CIRCULAR NO. 1/2014 [, DATED 13-1-2014
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.
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)]
