Tds as expense

This query is : Resolved

ashish gupta (Querist)
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19 January 2012
IF a payment has been made before deducting tds but we deduct and deposit TDS later from our pocket.

Now will the tds so deposited be allowed as expense or not ?

E.g. we paid 50000 to a contractor without deducting tds and later we deposit the tds @ 2% from our on pocket. So will this 2 % be allowed as expense?

Please guide.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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19 January 2012 NO, YOU CAN NOT CLAIM EXPENDITURE FOR YOUR FAILURE. IT IS TO BE WRITTEN OFF AGAINST CAPITAL.

THE NATURE OF TDS PAYMENT IS NOT DIFFERENT FROM INCOME-TAX PAYMENT.

Guest

Guest (Expert)

19 January 2012 Ashish,

You can do one thing.

Suppose you deposit Rs. 1000/- as TDS in your case. Then you can show the party of whom you deducted TDS as Debtor for the amount of TDS Deducted i.e. Rs. 1000/- and claim from that party.

There is no need to book any expense or write it off.

As you have already paid Rs. 50000/- to that party and it can also claim Rs. 1000/- as TDS amount in its ITR. So there will be no problem and that party will give you refund of TDS amount.

Take it in another way, u were supposed to pay 49000/- to that party but u made excess payment of RS. 1000/- to it so you can show as debtor. Dnt consider diff of 1000/- due to non deduction of TDS. consider 1000/- as excess payment.

Thanks

Revert for any other clarification.

Message likes : 1 times

ashish gupta

ashish gupta (Querist)
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20 January 2012 Thanks alot. Actually there will not be any other transaction with that party and we will not get any refund from the party.
thats why i was thinking not to debit his account.

Guest

Guest (Expert)

20 January 2012 Yeah, Ashish ji then you dont debit that amount.

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