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.