11 April 2011
You kind attention is invited to the amendmentmade vide NotificationNo. 41/2010 dated 31 May 2010 and the notable features of theamended TDS Rules which are applicable to the month of March and to theQuartered ended 31st March 2011 are as under: (a) Time limit for deposit of TDS for the entiremonth of March will be 30th April instead of two separate time limits viz. 7thApril for TDS up to 30th March and 31st May for TDS as of 31st March. (b) Non-salary TDS certificates will need to beissued on quarterly basis (instead of monthly or annual basis) (c) Time limit for filing quarterly TDS statementfor last quarter of FY is advanced to 15th May instead of 15th June. As can be seen from the above that the time limitfor deposit of TDS deducted during the month March 2011 (i.e. on payment basisOR on provision entries made at the yearend) shall be April 30th2011 as against the due date of April 7th and May 31st. Please note that failure to deduct TDS attract(i) disallowance of expenditure u/s. 40(a)(ia) on which TDS not made whilecomputing income under normal provisions; (ii) Levy of interest under section201 (IA) at the rate of One and Half Percent or part of the month for theperiod of delay in deduction and/or deposit of TDS (iii) levy of Penalty undersection 271C for failure to deduct TDS. Further, please note that the expenditurerelating to work/services availed during the period from April 1st2010 to Mach 31st 2011 should only be accounted in FY 2010-11 and inthe event any of such expenditure are accounted in the accounts of theimmediately succeeding year then the same will qualify as “prior periodexpenses” requiring reporting in annual accounts as well as in the Tax AuditReport. The amount of prior period expenses will not be allowed asdeduction under Income tax Act in the succeeding year(s). In view of the above, Finance and Accounts teamof each sector/company is advised to instruct each and every department intheir respective company to obtain bills for the work/services rendered duringthe period from April 1st 2010 to March 31st 2011 from thevendor before April 20th and also to provide a complete details ofthe expenditure under the respective expenses heads based on the service/workorder and the work done by the party and for which invoice/bill is not yetraised so that necessary provision with party name and amount can be made inthe accounts and TDS thereon can be discharged before the due date of April30th. Please make sure that to the extent possible, no ad-hoc provision forexpenses is to be made at the yearend since it will be difficult to makecompliance of TDS provisions with respect o such ad-hoc provision as the amountis not ascertain/accurate, party may not be known, etc. etc.
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