Income tax on pymt recd after mar 31

CMA Poornima Madhava (CMA) (13097 Points)
Replied 25 July 2015

Ur query is not clear to me. However, since such credits already appear in 26AS for FY15 (i.e. the transaction date), u need to show such income for FY15 only. Date of booking is nothing but the date of filing TDS return which is always done after the quarter is over.

Paul Kumar (Others) (27 Points)
Replied 25 July 2015

@ Poornima:

The payment was recd. only in April (after FY 2014-15), should I now pay tax + penalty for this amount, as they have shown transaction date as 31st March 2015? Or, can I account for this payment in the coming FY 2015-16?

When you say FY15 is it 2014-15 or 2015-16? Sorry, I am not a finance person.

Thanks in advance.

Rajagopalakrishnan R (PARTNER) (1417 Points)
Replied 25 July 2015

What is the nature of your business/Profession. If you are following the cash method of accounting ( I.e. accounting for receipts and expenses when actual amount is being received/paid out rather than when actual amount is due/incurred) then you have an issue here. You will be showing the inocme in the fy 2015-16 but your customer would have shown it as paid to you in 2014-15 and TDS also would be in that year. A common solution for this problem would be as follows.

Consider the TDS amount as income of FY 2014-15 and the amount of cheque as income of FY 2015-16. ( This has sanction of Section 198 of the IT Act)

Claim the TDS for the FY 2014-15 i.e. for AY 2015-16 which is due to be filed before Aug 31.

Make alternate arrangement to pay the tax for the income actually received ( Sicne TDS is already claimed in FY 14-15).

But if you are following the Mercantile system ofaccounting ( Opposite of Cash system, i.e accounting all income and expenses when the right/liability is incurred rather than when received/paid), then you need to include the above sums for FY 2014-15 itself. if any additional tax liability arises, you can pay before filing the return. No penalty would be attracted. But interest would be attracted if the amount exceeds 10000/-

Paul Kumar (Others) (27 Points)
Replied 25 July 2015

@ Rajagopalan & Partner: I am an individual consultant. What you have stated in the first part applies to me: I pay tax on amount received by me, after it has been recd. So how do I make alternate arrangement to pay the tax. Could you explain. Sorry for troubling you.

Thanks in advance.