We wish to clarify that as per CBDT vide Circular No. 01/2014 dated 13 January 2014 wherever in terms of the agreement/ contract between the payer and the payee, TDS is not required to be deducted under Chapter XVII-B of the Act on the Service tax component comprised in the amount payable to a resident if Service tax has been charged separately.

Earlier, vide Circular No 4/2008 dated 28 April 2008, the benefit of non-deduction of TDS on the Service tax component was allowed only on deduction of TDS under Section 194 J of the Income Tax Act, 1961 on the amount of rent paid/ payable.

For detailed study of clarification issued by the Board, Circular No. 01/2014 dated 13 January 2014 is annexed to this mail as Annexure A.

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