Partner - Risk Management
Accounting, Finance, Banking, Taxation (gst
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Dear Members/friends
Need help to know that how TDS is calculated?Also my other question is , Does the tds calculation include Services tax Amount mentioned in the invoice/bill?
Thanks regards
10th July 2014 From India, Vadodara
TDS is calculated on the gross amount of bill (excluding service tax)
Bill amount Rs 100
Service Tax Rs. 12.36
Total 112.36
Then, if rate of TDS is 10%, then you will deduct TDS on Rs. 100/- @ 10% i.e. Rs. 10
The payment to vendor shall be Rs. (100-10)+12.36 - 102.36
I hope the matter is clear now.
14th July 2014 From India, New Delhi
Hi Avika,
Greetings,& Thanks for clarifying my doubt.However When we raise Bill, the amount against services + service tax, Makes my total Bill, In such case
Some of our clients deduct tds on this Bill Amount.That means they include services tax amount also for the deduction.Upon asking they say," the tds will be deducted on total bill amount .And same is mentioned in the bill which also include service tax amount.How do we justify? Pls tell me are they correct.
Also Pls explain me about the tds% deductions applicability.?
Thanks and warm regards
14th July 2014 From India, Vadodara
Dear Bijay,
Earlier TDS used to be deducted on Gross Amount of the Bill (Other than Rent), But Now CBDT has issued circular to clarify the issue :
Please Refer Circular No. 1, dated 13.01.2014 :
....... 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.*
You can refer the circular to your clients in case tax is deducted on Service Tax Part of the invoice.
Thanks & Regards,
Sukhvinder S.Bhatia
*So, While entering into agreement with your vendors, Put a clause that Service Tax would be charged Separately other than Fees or Value agreed.
16th July 2014 From India, Delhi

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Dear Sukhwinder sir,
Thanks for clarifying the doubt with supporting circular.
Can you pls explain me the % deduction part of tds.As some clients deduct 1% & some 2%.What is the upper limit of such %.
Appreciate your reply sir.
16th July 2014 From India, Vadodara
Dear Bijay,
If this is about Contract like supply of labour etc Rate of TDS would be 1% (if you are not a company) and 2% in case of Company. (Pvt. Ltd. Or Ltd.)
If this is about Professional or Technical Services Rate for all type of Payees would be 10%.
Hope, This would help, still have any doubt. Let us know.
Thanks & Regards,
Sukhvinder S. Bhatia
18th July 2014 From India, Delhi
Dear Sukhwinder sir, Thank you very much for clarifying my doubt.Can I ask few more questions relating to service tax etc.I am interested to know more. Warm regards sir Bijay
18th July 2014 From India, Vadodara
You are welcome. Bijay. We all learn from each other by sharing our experiences. You can ask your question without any hesitation, I'll try to answer, if I could not, there are many learnt and expert members, who would help.
Thanks & Regards,
Sukhvinder S. Bhatia
19th July 2014 From India, Delhi
Dear Sir,
Thank you for your support in learning and sharing knowledge.I am actually not so qualified to understand the legal matters related to finance hence face practical problems when dealing with my clients in the business.Your inputs helps me a lot. Thanks once again.
I have query on service tax exemptions issue.Many of my clients say they will not pay for service tax because they/their business is exempted from the same.For Clarification they show me the notifications under the finance act, in this respect.Considering this should we accept that they are exempted or is it necessary for them to get exemptions for their organisation individually on the basis of the relevant notifications.?
In short - Can we simply consider the general notifications for considering the exemptions for all relevant organisations/business categories mentioned in the notification.
Also what about the exemptions for the companies working in SEZs?
20th July 2014 From India, Vadodara
TDS rates for contracts are 2% for direct contractors and 1% for sub contractors. There are some other special rates applicable. Please tell us what services you are providing and to whom
20th July 2014 From India, Mumbai
Dear Mr. Banerjee Sir,
We provide manpower services on contracts and we are proprietary Firm .Kindly elaborate the tds and service tax rates/applicability in relation to -
1)Contracting with proprietary firms.
2)Contracting with pvt Ltd & Ltd, Companies,
3)Residential and co-op societies
4)Hospitals and education institutes.
5)Clubs and NGOs
Recently I came across a hospital client stating we are exempted from esic because its hospital. is it so? How can we extend benefit to our manpower in such case.Will the hospital be able to provide insurance cover /disability benifit etc.
21st July 2014 From India, Vadodara
For manpower services, you come under contractor in tds rules.

So if you are a direct contractor, they will deduct 2% of bill amount.

If you are a subcontractor, the main contractor is required to deduct 1%

Proprietory firms with turnover of less than 40 Lakhs a year (I think now increased to 1 cr) need not deduct tds from your payments.

Current rule is that tds will be deducted on the gross bill before service tax. Earlier it was on total bill amount.

If you are covered under ESIC, and the location where employees are posted are also covered under esic, then you need to pay esic irrespective of who the principal employer is. So, even if the hospital them selves were not covered in esic, you still need to pay for your employees.

As per rules, the hospital can get exemption for you, but it's a very time consuming process. Further, what happens when an employee is shifted for that location to another location ? I do not think it's a good idea to go the exemption rule.

Hope I have answered your question

21st July 2014 From India, Mumbai
Also please note that service tax is applicable on an uniform rate of 12.36% on all invoices you raise.
However, in case of customers who are companies, the reverse charges rule applies. Under that rule, the company will pay the service tax directly on your bill and you need not charge the same. If you already have service tax number and charge directly, inform the company of the same so they don't pay in addition.

21st July 2014 From India, Mumbai
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