DEDUCTION OF TDS

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This query is : Resolved

Praveen Nigam (Querist)

29 July 2008 if we provide a liability in the books on estimated basis based on the departmental certificate in respect of completion of job (bill is not submitted by the contractors). should we deduct TDS or not? if we do not deduct TDS what will be the fall out.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

29 July 2008 TDS liability arises on recognition of credit in favour of a person which is signified by passing of an entry. If you pass an entry you are recognising and therefore TDS would arise.

Praveen Nigam

Praveen Nigam (Querist)

29 July 2008 when we do not have a bill, how can we deduct TDS, because we have to issue TDS certificate to the contractor based on the claim lodged by him.

CA Nallathambi Srinivasan

CA Nallathambi Srinivasan (Expert)

29 July 2008 TDS should be deducted when the payment is made or expenses is accounted/occurred whichever is earlier. Hence, whenever you have accounted the expenses and credit the party, then TDS should be deducted it is not depending upon whether you have made the payment or not.

CA Nallathambi Srinivasan

CA Nallathambi Srinivasan (Expert)

29 July 2008 But expenses accounted in the year end, you can remit the TDS till May of succeeding year. If suppose the expenses are not incurred you can reverse the Expense in the respective financial year. For remaining period, i.e Expenses accounted in Apr to Feb, you should deduct TDS, the expenses incurred or payment made on whichever is earlier.

I think this will clarify your doubts.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

31 July 2008 Yes, what Mr.Nallathambi has stated is the correct position of law.

Praveen Nigam

Praveen Nigam (Querist)

31 July 2008 Thanx,

is there any case law in support of the opinion given by the experts. we need for our tax audit purpose.