TDS whether covered in Section 43B

Dear Members,

As per Section 43B, any sum payable by way of  TAX, duty....... is allowed as deduction on payment basis..... My query in this regard is whether Tax deducted at source by the deductor will also be covered under Section 43B.   If covered, whether tax deductions which are either not remitted during the previous year or before the due date for filing the returns are to be disallowed U/s.43B. 

Please clarify this with reference to payments which are already subjected to disallowance vide Section 40(a)(i) and 40(a)(ia).

Regards

Dharmaraju

Sec 43B allows deduction for taxes, cess, duty etc on payment basis. However this tax does NOT cover income tax as income tax is specifically  disallowed by sec 40(a)(ii). Therefore TDS will also be automatically disallowed irrespective of the date of deduction or remittance

Dear Dharmaraju,

TDS is not covered by Sec 43B, since 43B deals with the allowability/dosallowability of "Expense" & TDS is not an expense in itself for the deductor. It is just a mode of discharging the consideration.

TDS is not something, which is debited to Profit & Loss Account and opening words of Sec 43B says -

"Notwithstanding anything contained in any other provision of this Act a deduction otherwise allowable under this Act in respect of.........."

Dear Amir,

The expense would have been accounted at full value and the tax deducted therefrom will be credited separately. As expense debited will be Gross, TDS element is also included in it. So the deduction is claimed though not separately. 

Hi bro.,

I was waiting for it......

Ok let me try to convince you from a different angle -

Sec 40(a) is a specific section that talks about the allowability of Expenses on which TDS is required to be deducted.

Sec 43B is general when it comes to allowability of Expenses involving Govt. levy.

Now when specific section has disallowed any expenditure, how can a general section disallow it again?

dear friend the above replies are correct.since income tax is not a deductible expenditure then how can u treat allowability of tds.tds itself is a part of income tax.

Hi Tarun,

U r mixing the two things, Income Tax & TDS.

TDS is not an income tax for the deductor.

I agree with you Amir and that is the reason why I had specifically mentioned in my query itself. But in case of TDS on Salary, Section 40(a) do not provide for disallowance. In that case, if TDS is not remitted within due date, can it be disallowed U/s.43B?

Bro for me  TDS is not covered by Sec 43B.

The very reason for the above is TDS is not an expenditure in itself and as such something which can not be claimed can never be allowed/disallowed.

Further I feel, to say that TDS on Salary is not covered by Sec 40 makes its way to Sec 43B is not a good interpretation since if law had to control TDS payments on salary then it would have done that in Sec 40  itself, like in other cases. Infact try to see the flip side of it, the very absence of TDS on salary from Sec 40 makes it clear that it is no way regulated by means of disallowances due to non payment or delayed payment......isnt???

Sorry for the delay....

1.  TDS is claimed as deduction as expenditure debited to P & L will be gross inclusive of TDS and hence if it is not paid it is bound to have claimed without making payment.

2.  Section 40 speaks of disallowance of entire expenditure if the Tax is not paid, whereas 43B will be applicable to the extent of tax only.

3.  The intention of Sec 43B is to seek early and prompt payment of all statutory dues whether it is in the form of TDS or any other taxes.

Section 43B states that

43B. Notwithstanding anything contained in any other provision of this Acta deduction otherwise allowable under this Act in respect of—

        any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or]

Reading of the above provision makes it clear that all forms of taxes payable where such sums are allowed as deduction are to be allowed only payment basis. Since TDS is claimed as deduction, I believe the same falls within the purview of 43B.

Amir Bhai, ab tho man javo.