TDS deduction

This query is : Resolved

M.Ashok kumar Reddy (Querist)
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14 March 2017 I am a an account in educational institutions, In Fy 2015-16 we had not deducted TDS on one transaction can we deduct in this Fy 2106-17 and if we deduct what is the consequences?

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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14 March 2017 Yes you can deduct TDS for FY 2015-16 in year 2016-17.

Only consequence is that if transaction is within India, 30% of expense on whom TDS is not deducted is disallowed in year in which transaction takes place, and allowed in year in which TDS is paid

CA Gopal Somani

CA Gopal Somani (Expert)
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14 March 2017 Agree with Mr Shubhanshu.

A deductor would face the following consequences if he fails to deduct TDS or after deducting the same fails to deposit it to the credit of Central Government’s account:-
a) Disallowance of expenditure

As per section 40(a)(i) of the Income-tax Act, any sum (other than salary) payable outside India or to a non-resident, which is chargeable to tax in India in the hands of the recipient, shall not be allowed to be deducted if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.
However, if tax is deducted or deposited in subsequent year, as the case may be, the expenditure shall be allowed as deduction in that year.

Similarly, as per section 40(a)(ia), any sum payable to a resident, which is subject to deduction of tax at source, would attract 30% disallowance if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.
However, where in respect of any such sum, tax is deducted or deposited in subsequent year, as the case may be, the expenditure so disallowed shall be allowed as deduction in that year.

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