TDS on Service Tax on Rent paid....Dilemma resolved

CBDT has clarified in its latest circular that TDS will not be deducted on the service tax element included in rent paid. The Circular clarifies that “Service tax paid by the tenant does not partake the nature of income of the landlord. The landlord only acts as the collecting agency for government for collection of service tax. Therefore, it has been decided that tax deduction at source (TDS) under section 194-I of the I-T Act would be required to be made on the amount of rent paid/payable without including the service tax.” This comes as a major relief to a large section of tax payers.