Query on TDS
This query is : Resolved
Pankaj Jhawar
(Querist)
22 June 2010
There was a agreement with a contractor wherein if we fail to make the payment on a specified date we have to make them the delay payment charges @2% per month.
We are now making the payment along with the interest, please guide me whether the same will be booked as interest in my book or as payment to contractor so that correct TDS is deducted on the interest amount. Please reply with reasons
We are now making the payment along with the interest, please guide me whether the same will be booked as interest in my book or as payment to contractor so that correct TDS is deducted on the interest amount. Please reply with reasons
22 June 2010
The penalty amount should be shown seperatly as it is not allowed as expense. IF you club it with interest amount it will not be legal :) though you can do so to avoid tax liability
CMA Ramesh Krishnan
(Expert)
22 June 2010
You need to book as Interest only and Interest payment after deducting the TDS need to make to contractor
22 June 2010
Interest paid to contractor for delay payment should be shown seprately as interst - Other. No TDS will be deducted on this .
Pankaj Jhawar
(Querist)
22 June 2010
Mr. Bansal why TDS on the same will not be deducted?
22 June 2010
TDS will be deducted on Contractual amount regarding sevices. Interst is penal nature which is due to non-payment in time.
Hence TDS will not deducted on it.
Other's experts views are solicited.
Hence TDS will not deducted on it.
Other's experts views are solicited.
Pankaj Jhawar
(Querist)
22 June 2010
Though it is penal but the same is allowed as a deduction in Income Tax but if TDS is not deducted on interest amount the same may be disallowed???
CA Sanat Pyne
(Expert)
22 June 2010
REQUEST SEPERATE BILL FOR INTEREST. OTHERWISE TDS WILL BE DEDUCTED ON HIGHER RATE i,e. 194I OR 194C
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