Subject: TDS under Chapter
XVII-B of the Income-tax Act, 1961 on service tax component comprised in
the payments made to residents - clarification regarding
The Board had
issued a Circular No.4/2008 dated 28-04-2008 wherein it was clarified that tax
is to be deducted at source under section 194-I of the Income-tax Act, 1961
(hereafter referred to as 'the Act'), on the amount of rent paid/payable
without including the service tax component. Representations/letters has been
received seeking clarification whether such principle can be extended to other
provisions of the Act also.
Attention
of CBDT has also been drawn to the judgement of the Hon'ble Rajasthan
High Court dated 1-7-2013, in the case of CIT (TDS) Jaipur v. Rajasthan
Urban Infrastructure (Income-tax Appeal No.235, 222, 238 and 239/2011),
holding 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.
The matter
has been examined afresh. In exercise of the powers conferred under section 119
of the Act, the Board has decided that wherever in terms of the
agreement/contract between the payer and the payee, the service tax component
comprised in the amount payable to a resident 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.
This
circular may be brought to the notice of all officer for compliance
F.NO.275/59/2012-IT(B)]
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