CBDT Accepts High Court Verdict Of No TDS On Service-Tax Component

[central kolkata]

CBDT Accepts High Court Verdict Of No TDS On Service-Tax Component

The CBDT has issued Circular No. 1/2014 dated 13.01.2014 pointing out that the Rajasthan High Court has taken the view in CIT(TDS) vs. Rajashthan Urban Infrastructure (copy attached) that if as per the terms of the agreement between the payer and the payee, the amount of service-tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service-tax component u/s 194J of the Act. Pursuant thereto, the CBDT has decided in exercise of powers u/s 119 that wherever the terms of the agreement/ contract between the payer and the payee, the service tax component comprised in the amount is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component. 

Team CKCASC

[RISHAB JALAN]

Dear Professional friends,

I am sharing my understanding of the circular no.1/2014 dated 13/01/2014 of CBDT which states that no TDS on service tax component of nature of payments covered under chapter XVII B OF INCOME TAX ACT:-

1. Service tax component should be indicated seperately in the agreement/contract and bills.

2. Payment should me made in two parts :-

    a) For service tax

    b) For service charge less TDS on service charge

3. It covers all the section under chapter XVII B, NOT ONLY 194I OR 194J

If i have ignored anything or misunderstood anything, please enlighten me.

CA Rishab Jalan

+919830211470

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