Saturday, 7 June 2014

Circular No. 01 /2014 – Income Tax -CLARIFICTION REGARDING TDS ON SERVICE TAX COMPRISED IN THE PAYMENTS MADE TO RESIDENTS


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CHAPTER XVII-B OF THE INCOME-TAX ACT, 1961 - COLLECTION AND RECOVERY
 OF TAX - DEDUCTION AT SOURCE - CLARIFICATION REGARDING TDS UNDER CHAPTER XVII-B ON SERVICE TAX COMPONENT COMPRISED OF PAYMENTS 
MADE TO RESIDENTS 

CIRCULAR NO. 1/2014 [F.NO.275/59/2012-IT(B)]  DATED 13-1-2014

1.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.




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Date

07/12/2013




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