I need help - plz suggest

This query is : Resolved

RITIKA (Querist)
Follow

29 February 2012 The firm with which I am working is Advertising and web designing company. The work orders are prepared for Rs.4,25,000/- for Feb & march 2012 on which advances of 50% are received in feb. For the advances received we have given our clients the proforma Invoice on which TDS is deducted but work will be completed after march 2012 and then the invoice will be made. since proper invoice is not prepared, it can't be accounted as service provided/sales in the P&L till march and will come in april 2012 for next year then what about TDS deducted on Advances? How will it be accounted? Can we carry forward the TDS? Will sales in next year increase with only 50% TDS credit?

Krishna Mohan

Krishna Mohan (Expert)
Follow

29 February 2012 This is a peculiar situation in many cases. Recognition of income should be as per regular accounting policies followed by the firm. We cannot change this merely for TDS purpose. TDS deduction on advance by the client is as per IT Act. In this scenario, you can still show the advance from the client as current liability and claim the TDS deducted as refund or let it be adjusted in other tax payables. In next year, recognize entire invoice as your income and as you have already claimed refund during last year, you have to pay this in next year.

Message likes : 1 times

Ravi Jhamb

Ravi Jhamb (Expert)
Follow

29 February 2012 Your firm is not newly establish. you will treat advance in current liabilities and deduct tds is adjusted your company income.
As per IT Act, Income Due or received whichever is earlier.

RITIKA

RITIKA (Querist)
Follow

29 February 2012 Thanks for the reply.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now