22 February 2017
sir, pl suggest a solution- A client is doctor follows cash system. in fy 14-15 accrues fees rs.25 lakh as per form 26as and deducted tds of rs.2.5 lakh thereon. but actualy recd. only 8 lakh in fy 14-15 & mostly remaining in fy 15-16. Then how his income calculate for tax purpose. If in fy takes income rs.8 + tds 2.5 = 10.5 lakh then there is refund and in fy 15-16 various amounts recd for LY as well as current period, hence there is much tax payable. How compute correct income and taxability. Thanks.
Section 199 does not permit claim of TDS unless corresponding income is offered to tax during the current year. Please note that TDS credit to the extent available on Form 26AS is as good as received in cash. Therefore as you mentioned, offer Rs 10.5 Lakhs as income in Year 1 and offer balance in next year. This should work as it is not violating the law and also practical.
Ending up in paying higher tax in Year 2 is not a issue to be worried about too much, as nowadays refunds are processed lightening fast and people are getting refunds in a week of filing tax returns. You may use the refund money for payment of taxes of next year (by paying advance tax). Hope the above clarifies.
CAclubindia
