TDS is deducted on gross amount icluding service tax charged in the bill.i.e tax on tax which appears unfair.Since service tax is not an income whether deduction of TDS on service tax amount is legal?
The CBDT decided that the TDS under sections 194-I of Income Tax Act would be required to be made on the amount of rent paid/payable without including the service tax. Further, the service tax paid by the tenant would not be considered as income of the landlord, hence, the tax was deductible at source on income by way of rent paid to any resident.
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