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

  1. Umesh

    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.

    Reply
    1. shubham sharma

      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.

      Reply
      1. Gopi Krishna Reddy

        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??

        Reply
  2. Shaik

    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?

    Reply
    1. pankaj singh

      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

      Reply
    2. piyush

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

      Reply
    3. Murugesh

      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!!

      Reply
  3. Ujjwal

    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

    Reply
    1. piyush

      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.

      Reply
  4. Brijesh Gupta

    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.

    Reply
  5. Brijesh Gupta

    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.

    Reply
  6. shishir

    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 ?

    Reply
    1. piyush

      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

      Reply
  7. Dr N B Singh

    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?

    Reply
  8. Khalid Bagwan

    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.

    Reply
    1. piyush

      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.

      Reply
  9. Ravindra Katkar

    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

    Reply
    1. piyush

      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

      Reply
  10. Durga

    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.

    Reply
  11. mandar

    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

    Reply
    1. piyush

      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

      Reply
  12. sai

    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

    Reply
  13. Savita

    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.

    Reply
    1. srinivas

      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,

      Reply
    2. piyush

      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

      Reply
  14. B Vamsidharreddy

    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.

    Reply
  15. DEEP UPRETI

    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 ?

    Reply
  16. Sajeev

    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.

    Reply
  17. rocky

    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

    Reply
  18. Neha Singh

    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.

    Reply
  19. Chakravarthy

    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.

    Reply
    1. TDSMAN Post author

      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.

      Reply
  20. SANTHOSH KUMAR

    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

    Reply
  21. Eserviceshelp.in

    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

    Reply
  22. RAJENDRA

    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?

    Reply
  23. dharmesh

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

    Reply
  24. DHIRAJ

    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.

    Reply
  25. Ashika

    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??

    Reply
  26. AFROZ

    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?

    Reply
  27. S.Rajalakshmi

    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

    Reply
  28. manjunath

    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?

    Reply
  29. Raj Kumar Juneja

    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

    Reply
  30. Akhil

    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..

    Reply
  31. Syed Ali

    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

    Reply
  32. R B Thorat

    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?

    Reply
  33. rajarshi roy

    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.

    Reply
  34. Matin Bagwan

    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.

    Reply
  35. parveen

    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

    Reply
  36. alpesh siyani

    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).?

    Reply
  37. ASOK SARKAR

    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 ?

    Reply
  38. DAV Ahmedabad

    In a month if a professional person is absent for some days eg. for 5 days, then we need to deduct TDS on present days or decided professional package.

    Reply

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