e-TDS : - No TDS on Service Tax in 194J

Friends 

               Income Tax Department has issued a Circular No. 1/2014 [F.NO.275/59/2012-IT(B)], dated 13.01.2014 regarding clarification on tds on 194J or 194-I without including the service tax component if service tax is to be paid separately as per the terms of agreement between the payer and the payee.. 

 SECTION 194-I OF THE INCOME-TAX ACT, 1961 - DEDUCTION OF TAX AT SOURCE -  RENT – CLARIFICATION REGARDING TDS UNDER CHAPTER XVII-B ON SERVICE TAX  COMPONENT COMPRISED OF PAYMENTS MADE TO RESIDENTS 

CIRCULAR NO. 1/2014 [F.NO.275/59/2012-IT(B)], DATED 13-1-2014 

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. 

Director Remuneration under section 194J

Friends,  In  budget 2012, Director Remuneration will be covered under section 194J and TDS will be deducted @ 10%  under Fee for professional or technical services under section 194J.

This amendment will be applicable w.e.f. 01-07-2012

Section   :- 194J 

Subject   :- Fees for Professional or technical services

w.e.f.      :- 01-07-2012

Changes :- Payment to a director of a company any sum by way of any remuneration, fees or commission Which is not a salary shall also attract TDS of 10%

For more Clarity read exact words  as per  Chapter III of Income Tax Act  : -

       In section 194J of the Income-tax Act, in sub-section (1), after clause (b), the following clause shall be inserted with effect from the 1st day of July, 2012, namely:—

“(ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company; or”.