The Central Board of Direct Taxes (CBDT) has clarified that no income tax would be with held on payments made to assessees with respect to the goods and services tax (GST) component on services rendered.
It said tax would be required to be with held only on the amount paid without including the GST on services component.
For this purpose, terms of agreement between the payer and the payee would be taken into account.
Under the old service tax regime as well, the CBDT had clarified that not a was required to be with held on such service tax component.
Various representations were made to the CBDT seeking clarifications whether the same kind of rule would continue under the GST as well.
Consultants PwC said the clarification will have a positive impacton reducing the prevailing ambiguity in the industry.
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