Circular No. 1/2014,
dated 13.1.2014
Non-deduction of tax
at source on the service tax component comprised in payments made to residents,
if the service-tax component is indicated separately
The CBDT had issued Circular No.4/2008 dated 28.4.2008
clarifying that tax is to be deducted at source under section 194-1, on the
amount of rent paid/payable without including the service tax component.
However, this Circular was silent regarding deduction of tax at source on the
service tax component of other payments on which TDS provisions are applicable.
Accordingly, in exercise of the powers conferred under
section 119, the Board has, vide this Circular, clarified 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 on the amount
paid/payable without including such service tax component.
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