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TDS Calculation

Mohan (Accounts Mgr) (209 Points)

30 March 2010

Hi, we paid advances to Rs.20,000 and Rs.30,000 /- to a company before 30.09.2009 by deducting TDS at 1.133% respectively i.e., Rs.227/- and Rs.340/-. In the month of December we prepared the sub-contract bill arrived for Rs.1,00,000/-. You are aware the TDS after october is 2% on bill. My question is TDS on Rs.1,00,000/- is Rs.2,000/-. Kindly tell me the TDS liability is (2000-227-340 = 1434/-) or My TDS liability is (100000-20000-30000 = 50,000 * 2% = 1000/-) for remittance. In simply my liability is either Rs.1434/- or Rs.1000/-. Please clarify.

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10 Replies

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 30 March 2010

Your Liability would be Rs. 1434/-.

Look at below.

Total Payment Made as advance Rs. 50000 Tds deduct Rs.547/-

Bill raised. Rs. 100000/-. after TDS deuction @ 2% of Rs. 2000, net remittance would br Rs. 98000/-.

as Rs. 547 has already deducted by you, balance tax liability will be Rs. 2000- Rs. 547= Rs. 1433.

Regards,

Ratan

ABHINAV SURELIA ( CA & CS) (92 Points)
Replied 30 March 2010

Hi mohan,

According to me the T.D.S. liabilty should come to Rs.1000.

You can't do the calculation as (2000-227-334), because it is considering the liability on the whole amount of Rs.100000 first and then u are deducting the earlier t.d.s. paid. ( and i think it is not practically correct)

CA KHAN AURANGZAIB (ERP FINANCIAL CONSULTANT) (85 Points)
Replied 30 March 2010

TDS will be deducted on only remainng amount i.e on Rs 50000/-. hence tds will be 1000 (50000*2%)

Kaushik Vankadkar (Service) (350 Points)
Replied 30 March 2010

Ratan is right, Rs.1433/- should be the liability

Rs. 547/- is already deducted.

anshul (ca ) (40 Points)
Replied 30 March 2010

Date of invoice does not signifies actual date of provision of service, anyways in your case, since you received the invoice in the month of december ( assuming that services you recieved is for the month of december), you have to deduct TDS as per the provision that is @ 2 % on whole amount 100,000 -/ and then subtract what you have already deducted.

Mohan (Accounts Mgr) (209 Points)
Replied 30 March 2010

hi thnx for you replies, however i agreed with the Mr.Abhinav, bcoz we simply apply the provisions of TDS time to time only. for instance i paid advance Rs.80,000/- before september 2009 @ 1.133% comes to Rs.906/-, whereas in the month of december the invoice value Rs.90,000/- the applicable tDS @ 1% comes to 900/-. We can not refund of 6/- from the party. Hence we have to deduct the advance amount from the bill not advance tds from the tds amount.

KADAM BANSAL (ARTICLE) (24 Points)
Replied 31 March 2010

i am completely satisfied with Ratans answer. As your bill is raised in December you have to deduct tax @ 2% on whole Rs.1,00,000/- that comes to Rs. 2000/- and you have already deposited Rs.567/- (227+340) so your net liability is Rs.1433 (2000+567).

anshul bafna (student) (522 Points)
Replied 31 March 2010

CHECK LATEST NOTES AND AMENDMENTS FOR CA FINAL

/forum/ca-final-may-2010-amendments-and-notes-for-all-subjects-75890.asp

Mohan (Accounts Mgr) (209 Points)
Replied 31 March 2010

Still i agree with CA Khan and Abhinav and accordingly my TDS liability is Rs.1000/-, as the provisions of 194C amount paid or credited which ever is ealier, then the applicable TDS rates to be follow, hence my bill proforma is..... Gross Bill Value (-) Advance Amount = Net Bill (100000-50000 = 50000) and TDS on Balance 50,000/- @ 2% = 1000/-. Further i will issue Form-16A to the Party 227+340+1000=1567/- only. Anyway thnx to all for nice discussion.

Nicky (Chartered Accountant) (245 Points)
Replied 03 April 2010

I would work it as under:

a) TDS is to be deducted on due or payment basis which ever is earlier so in the give case you have deducted tax i.e. Rs. 567/- (Some people have mentioned it as Rs. 547/-)

b) On balance 50,000/- you deduct @ 2% i.e. Rs. 1,000/-

c) So total would be Rs. 1,567/-