Service tax applicability on debit notes

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In X Group of companies, there are three companies. In one co.A of the said group, there is one employee who is IT/EDP Manager. This employee look after the IT needs of all three companies. His salary cost is shared by other two companies also in a pre agreed ratio.They have a MOU for this purpose and also for sharing other common costs like travel, conveyance etc. Is service tax applicable on Debit notes raised by Co. A on other two companies for such sharing ? Is TDS also applicable on this ??

AI Summary

Debate Over Service Tax and TDS on Debit Notes for Shared IT/EDP Manager Salary Costs; Rule 5(2) and Section 194J Discussed. A discussion in a forum addresses whether service tax and TDS apply to debit notes raised by Company A for sharing an IT/EDP Manager's salary and other costs among three companies in a group. One participant suggests that cost sharing does not constitute a service, implying no service tax is due, but advises ensuring compliance with rule 5(2). Another participant argues that such cost sharing is subject to TDS under section 194J of the Income Tax Act and believes service tax should also be applied according to service tax valuation rules.