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Sec 194C - chargeability of TDS

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Querist : Anonymous

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Querist : Anonymous (Querist)
08 September 2010 In our company in case of contractor payments , Service sheet is prepared by Engineers through SAP system. System genarates accounting entry debit to " expenditure" a/c and Credit to " GR/IR (clearing a/c)".

When Finance deptt. actually accept the liability System genrate another entry Debit to "GR/IR (clearing a/c)" and credit to Contractor a/c.

My query is whether TDS is to be deducted at the time of passing Ist entry or IInd entry.
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CA Shailesh Kumar Bhagat

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CA Shailesh Kumar Bhagat (Expert)
08 September 2010 As per sec 194 C tax is to be deducted either at the time of xredit of such sum to the account of the payee or at the time of payment, which ever is earlier.

I understand , in the second entry amount is credited to payee( contractor's) account, so TDS is arises at the time of passing subsequent entry.
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CMA Ramesh Krishnan

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CMA Ramesh Krishnan (Expert)
08 September 2010 yes. Act is telling the Credit or Payment which ever is earlier, so TDS liability will arise on 2nd entry



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Bhaskaran Chackrapani Warrier

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Bhaskaran Chackrapani Warrier (Expert)
08 September 2010 By virtue of the provisions in section 194C(2), tax is to be deducted at the time of 1st entry and not at the time of 2nd entry.
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mohinder kansal

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mohinder kansal (Expert)
08 September 2010 agree with B Ckackrapni ji

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