Tds threshold limit

This query is : Resolved

CA Mohan Jain (Querist)
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08 February 2013 Dear Sir,
You would agree that, the annual limit for non deduction of TDS under Section 194C is Rs.75,000/-.

Now, Consider am Example:
We paid Rs.74500 to a person in April,2012 and were almost sure that no further transaction would be there with this party.

But during March,2013 we agian needed to pay Rs.600/- to the same party.

Now total amount exceeds Rs.75000. and there is a libility to deduct TDS.

But the recipient would not agree for deduction.

What should the company do in such cases??
The auditor are insisiting to report this issue?

Further, the AO would also disallow these expenses??

Please suggest.

Regards

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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08 February 2013 You will have to deduct tax at source else,

1. The expenses would be disallowed in computing income.
2. Penalty for non deduction of tax at source would also be levied.

CA Mohan Jain

CA Mohan Jain (Querist)
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08 February 2013 @Mr. Lakhotia,

But Sir the Party is not ready. Reason being the amount pending payale is just Rs.600/-, where as the TDS liability is Rs.1500/-.

Should we pay the money out of our own pocket??

Regards

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CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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08 February 2013 The practice generally followed is to deduct tax and debit the party's account.

Setoff the same from payments you would be making in the coming year.

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CA Mohan Jain

CA Mohan Jain (Querist)
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08 February 2013 Ok... Thanks For your Advise.

Regards

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Hemant Kumar

Hemant Kumar (Expert)
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08 February 2013 Threshold limit is 75000 agreegate in a year.
you have paid 74500 in April 2012. and you will have to pay 600/- in March 2013. Then you must to deduct TDS. if you not deducted tds then expenditure will be disallowed.

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CA Mohan Jain

CA Mohan Jain (Querist)
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08 February 2013 @Lakhotia Sir,

What if the company is not expecting to make any further payment to this party in future?

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