Tds
This query is : Resolved
26 November 2018
Invoice consists of both material and service i.e. installation. Material received but installation was not done. Vendor requested for payment of material value. Installation charges will be paid after installation. In this case, is it required to charge TDS on service i.e. installation charges?
26 November 2018
Yes, TDS should be deducted at service portion ( Installation charges ).
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26 November 2018
Taxable value of material is Rs.19,96,035
Taxable value of service is Rs. 2,13,157
IGST @ 5%
In this case, what is the amount of TDS and TDS under GST?
Taxable value of service is Rs. 2,13,157
IGST @ 5%
In this case, what is the amount of TDS and TDS under GST?
26 November 2018
TDS should be deducted at service portion only, so you can deduct TDS on the taxable value 213157 @ applicable rate.
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26 November 2018
Sir my question is when to deduct TDS i.e. whether at the time of raise of invoice or at the time of payment? For example invoice raised on 15.10.2018 for installation charges but installation and payment will be done in December, 2018.
26 November 2018
TDS to be deducted on the date whichever is earlier on below.
01. Invoice received date ( or ) 02. Payment date whichever is earlier.
in your case, TDS should be deducted in the month of Oct-2018 and to be deposited on the due date ( 07/11/2018 ).
But most of the time we have receive the invoices after the due dates ( late submission of invoice ). In this case you dont worry about it, You should treat the invoice accounting date is a invoice received date hence should deduct the TDS at the time of invoice booking and remitting the TDS on next month on or before 7th.
Hope you can understand.
01. Invoice received date ( or ) 02. Payment date whichever is earlier.
in your case, TDS should be deducted in the month of Oct-2018 and to be deposited on the due date ( 07/11/2018 ).
But most of the time we have receive the invoices after the due dates ( late submission of invoice ). In this case you dont worry about it, You should treat the invoice accounting date is a invoice received date hence should deduct the TDS at the time of invoice booking and remitting the TDS on next month on or before 7th.
Hope you can understand.
26 November 2018
Thank you so much Sir
19 February 2019
Dear Sir,
For the service payment, Invoice is raised on the name of "X" but payment made to "Y" and TDS also deducted. Is it justifiable? otherwise, what are the consequences in this case?
For the service payment, Invoice is raised on the name of "X" but payment made to "Y" and TDS also deducted. Is it justifiable? otherwise, what are the consequences in this case?
27 July 2025
Great set of questions! Let me clarify everything step-by-step:
---
### 1. **TDS on Service Portion Only**
Yes, you are correct — **TDS should be deducted only on the service part**, i.e., installation charges (₹2,13,157), *not* on the material (₹19,96,035).
---
### 2. **TDS Deduction Timing: Invoice Date vs Payment Date**
According to Income Tax Rules (Section 194C/194J etc.):
* **TDS should be deducted at the earlier of:**
* Date of Invoice received; or
* Date of payment
In your example, invoice is dated 15.10.2018 but payment is made in December 2018. So, you **should deduct TDS in October 2018**, even if payment is done later.
---
### 3. **TDS Deduction When Invoice is Received Late**
If invoice is received late (after due date for TDS deposit), then you should treat the **invoice accounting date as invoice receipt date** and deduct TDS at that point. Ideally, deposit TDS on or before 7th of next month after invoice received.
---
### 4. **TDS on Payment Made to a Different Person (X vs Y)**
* Invoice raised in name of "X"
* Payment made to "Y"
* TDS deducted by you on "Y"
---
**Is it Justifiable?**
* **TDS deduction is required on the actual payee of the income**, i.e., the person to whom payment is made.
* So, deducting TDS on "Y" when payment is made to Y is correct.
* But TDS return and Form 26AS should also reflect TDS credited to "Y".
---
**Consequences of Mismatch:**
* If TDS deducted on "Y" but invoice is in name of "X", mismatch will occur in TDS returns.
* It may create confusion or issues in TDS credit to the deductee.
* The deductor should ideally get a **declaration from both parties** or adjust invoices/payment accordingly.
* Income Tax Department may raise query or notice if mismatch is found.
* To avoid penalties or disallowance, it's better to align invoice and payment party.
---
### Summary:
| Query | Answer |
| ------------------------------- | ---------------------------------------------------- |
| TDS on material vs service | Deduct TDS only on service portion |
| When to deduct TDS | Earlier of invoice date or payment date |
| Invoice received late | Deduct on invoice accounting date |
| Payment made to different party | Deduct TDS on actual payee (party receiving payment) |
---
If you want, I can also help with **TDS return filing tips** or **sample entries** for this situation!
---
### 1. **TDS on Service Portion Only**
Yes, you are correct — **TDS should be deducted only on the service part**, i.e., installation charges (₹2,13,157), *not* on the material (₹19,96,035).
---
### 2. **TDS Deduction Timing: Invoice Date vs Payment Date**
According to Income Tax Rules (Section 194C/194J etc.):
* **TDS should be deducted at the earlier of:**
* Date of Invoice received; or
* Date of payment
In your example, invoice is dated 15.10.2018 but payment is made in December 2018. So, you **should deduct TDS in October 2018**, even if payment is done later.
---
### 3. **TDS Deduction When Invoice is Received Late**
If invoice is received late (after due date for TDS deposit), then you should treat the **invoice accounting date as invoice receipt date** and deduct TDS at that point. Ideally, deposit TDS on or before 7th of next month after invoice received.
---
### 4. **TDS on Payment Made to a Different Person (X vs Y)**
* Invoice raised in name of "X"
* Payment made to "Y"
* TDS deducted by you on "Y"
---
**Is it Justifiable?**
* **TDS deduction is required on the actual payee of the income**, i.e., the person to whom payment is made.
* So, deducting TDS on "Y" when payment is made to Y is correct.
* But TDS return and Form 26AS should also reflect TDS credited to "Y".
---
**Consequences of Mismatch:**
* If TDS deducted on "Y" but invoice is in name of "X", mismatch will occur in TDS returns.
* It may create confusion or issues in TDS credit to the deductee.
* The deductor should ideally get a **declaration from both parties** or adjust invoices/payment accordingly.
* Income Tax Department may raise query or notice if mismatch is found.
* To avoid penalties or disallowance, it's better to align invoice and payment party.
---
### Summary:
| Query | Answer |
| ------------------------------- | ---------------------------------------------------- |
| TDS on material vs service | Deduct TDS only on service portion |
| When to deduct TDS | Earlier of invoice date or payment date |
| Invoice received late | Deduct on invoice accounting date |
| Payment made to different party | Deduct TDS on actual payee (party receiving payment) |
---
If you want, I can also help with **TDS return filing tips** or **sample entries** for this situation!
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