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No TDS on Service Tax u/s 194J of the Income Tax Act

The CBDT hass issued a Circular No. 01/2014 dated 13.01.2014 regarding deduction of TDS under Section 194J (chapter XVII-B of the Income Tax Act, 1961) on professional and technical services.  This circular clarifies that on Professional and technical services fees paid by the payee to payer is not undercome TDS Deduction. 

This circular has issued by CBDT after the judgement of the Hon’ble Rajastlian High Court dated 01.07.2013, in the case of CIT(TDS) Jaipur vs 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. Therefore on Professional and Techical service fees no TDS is required  u/s 194J of the Income Tax Act. 

Circular 01/2014 dated 13.01.2014 reproduced hereunder. 

 

F. No_ 275/59/20124T(B)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

Circular No.01/2014

New Delhi, the 13th January-‘2014 

Subject: TDS under Chapter XVII-,13 of the Income-tax Act, 1961 on service tax component comprised in the payments made to residents – clarification regarding

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 194-1 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 Rajastlian High Court dated 01.07.2013, in the case of CIT(TDS) Jaipur vs 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 officers for compliance.

5. Hindi version shall follow.

Under Secretary to Government of India

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  • Umesh says:

    Dear,

    Sir /madam

    Incase there is no such agreement between the the payee & payer in relation showing the Amt. of service tax seperatly ,then whether TDS will be dedcuted on the amt. inclusive of srevice tax or first it will requir to seperation the amt. of service tax & then only Deduction will be made on the Professional Fess Amount.

    Reply must,please.

    January 18, 2014 at 11:23 am
    • shubham sharma says:

      There is no need to separation of amount.If Service tax amount is shown separately in Invoice then it should not be included in calculating TDS.

      May 27, 2014 at 1:02 pm
      • Gopi Krishna Reddy says:

        Dear Sir / Madam

        Whether it is Mandatory to deduct TDS Excluding Service tax or we can deduct Inclusive of Service Tax?? Are there any Penal Provisions if we are deducting TDS inclusive of Service Tax??

        June 19, 2015 at 4:41 pm
  • Shaik says:

    I do not understand the new circular No.1 issued this January 2014 for TDS u/s 194J. I want to understand in lay man’s language that, if a professional service bill amount is Rs.112.36
    including service tax, TDS to be deducted on Rs.100 only and not considering the amount service tax amount for TDS?

    January 21, 2014 at 11:11 pm
    • pankaj singh says:

      No, Mr. Saik, you are misunderstanding in your example TDS shall be deducted on 112.30. If service tax is shown separately in bill then only service tax shall be excluded, for Ex-

      Professional Charges-100.00
      Service Tax – 12.36
      Total 112.36

      now TDS on Rs 100 only not on 112.36

      February 5, 2014 at 3:31 pm
      • rocky says:

        correct

        January 9, 2015 at 6:01 pm
    • piyush says:

      TDS is to be deduted on Rs100 and not on 112.36.in easy language no tds on service tax amount

      May 2, 2014 at 2:01 pm
    • Murugesh says:

      Hai,

      Service tax shown separately in the bill, but service recipient not have a service tax registration No. In the case service recipient deduct TDS with S.T or With out S.T? Pl.Clarify!!

      January 10, 2015 at 1:20 pm
  • Abhishek says:

    Shaik: You are correct.

    January 27, 2014 at 3:47 pm
  • maya babu says:

    whether this circular is applicable to sec 194C??

    January 30, 2014 at 11:07 am
    • piyush says:

      yeah it to applicable to entire chapter of TDS

      May 2, 2014 at 2:04 pm
  • Arun kumar says:

    Is this applicable or in proposed situation??

    January 30, 2014 at 5:26 pm
  • Ujjwal says:

    I m visiting faculty at an engg colg..they pay acc to hours…at the end of semester my total comes to Rs 40000.Accounts section say they going to deduct TDS on whole amount of Rs 40000 which comes 194j.i want to know tds if limit is 30000, what it means? Acc to me taxable amt is only 10000.plz help me out

    February 11, 2014 at 8:05 am
    • piyush says:

      they are correct. TDs wil be on 40000. limit of 30000 means that no TDS till rs30000. But onces limit is cross then in entire value TDs need to be deducted. Therefore TDs wil be on 40000.

      May 2, 2014 at 2:06 pm
  • Brijesh Gupta says:

    first of all thanks for posting this article. Earlier concept was not appropriate. Because Service Tax amount is not income of assesse and TDS should be deducted from income.

    February 18, 2014 at 12:26 am
  • Brijesh Gupta says:

    Ujjwal.. TDS will be deducted on whole Rs 40000 if they are paying you through one cheque/single payment. And if you are getting 40000 for one semester it means 80000 for one year, it also cross annual limit of 75000.

    February 18, 2014 at 12:32 am
  • parth says:

    This rule is with effect from?

    March 11, 2014 at 1:00 pm
    • piyush says:

      notification is effect from date of published ie 13/01/20014

      May 2, 2014 at 2:10 pm
  • shishir says:

    if bill was dated 25.10.12 and service tax showed separately in invoice.. so the TDS applicable on component of service tax if bill booked on feb-14 ?

    March 19, 2014 at 2:16 pm
    • piyush says:

      date of payment or date of credit whichever is earlier. If bil booking and payment is done now then no tds on service tax portion. But if anything was earlier from 13/01/2014 then TDs wil be on entire amount

      May 2, 2014 at 2:09 pm
  • siva says:

    what about 194c ….if they are charging service tax what is the treatment for it

    March 21, 2014 at 12:19 pm
    • arun b shah says:

      i have paid 404096 inclusive of service tax and paid ra 400000
      nd deduct tds in books of a/c how i give entery

      September 23, 2015 at 1:01 am
  • Dr N B Singh says:

    I am a doctor & providing medical services to an org on Rs.15000/-pm as per contract, but the org is deducting TDS on it. Are they correct?

    April 15, 2014 at 6:41 am
    • piyush says:

      a far i m concern TDS is applicable and organisation is correct.

      May 2, 2014 at 2:16 pm
  • Khalid Bagwan says:

    I am a Website Designer & providing Web service to a Company on Rs.23,000/-, but the company is deducting TDS on it. Are they correct? They are deducting 10% TDS on it means 2300/- on 23,000/-. is this correct…?
    My Invoice date is April 2014.

    April 23, 2014 at 6:45 pm
    • Raj says:

      Yes, 10% (excluding service tax) tds applicable on professional/technical service.

      April 28, 2014 at 6:10 pm
    • piyush says:

      TDS should not be deducted as limit is 30000 per annum for no tds. since bill amount is less than 30000 so no tds. Assuming this is only bill in a year.

      May 2, 2014 at 1:58 pm
  • Ravindra Katkar says:

    Our CA Charged Us bill of Rs. 30000 + ST is RS. 3708=33708,
    Now here we can deduct the TDS on this bill or not because CA say the threshold limit is RS.30000/- and no tds on S T

    please explain this conclusion

    April 28, 2014 at 3:26 pm
    • piyush says:

      No TDS as monetary limit of 30000 should be crossed. There is no TDs on service tax portion. Further bill is not more than 30000. Therefore no TDs

      September 13, 2014 at 2:03 pm
  • nitish says:

    Hi…
    I want to know that how much TDS is deducted on SMS services.please send us with u/S tax.

    May 21, 2014 at 5:35 pm
  • nitish says:

    hi….
    I want to know how much TDS is deducted on SMS Services.Pls send me with u/s tax…

    May 21, 2014 at 5:37 pm
  • Durga says:

    hi, am offering software services to an educational institution and my total invoice for the year is Rs 150000 including service tax. now the institution says that they will pay me after deducting TDS. Is it applicable and is so what percentage they will deduct from my payment.

    May 23, 2014 at 3:47 pm
    • piyush says:

      Institution is correct they will deduct TDS under section 194J @ of 10%

      September 13, 2014 at 2:10 pm
  • mandar says:

    Hi i want Clarification regarding the TDS is not Applicable on Sevice Tax Component on 194 J But what About the 194 C were the Party Charges Service Tax, on that too TDS wont be applicable on service Tax Component

    Pl. Repply

    June 17, 2014 at 11:08 am
    • piyush says:

      As far i am concern no TDs if service tax is charged seperately in the invoice. Circular have cited an example of 194j, However in my view circular is applicable to rest section also where service tax is shown seperately then no TDs on service tax portion

      September 13, 2014 at 2:08 pm
  • sai says:

    Hi
    I am freelance consultant, my company is making payment after deducting tds of 10% on the payments, but here I have query whether the TDS deducted under 194j is claimable, if yes pls let me know the exemptions allowed.
    Regards,

    Sai

    July 13, 2014 at 1:01 am
    • piyush says:

      TDs deducted is claimable only by filing ur income tax return

      September 13, 2014 at 2:09 pm
  • Savita says:

    Pl. help me. I am technical service provider. My clinet paid me Rs. 115500 & deducted Rs. 11550 against 194H. What is means. Whether I can demand this amount in ITR since it is not crossing my anual income tax slab i.e. 1,80000/-
    Pl. suggest.

    July 17, 2014 at 2:09 pm
    • srinivas says:

      hai,
      you can claim refund. for this 1st you have to file your return of income

      August 8, 2014 at 6:47 pm
    • srinivas says:

      I THINK THEY WILL TREAT IT AS COMMISSION OR BROKERAGE THAT’S WHY THEY DEDUCT U/S 194H. Any person, who is responsible for paying, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, deduct income-tax thereon. However, individuals and HUF who were covered under section 44AB(a) and (b) in the preceding previous year i.e. whose gross turnover/receipts of the business/profession in the immediately preceding financial year exceeded business/profession in the immediately preceding financial year exceed Rs. 1,00,00,000 / 25,00,000, as the case may be,

      August 8, 2014 at 6:59 pm
    • piyush says:

      yes u can claim TDs amount by filing ur return. Return is mandatory for all assessee who have crossed taxable limit of 2lac. return is optional for assesee les than taxable limit. So u hava an option. So u can file and clain ur TDs refund

      September 13, 2014 at 2:05 pm
  • B Vamsidharreddy says:

    We paid Service tax to the vendor.But we are not eligible to take credit of that service tax amount.That’s why we passed one entry at the year end like

    Expenditure a/c Dr XXXX
    To ST Input XXXX

    In this Case whether we have to deduct TDS or Not on ST amount.

    September 26, 2014 at 5:33 pm
  • DEEP UPRETI says:

    The Travelling & CONVEYENCE worth Rs.20000/- To & fro provided to consultant u/s 194j as per agreement & separate bill of travelling & conveyance provided by consultant. is that amount under the preview of tds professional ?

    November 13, 2014 at 4:00 pm
  • Sajeev says:

    Hi,
    I have been working as a Jewel appraiser on contract basis for a scheduled Bank. Now, the Bank has informed me that, they will deduct TDS @ 10%, if I am getting more than Rs.5000/= as Jewel Appraiser Fees in a financial year.

    Whether the fee limit is Rs.30,000/= per year or Rs.5000/= per year for deducting TDS?

    Please clarify.

    January 8, 2015 at 11:07 pm
  • rocky says:

    is any other circular for TDS on service tax after Jan’14???

    January 9, 2015 at 5:57 pm
  • rocky says:

    In case of TDS u/s 194D 194G 194H TDS shall be deducted on AMOUNT EXCLUSIVE OF ST whereas, in case of TDS U/s 194C 194 J TDS shall be deducted on AMOUNT INCLUSIVE OF ST

    January 9, 2015 at 6:08 pm
  • Murugesh says:

    TDS deducted with out service tax can applicable for non service tax registration company ?

    January 10, 2015 at 3:00 pm
  • Neha Singh says:

    Sir/Madam I’m working in ABC company as direct vendor & they deduct TDS on U/S 194J. Now they have said that we can claim on it in during return filling. SO kindly advice how I can claim on it & what will be the procedure for the same.

    February 19, 2015 at 12:04 pm
  • Chakravarthy says:

    Hi,

    I’m a technical service provider/ consultant with a gross consultancy fee of Rs. 2.50 lakh per month (which includes the ST also). Since 8 months my client paying me Rs. 2.25 lakh by deducting 10% as TDS. Pls. clarify me with proper calculation sheet and details.

    & deducted Rs. 11550 against 194H. What is means. Whether I can demand this amount in ITR since it is not crossing my anual income tax slab i.e. 1,80000/-
    Pl. suggest.

    March 13, 2015 at 10:16 pm
    • TDSMAN says:

      Dear Sir,

      TDS will be applicable only on the service charges and not in the service tax part. You will have to back calculate the service charges by removing the service tax and then on the balance amount 10% TDS will be applicable.
      Yes, you can claim the excess tax by filing ITR.

      March 17, 2015 at 2:03 pm
  • SANTHOSH KUMAR says:

    Respected All,

    I need some clarification. “ABC” Company is getting Contract from Broadcasting Company “XYZ”. “ABC” Company have given sub contract to “M” for Rs. 60/- and he has completed the Job. “ABC” Company have raised the Bill to “XYZ” Company with Service Tax @ Rs. 100 + ST and “XYZ” Company have settled the bill with the TDS amount detected and Balance @ Rs. 90 +ST to “ABC” Company. They have paid the Service Tax to the Government. “ABC” Company have have been detected TDS @ 2% on Rs. 60 and Balance of Rs 58.8 have been paid. Do i want to pay Service Tax again or not. Pl confirm

    April 1, 2015 at 3:00 pm
  • Eserviceshelp.in says:

    Dear Sir/ Madam,
    If in invoice Adveretisement Charges (on TV) i.e. cover in contract u/s 194c
    Total Bill is 250000.00
    Service tax is 30900.00
    total 280900.00
    should we deduct TDS on Rs. 250000.00 or 280900.00
    Thanks

    April 2, 2015 at 2:18 pm
  • RAJENDRA says:

    If TS had not been deducted on service tax amount, then while filing TDS return which amount has to be reflected, whether with TDS or without TDS?

    May 12, 2015 at 6:05 pm
  • dharmesh says:

    wooden model with indscape lighting & other details bill tds section with rate please amt rs 378500

    May 16, 2015 at 2:03 pm
  • DHIRAJ says:

    Please confirm us what’s the status of PAN holder AAATM7499K. Whether TDS is applicable on Training Prorgam by Maruti . Bill amount excluding Service Tax is Rs.25000/- Please confirm us immediately.

    May 22, 2015 at 11:35 am
  • Ashika says:

    We have a hired a production person for setting up production at the show. We have paid them Rs. 46000 in total.
    Can we deduct TDS under section 194J @ 10% for rendering technical services??

    June 22, 2015 at 3:09 pm
  • AFROZ says:

    I AM A INSTRUCTOR IN GOVT. ITI COLLEGE ON CONTRACT BASIS WITH 18000/- PM SALARY.I AM IN LABOUR RESOURCES DEPARTMENT IN BIHAR. BUT THE DEPARTMENT IS DEDUCTING TDS IN IT @ 10%. Are they correct?

    August 15, 2015 at 9:14 pm
  • S.Rajalakshmi says:

    If a company paid Rs.6500/- per month to a consultant for the FY 15-16. Whether TDS on Professional fees under section 194j is applicable or not

    August 31, 2015 at 4:46 pm
  • manjunath says:

    I am working under contract basis as a consultant I am receiving 20000 per month means 2.4 lack per year. am I eligible for TDS under professional services and guide me how it will calculated. is there any chance to escape from that tax?

    October 1, 2015 at 10:31 pm
  • Raj Kumar Juneja says:

    If your remuneration as salary then no TDS deduction on Salary for FY 2015-2016 for Rs. 270000/- otherwise professional limit 30000/- PA
    Rajkumar Juneja

    November 18, 2015 at 5:50 pm
  • Akhil says:

    I have a doubt here:

    Background:
    I am working as a consultant and my contract specifies a total yearly fee inclusive of all taxes. As i understand, applicable taxes are Service Tax and TDS.
    My company deducts the TDS on the total monthly salary and pays me. ST compliance is my responsibility.

    Doubt:
    I will explain my confusion through a simple example below –
    Lets imagine my annual salary is 12 lacs. That means 1 Lac per month. Company deducts the TDS on the full amount and pays 90 K (@ 10% TDS) per month.

    Basically, 12 Lacs includes my base salary (10.52 L) and Service Tax (1.48 L). The TDS is deducted on the full amount.

    Is this correct or TDS shall be deducted only on the base salary and not on Service tax.

    Please clarify..

    December 26, 2015 at 6:57 pm
  • Syed Ali says:

    Our scientific department (a central govt. organization) providing service to another govt department by deploying employees for a long time. we are charging the salary and allowances of the deployed employees and also charging the cost of our equipment installed. Service tax on total charges are also received separately . Kindly let me know if these charges of Govt organization are covered under Income tax J194. Thanks . Ali

    January 8, 2016 at 11:56 pm
  • R B Thorat says:

    Fees paid to person other than professinal like CA, for professional work like TDS , VAT and accounting work etc, whether TDS is equired to be done ? if yes 2 what rate?

    May 6, 2016 at 12:29 pm
  • rajarshi roy says:

    Hi, if i’m paid by some company for consultation fee and the company deducted TDS u/s 194J, then while filing ITR1 where to put this income- under income from salaries or income from other sources? please clarify.thanks in advance.

    May 27, 2016 at 11:14 pm
  • Matin Bagwan says:

    my employer has deducted tds u/s 194j and my total income does not exceed the basic exemption limit .this the only source of income i have. can i claim a refund of the tds deducted? how do i do the same please help. which ITR should i file. the amount was deducted in 2015. please help.

    June 16, 2016 at 10:17 pm
  • parveen says:

    i have one bill in which one part is service tax and another on non service tax. please clarify that on which part i deduct tds

    July 1, 2016 at 1:21 pm
  • alpesh siyani says:

    my query is If Payment made invoice wise to Accounting consultant if (a) rs 9000 for invoice no .01 date 01/04/16( no tds deduct),(b) rs .9000 for invoice No.2 ( no tds deduct) (c)rs .9000(tds 900 is deducted ) invoice.3.

    is Tds deduct on (a) , (b).?

    July 18, 2016 at 5:29 pm
  • ASOK SARKAR says:

    My question is if we pay the payout / infrastructure expenses to a vehicle dealer including service tax at 15% then on which amount income tax should be calculated ? Is it calculated on only payout amount or calculated on payout + S.Tax amount ?

    October 27, 2016 at 8:46 am

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