Dear Members/Friends,
Greetings,
I need help understanding how TDS is calculated. Also, I have another question: Does the TDS calculation include the Service Tax amount mentioned in the invoice/bill?
Thanks and regards,
Bijay
From India, Vadodara
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418Greetings,
I need help understanding how TDS is calculated. Also, I have another question: Does the TDS calculation include the Service Tax amount mentioned in the invoice/bill?
Thanks and regards,
Bijay
From India, Vadodara
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TDS is calculated on the gross amount of the bill (excluding service tax).
Example:
Bill amount: Rs 100
Service Tax: Rs 12.36
Total: Rs 112.36
If the rate of TDS is 10%, then you will deduct TDS on Rs 100 @ 10%, i.e. Rs 10. The payment to the vendor shall be Rs (100-10) + 12.36 = Rs 102.36.
I hope the matter is clear now.
From India, New Delhi
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Example:
Bill amount: Rs 100
Service Tax: Rs 12.36
Total: Rs 112.36
If the rate of TDS is 10%, then you will deduct TDS on Rs 100 @ 10%, i.e. Rs 10. The payment to the vendor shall be Rs (100-10) + 12.36 = Rs 102.36.
I hope the matter is clear now.
From India, New Delhi
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Hi Avika,
Greetings, and thanks for clarifying my doubt. However, when we raise a bill, the amount against services plus service tax makes my total bill. In such cases, some of our clients deduct TDS on this bill amount. That means they include the service tax amount for the deduction. Upon asking, they say, "the TDS will be deducted on the total bill amount." The same is mentioned in the bill, which also includes the service tax amount. How do we justify this? Please tell me if they are correct.
Also, please explain the TDS percentage deductions applicability.
Thanks and warm regards,
Biajy
From India, Vadodara
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Greetings, and thanks for clarifying my doubt. However, when we raise a bill, the amount against services plus service tax makes my total bill. In such cases, some of our clients deduct TDS on this bill amount. That means they include the service tax amount for the deduction. Upon asking, they say, "the TDS will be deducted on the total bill amount." The same is mentioned in the bill, which also includes the service tax amount. How do we justify this? Please tell me if they are correct.
Also, please explain the TDS percentage deductions applicability.
Thanks and warm regards,
Biajy
From India, Vadodara
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Dear Bijay,
Earlier, TDS used to be deducted on the gross amount of the bill (other than rent). But now, CBDT has issued a circular to clarify the issue. Please refer to Circular No. 1, dated 13.01.2014:
"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."
You can refer to the circular to inform your clients in case tax is deducted on the Service Tax part of the invoice.
Thanks & Regards,
Sukhvinder S. Bhatia
So, when entering into an agreement with your vendors, include a clause that Service Tax would be charged separately other than the fees or value agreed.
From India, Delhi
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Earlier, TDS used to be deducted on the gross amount of the bill (other than rent). But now, CBDT has issued a circular to clarify the issue. Please refer to Circular No. 1, dated 13.01.2014:
"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."
You can refer to the circular to inform your clients in case tax is deducted on the Service Tax part of the invoice.
Thanks & Regards,
Sukhvinder S. Bhatia
So, when entering into an agreement with your vendors, include a clause that Service Tax would be charged separately other than the fees or value agreed.
From India, Delhi
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Dear Sukhwinder sir,
Thank you for clarifying the doubt with supporting circular. Could you please explain the percentage deduction part of TDS? Some clients deduct 1%, while others deduct 2%. What is the upper limit of such percentage deductions?
I appreciate your prompt reply, sir.
From India, Vadodara
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Thank you for clarifying the doubt with supporting circular. Could you please explain the percentage deduction part of TDS? Some clients deduct 1%, while others deduct 2%. What is the upper limit of such percentage deductions?
I appreciate your prompt reply, sir.
From India, Vadodara
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Dear Bijay,
If this is about a contract, such as the supply of labor, the rate of TDS would be 1% (if you are not a company) and 2% in the case of a company (Pvt. Ltd. or Ltd.).
If this is about professional or technical services, the rate for all types of payees would be 10%.
Hope this information helps. If you still have any doubts, please let us know.
Thanks & Regards,
Sukhvinder S. Bhatia
From India, Delhi
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If this is about a contract, such as the supply of labor, the rate of TDS would be 1% (if you are not a company) and 2% in the case of a company (Pvt. Ltd. or Ltd.).
If this is about professional or technical services, the rate for all types of payees would be 10%.
Hope this information helps. If you still have any doubts, please let us know.
Thanks & Regards,
Sukhvinder S. Bhatia
From India, Delhi
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Dear Sukhwinder sir, Thank you very much for clarifying my doubt.Can I ask few more questions relating to service tax etc.I am interested to know more. Warm regards sir Bijay
From India, Vadodara
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From India, Vadodara
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You are welcome, Bijay. We all learn from each other by sharing our experiences. You can ask your question without any hesitation; I'll try to answer. If I could not, there are many learned and expert members who would help.
Thanks & Regards,
Sukhvinder S. Bhatia
From India, Delhi
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Thanks & Regards,
Sukhvinder S. Bhatia
From India, Delhi
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Dear Sir,
Thank you for your support in learning and sharing knowledge. I am actually not so qualified to understand the legal matters related to finance, hence face practical problems when dealing with my clients in the business. Your inputs help me a lot. Thanks once again.
I have a query on service tax exemptions issue. Many of my clients say they will not pay for service tax because they or their business is exempted from the same. For clarification, they show me the notifications under the Finance Act in this respect. Considering this, should we accept that they are exempted, or is it necessary for them to get exemptions for their organization individually based on the relevant notifications?
In short, can we simply consider the general notifications for considering the exemptions for all relevant organizations/business categories mentioned in the notification? Also, what about the exemptions for the companies working in SEZs?
Regards.
From India, Vadodara
Acknowledge(0)Amend(0)
Thank you for your support in learning and sharing knowledge. I am actually not so qualified to understand the legal matters related to finance, hence face practical problems when dealing with my clients in the business. Your inputs help me a lot. Thanks once again.
I have a query on service tax exemptions issue. Many of my clients say they will not pay for service tax because they or their business is exempted from the same. For clarification, they show me the notifications under the Finance Act in this respect. Considering this, should we accept that they are exempted, or is it necessary for them to get exemptions for their organization individually based on the relevant notifications?
In short, can we simply consider the general notifications for considering the exemptions for all relevant organizations/business categories mentioned in the notification? Also, what about the exemptions for the companies working in SEZs?
Regards.
From India, Vadodara
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