CIRCULAR NO. 1/2014 [, DATED 13-1-2014
Subject: TDS under Chapter XVII-B of the Income-tax Act, 1961 on service tax componentcomprised 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.
2. 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.
3. 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.
4. This circular may be brought to the notice of all officer for compliance
F.NO.275/59/2012-IT(B)]
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