Applicability of TDS

[Hamonta Kumar Sarmah]

Whether TDS provision U/s. 194C and 194J of the Income Tax Act will be applicable on the gross contract amount payable (inclusive of service tax) or net contract amount payable (exclusive of service tax)

The Circular given by CBDT covers only 194I in this regard. Thus, it is logical that TDS should not be applied on service tax portion relating to payments falling u/s 194C/194J also, it is not supported by the provisions/Circular of the board as of now.

The exclusion of service tax is only for s.194I and not for 194C or 194J. I tink the TDS is only on the gross amount incl service tax

[sunil jain]

CBDT in its clarification to Bombay Chamber Of Commerce & Industry vide letter dt 30.06.08 has clarified that 'payment u/s 194-I differ from payment u/s 194-J as in case od 194-I, TDS has to be deducted on any Income paid as Rent. However u/s 194-J, TDS is to be deducted on any sum paid as professional fees. CBDT had decided to exclude TDS on s. tax component on rent because s.tax is nt income

AI Summary

TDS on service tax: exclusion affirmed for rent payments but ambiguity remains for other TDS provisions.
The CBDT clarified that the service tax component should be excluded from the TDS base for rent payments, so TDS on Service Tax is not applied to rent; that clarification is limited to rent and does not resolve whether service tax should be included or excluded when computing TDS on contract payments or professional fees, generating divergent views.