Previously there was no clarrification on this matter by the income tax department so all were deducting TDS inclusive of Service tax, as because of this there was a problem as we were deducing tax on tax only so it was not a correct concept.
So Income Tax department has made a circular "Circular 01/2014 dated 13.01.2014 - TDS NOT TO BE DEDUCTED ON SERVICE TAX COMPONENT SHOWN SEPARATELY" which clearly explain that the TDS to be deducted exclusive of service tax.
For reference see the circular Circular 01/2014 dated 13.01.2014.
