TDS on service tax kept in abeyance

A proposal to introduce the tax deducted at source mechanism for service tax on the lines of income tax has been put on the back burner. The finance ministry is instead thinking of expanding the list of services on which the tax would be levied under the reverse charge mechanism. At present, usually the service provider collects tax at a rate of 12 per cent and deposits it with the government. In a TDS mechanism, the recipient of the service is required to deduct the tax and deposit it with the government. The service provider gets the credit for the amount deducted on the basis of the certificate issued by the deductor. Under the reverse charge mechanism, the service recipient is liable to make the payment and gets credit for the amount paid.