Tds in case of credit note?
This query is : Resolved
17 November 2014
there are many bills of a party and also one credit note.So when grossing up does negative TDS to be taken for credit note, as we will be crediting party for net amount.
17 November 2014
No TDS on purchase and sales so no tds on credit note....
17 November 2014
but credit note is issued for services which are covereded u/s.194c.
17 November 2014
Debit and Credit note are issued only in case of Purchase and Sales.
17 November 2014
IT is WCT.
there is some non fulfillment of services, so party has issued credit note.the question if for TDS.
there is some non fulfillment of services, so party has issued credit note.the question if for TDS.
27 July 2025
Regarding **TDS on Credit Notes** issued for services (like under Section 194C):
* **If the original payment was subject to TDS deduction**, and later a **credit note reduces the amount payable** (due to non-fulfillment or adjustment), then the TDS should also be adjusted accordingly.
* This means you **reduce the TDS amount proportionately** corresponding to the credit note amount.
* In practice, this is done by **adjusting the TDS challan** or by accounting for the reduction in TDS in your TDS return for that quarter.
* However, you **do not deduct "negative TDS"** separately. Instead, the overall TDS liability is reduced.
**Example:**
* Original invoice: ₹1,00,000
* TDS @ 1% = ₹1,000 deducted
* Credit note issued for ₹20,000
* Adjusted amount payable: ₹80,000
* TDS should now be ₹800
* So, you adjust the earlier deducted TDS by ₹200.
---
If the TDS is already deposited, you can either:
* Adjust it in the next quarter’s TDS return by reducing the TDS liability, or
* If the TDS return is already filed, file a correction return.
---
**In summary:**
You **adjust TDS liability on the net amount after considering credit notes**. Negative or refund of TDS is not a separate transaction but part of TDS return adjustment.
---
Would you like help with the exact procedure of adjusting TDS for credit notes in the TDS return?
* **If the original payment was subject to TDS deduction**, and later a **credit note reduces the amount payable** (due to non-fulfillment or adjustment), then the TDS should also be adjusted accordingly.
* This means you **reduce the TDS amount proportionately** corresponding to the credit note amount.
* In practice, this is done by **adjusting the TDS challan** or by accounting for the reduction in TDS in your TDS return for that quarter.
* However, you **do not deduct "negative TDS"** separately. Instead, the overall TDS liability is reduced.
**Example:**
* Original invoice: ₹1,00,000
* TDS @ 1% = ₹1,000 deducted
* Credit note issued for ₹20,000
* Adjusted amount payable: ₹80,000
* TDS should now be ₹800
* So, you adjust the earlier deducted TDS by ₹200.
---
If the TDS is already deposited, you can either:
* Adjust it in the next quarter’s TDS return by reducing the TDS liability, or
* If the TDS return is already filed, file a correction return.
---
**In summary:**
You **adjust TDS liability on the net amount after considering credit notes**. Negative or refund of TDS is not a separate transaction but part of TDS return adjustment.
---
Would you like help with the exact procedure of adjusting TDS for credit notes in the TDS return?
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