Tds deduction

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Nikhil (Querist)
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13 October 2012 Assume a bill is received on 20th of Sept. and approved for payment on 25th of Sept. is booked on 25th Sept. Also a bill is received on 25th of Sept. approved on 1st Oct. is booked on 1st Oct. now the liability to pay TDS of the bills is in different months even though they belong to the same month.

I on my opinion think that its not the right treatment of TDS. As in this case Bill date will never be of consideration and anyone will be able to book TDS as per their own discretion.

Can someone please elaborate??

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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13 October 2012 Yes, you are correct TDS liability is for different months. Because of TDS should be deduct on the date of payment or credit which is earlier. In your case you credited/paid one bill on 25th September so TDS liability arises on this date for this bill as well as for another bill on 1st October so TDS liability arises on this date for this bill.

OM SAI SRI SAI JAI JAI SAI

Nikhil

Nikhil (Querist)
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14 October 2012 But in this case bill date will never matter. I can provide an entry in the next month for a bill which was of previous month and there will never be any delay payment of TDS as I can manipulate the entries in books...????

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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14 October 2012 Yes, you can change like that. What may be bill date but receipt of bill is another day possible. Assume if the seller is make an invoice or bill on the day of the bill date and he post it or transport to us it takes time i.e minimum 2 days based on the distance etc... and it not necessary the seller post it on the same day. So there is chance to received bill dt:25th September in October.

OM SAI SRI SAI JAI JAI SAI

Nikhil

Nikhil (Querist)
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14 October 2012 Thanks a lot. Can you provide any link to any refernce available online for me to look into for this???

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Sure! Here's the key point on **TDS deduction timing** with references you can check:

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### When to Deduct TDS: Earlier of **Credit or Payment**

* As per the Income Tax Act and CBDT circulars, TDS under sections like 194C, 194J, 194I should be deducted **at the time of payment or at the time of crediting the amount to the payee's account**, whichever is earlier.

* **Bill date alone does not determine the TDS liability date**. If a bill is received in a subsequent month but credited earlier, TDS needs to be deducted based on credit/payment date.

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### Official Reference:

1. **Section 192(1) & 194C Explanation** (similar provisions apply under various TDS sections):
The term "credit" means the time when the amount is entered in books or ledger of account, and "payment" means when actually paid.

2. **CBDT Circular No. 715 dated 18-10-1994** — Clarifies that TDS deduction is to be done on the earlier of payment or credit.

3. **Income Tax Department FAQ:**

* [TDS on Contract Payments](https://www.incometaxindia.gov.in/Pages/faqs/tds-2019-20.aspx) (See Q\&A on timing of TDS deduction)
* [TDS Section-wise FAQ](https://www.incometaxindia.gov.in/Pages/faqs/faq.aspx)

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### Practical takeaway:

* You should record and deduct TDS based on when the payment or credit happens, whichever is earlier.

* If the books are manipulated so that credit/payment date is shifted to next month, technically TDS liability shifts accordingly. However, this must be a genuine transaction date. Artificial manipulation can be questioned during assessment.

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If you want, I can help you draft an official note or mail with these references for your team or auditors. Would you like that?

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