You have been advising that payment to a service provider, which is inclusive of service tax, would require tax deduction at source on the entire amount, inclusive of service tax. In view of the Board’s Circular No. 4 of 2008 dated April 28, 2008, your answer would require revision. The Circular may be publicised for the benefit of readers.
The Central Board of Direct Taxes in Circular No. 4 of 2008 dated April 28, 2008, has responded to a request for clarification as to whether service tax should be included in rent for tax deduction at source under Sec. 194-I in the following words:
“3. Service tax paid by the tenant does not partake of the nature of “income” of the landlord. The landlord only acts as a collecting agency for the Government for collection of service tax.
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The Central Board of Direct Taxes in Circular No. 4 of 2008 dated April 28, 2008, has responded to a request for clarification as to whether service tax should be included in rent for tax deduction at source under Sec. 194-I in the following words:
“3. Service tax paid by the tenant does not partake of the nature of “income” of the landlord. The landlord only acts as a collecting agency for the Government for collection of service tax.
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