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.
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