No TDS on Service Tax Component

Clarification in the Latest Circular from CBDT

The latest circular from CBDT (Central Board of Direct Taxes) clarifies, based on a High Court decision, that service need not be deducted on the Service Tax component.

Thus, your cllients should now pay you higher to that extent. Correspondlngly, you need to deduct lower TDS to a similar extent.

An example:

  Earlier NOW
Head % Rs Rs
Amount Billed 10,000 10,000
Service Tax 12.36% 1,236 1,236
Gross Amount 11,236 11,236
T.D.S. 10.00% 1,124 1,000
Net Amount Receivable / Pauable 10,112 10,236

Ensure you follow this and also make sure your clients pay you accordingly. The link to the circular is here.

Note that, for now, this is applicable only if Service Tax is charged seprately for professional / techincal services.

Further Extension in Due Date for Filing Quarterly Return of Payment of Interest

The CBDT has notified a further extension in the due date for filing of Quarterly Return of Payment of Interest to Residents without deduction of TDS to 31 January, 2006. This is for the quarters ending 30 June, 2005 and 30 September, 2005.