Service tax on Income tax deducted at source

[Mukund Honkan]

Service tax earlier to recent budget presented in Feb 2011 was payable on actual receipt from vendors. If vendor has deducted TDS but not paid balance amount, whether one should deposit services tax on TDS amount. Regards, Mukund M Honkan

[CA Rachit Agarwal]

Yes. Service Tax will be paid on the TDS amount.

The person deducting the tax has paid the amount to you indirectly. He has deposited the tax for which credit would be availed by you.

Hence Service tax woule be applicable on the gross amount (Amount received plus the tds)

 

[Mukund Honkan]

Thanks for feedback. Are there any relevant case laws thanks Mukund M Honkan

 

 

AI Summary

Service tax on TDS: taxability attaches to gross consideration including amounts represented by tax deducted at source.
Service tax is payable on the gross consideration for services, including amounts corresponding to tax deducted at source, because the deductor is treated as having paid that amount on behalf of the provider and the provider may claim credit for the tax so deposited; therefore taxable value comprises the actual amount received plus the TDS portion.