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Tds deduction during the first year of tax audit in case of an individual

ANNUANN (ARTICLE STUDENT) (4 Points)

05 August 2016

Whether TDS is required to be deducted by an individual during the first year of tax Audit

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13 Replies

Shreesh Kumar (CA Final) (122 Points)
Replied 05 August 2016

Yes, If you got TAN

Mayur (Partner @ Mayur Thakkar & Co.) (3111 Points)
Replied 05 August 2016

even if he does not have Tan if he enters into transaction as listed u/s 192 to 194, he has to deduct TDS.

Kartik (CMA) (138 Points)
Replied 05 August 2016

I also have same query. Our sales cross 1st time 1cr turnover in feb 2016 and we do not have TAN number hence not deducted TDS on any payment during FY 15-16. now all such expenses will get disallowed??? please advice

NARESH D.SHETTY (PARTNER) (21 Points)
Replied 05 August 2016

It won't be disallowed. You should start deducting from the next year.

Mayur (Partner @ Mayur Thakkar & Co.) (3111 Points)
Replied 05 August 2016

@ Naresh, Why it wont be disallowed? Can you please tell to enhance my knowledge. Because I am under impression that if tax is deductible but not deducted then the expense will be disalloed.

Thankyou.

Deepak Gupta (CA Student) (15922 Points)
Replied 05 August 2016

First year of Tax Audit for existing business:
An individual is exempted from deducting TDS under section 194A/C/H/I/J, if tax audit was not applicable during the F.Y. immediately preceding the F.Y. in which income is paid/credited.

First year of Tax Audit for new business:
Tax audit was not applicable during the F.Y. immediately preceding the F.Y. in which income is paid/credited, as the business was not in existence. Hence, liability to deduct TDS in case of aforesaid sections does not arise even if the turnover crosses the threshold specified u/s 44AB during the first year of business.

Reference:
Proviso to Sec. 194A(1)
Explanation(i)(l)(B) to Sec. 194C(7)
Second Proviso to Sec. 194H
Second Proviso to Sec. 194I
Second Proviso to Sec. 194J(1)

4 Like

Shweta (Business Manager) (39 Points)
Replied 26 January 2018

Can somebody please suggest-

If any Proprietor (for his Proprietorship firm) has Auditing (for the first time) in the FY 2016-17.

Then, is it Mandatory to take TDS registration this FY 2017-18 on the basis of this factor (Auditing) alone.

CA Devika K ACA., (Chartered Accountant) (32 Points)
Replied 03 August 2018

thank u

it was a usefull

lalitha (article student) (22 Points)
Replied 17 November 2018

Please provide , non-compliance of TDS provisions for the first year of audit comes under which section

Puja Sharma (CA) (433 Points)
Replied 17 November 2018

It is not mandatory for the proprietorship business to take TDS registration because he was audited last year.

But, the next year if it incurs any such expenditure on which TDS is to be deducted then you will need TDS Reg.

So, it is better to get the TDS registration done in advance.

Puja Sharma (CA) (433 Points)
Replied 17 November 2018

The following provisions contain exemptions from TDS deduction for individual or a Hindu undivided family if there accounts were not audited in the previous financial year:

1. Proviso to section 194A(1) reads as under:

"Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section."

2. Explanation mentioned in Section 194C defines specified person which includes:

any person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, if such person,—

(A) does not fall under any of the preceding sub-clauses; and

(B) is liable to audit of accounts under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the contractor"

3. Second Proviso to section 194J reads as under:

"Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum by way of fees for professional services or technical services is credited or paid, shall be liable to deduct income-tax under this section"

4. Second Proviso to section 194I reads as under:

"Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid, shall be liable to deduct income-tax under this section."

5. Second Proviso to section 194H reads as under"

"Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such commission or brokerage is credited or paid, shall be liable to deduct income-tax under this section"

1 Like

Saransh loya (4 Points)
Replied 16 July 2022

Hello friend has done turnover of more then 1 cr from last 2 years but he is showing income under 44Ad. But this year he has turnover of more 1.5 cr and he has to 1st time audit as his profit margin is less .

But during that year he has not deducted Tds.

So plz advice is it ok.

Or from next year he has to deduct the tds and not necessary for the 1st year of audit