TDS
This query is : Resolved
12 June 2010
A Trust follows cash basis of accounting. It has given its building for rent to a Company. Company credited to Trust account Rs. 21000 as rent payable on 31.03.2010 and made TDS 2100. Since the Trust follows cash basis of accounting, it will not account rent Rs. 21000. How to account for TDS of Rs. 2100? Please explain in detail?
15 June 2010
Since the trust is maintaining cash basis books you can account the TDS on the cash basis and the same can be claim the year in which Income is accounted
15 June 2010
Thanks Ramesh for your reply.
I am also of the same opinion. However, Since TDS certificate is issued for the year 2009-10, TDS amount to be claimed this year only & Rent will be accounted in the year of receipt.
I am also of the same opinion. However, Since TDS certificate is issued for the year 2009-10, TDS amount to be claimed this year only & Rent will be accounted in the year of receipt.
27 July 2025
Great question! Here's a detailed explanation for your scenario where the Trust follows **cash basis accounting**:
---
### Situation Recap:
* Trust gives building on rent.
* Company **credited Rs. 21,000 as rent payable on 31.03.2010** and deducted TDS Rs. 2,100.
* Trust follows **cash basis**, so it records income **only when cash is received**, not when credited.
* TDS certificate is issued for FY 2009-10 (i.e., corresponding to the credit date).
---
### How to account for rent and TDS in cash basis:
#### 1. **Accounting for Rent:**
* Since the Trust uses **cash basis**, rent income will be recorded **only when actually received**.
* So rent of Rs. 21,000 will be recorded in the year when the rent amount is actually paid/received by the Trust, not in FY 2009-10 if payment is later.
#### 2. **Accounting for TDS:**
* The TDS certificate is issued for FY 2009-10 because the rent was credited in that year.
* However, since the Trust recognizes income only on receipt, it will **claim the TDS credit in the year when rent is actually received** (matching income recognition).
* That means, the TDS amount (Rs. 2,100) will be accounted as tax credit **in the year rent is received**, even though certificate is for FY 09-10.
---
### Practical Implications:
* When filing income tax return for the year rent is received, the Trust can **claim TDS credit for Rs. 2,100** against tax liability.
* The TDS certificate being issued in FY 09-10 is a formal record for the payer and tax authorities, but for the Trust, **tax credit is recognized only in the year it actually receives rent income** (cash basis principle).
---
### Summary:
| Aspect | Trust’s accounting (Cash Basis) |
| --------------- | --------------------------------------------------------------- |
| Rent Income | Recognized on receipt of rent (not when credited) |
| TDS Credit | Claimed in the year rent is received |
| TDS Certificate | Issued for FY 09-10, but used for tax credit in year of receipt |
---
If you want, I can also help with journal entries or tax filing notes for this scenario!
---
### Situation Recap:
* Trust gives building on rent.
* Company **credited Rs. 21,000 as rent payable on 31.03.2010** and deducted TDS Rs. 2,100.
* Trust follows **cash basis**, so it records income **only when cash is received**, not when credited.
* TDS certificate is issued for FY 2009-10 (i.e., corresponding to the credit date).
---
### How to account for rent and TDS in cash basis:
#### 1. **Accounting for Rent:**
* Since the Trust uses **cash basis**, rent income will be recorded **only when actually received**.
* So rent of Rs. 21,000 will be recorded in the year when the rent amount is actually paid/received by the Trust, not in FY 2009-10 if payment is later.
#### 2. **Accounting for TDS:**
* The TDS certificate is issued for FY 2009-10 because the rent was credited in that year.
* However, since the Trust recognizes income only on receipt, it will **claim the TDS credit in the year when rent is actually received** (matching income recognition).
* That means, the TDS amount (Rs. 2,100) will be accounted as tax credit **in the year rent is received**, even though certificate is for FY 09-10.
---
### Practical Implications:
* When filing income tax return for the year rent is received, the Trust can **claim TDS credit for Rs. 2,100** against tax liability.
* The TDS certificate being issued in FY 09-10 is a formal record for the payer and tax authorities, but for the Trust, **tax credit is recognized only in the year it actually receives rent income** (cash basis principle).
---
### Summary:
| Aspect | Trust’s accounting (Cash Basis) |
| --------------- | --------------------------------------------------------------- |
| Rent Income | Recognized on receipt of rent (not when credited) |
| TDS Credit | Claimed in the year rent is received |
| TDS Certificate | Issued for FY 09-10, but used for tax credit in year of receipt |
---
If you want, I can also help with journal entries or tax filing notes for this scenario!
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