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Tds under section 194h

Sudhir (Executive) (25 Points)

24 June 2016

Since TDS rate has changed for Commission from 10 to 5%, if i receive an invoice for last year in Jun, which TDS Rate should be applied??

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5 Replies

Shishir Nayak ((Expert)) (369 Points)
Replied 24 June 2016

As this Section says TDS under Section 194H will be deducted at the time of credit of such income to the account of the payee or to any other account. "time of Credit of Income" indicates the current rate should be applied. I request other Eminent expert to add on this.

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 24 June 2016

TDS u/s 194H needs to be deducted at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier.
If the credit is given to the account of payee as well as payment made in June then new rate shall apply

CMA Poornima Madhava (CMA) (13097 Points)
Replied 24 June 2016

But if you account it in this year, then the expense would become prior period expense and entire amount would be disallowed for the purpose of income tax. Hence if you want to avoid this, you need to apply old rates only and also revise the TDS return if already filed.