CBDT clarifies on TDS on Service Tax

The Central Board of Direct Taxes (CBDT) has made it clear that tax need not be deducted at source on the service tax component on payments made/due to a resident payee. This will be allowed only in cases where the service tax component comprised in the amount payable to a resident is indicated separately in the contract between the payer and the payee, the CBDT has said in a circular. In such situation, tax has to be deducted on the amount paid/payable without including the service tax component.