Implication of TDS, Income Tax

[Manoj Aggarwal]

As a service receiver ( for import of services in India) we have to pay service tax on $ 100 to be paid to a management consultant in UK. Whether TDS ( under Income Tax)is to be deducted on $100 or at $112.36 ??

Posts / Replies

[Ramanujam V]

As per Sec.66A of Finance Act and Sec.2(1)(d)(iv)r.w. Import of service, rules, the person receiving the service in India would be liable to pay service tax when a service of the nature explained in the query is received. As per IT provisions, the TDS is attracted u/s 195 on any payment made (or credited) to a Non-resident/foreign company. In this case, the liability to pay tax would fall on the service receiver and hence it cannot said to be the payment made to the non-resident/foreign company. Hence, No TDS, if any applicable is deductible only on $ 100 and not on service tax component applicable.

[Surender Gupta]

I fully agree with the opinion of Mr. Ramanujam V and TDS should be deducted only on $ 100.

[NEESHA]

I ALSO AGGREED WITH MR RAMANUJAM V AND TDS SHOULD BE DEDUCTED ON 100 $ AND NOT ON 112.36 $