The CBDT has issued Circular No. 1/2014 dated 13.01.2014 pointing out that the Rajasthan High Court has taken the view in CIT(TDS) vs. Rajashthan Urban Infrastructure -
"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"
Pursuant thereto, the CBDT has decided in exercise of
powers u/s 119 that wherever the terms of the agreement/ contract
between the payer and the payee, the service tax component comprised in
the amount 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.
Circular can be viewed at:
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