Tds on contractor

This query is : Resolved

Gurvinder Singh (Querist)
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30 October 2014 Kind Attn : Dear Sir/Mam

PLS ADV IN THE FOLLOWING:

-OUR CO(PVT LTD) HAS MADE PAYMENT OF VENDOR'S BILL PERTAINING TO F.Y:13-14. AFTER DEDUCTING TDS

-BALANCE SHEET NOT FINALISED FOR F.Y. 13-14

CAN I BOOK THE BILL IN F.Y.13-14, IF YES, NEED TO PAY TDS WITH INTEREST. WHAT IS THE CALCULATION OF INTEREST?

IF THE BALANCE SHEET IS FINALISED FOR F.Y13-14
-CAN I BOOK THE BILL IN F.Y.14-15 AND DEDUCT TDS AS ON DT.

PLS ADV.

THANKS
GURVINDER SINGH

CA Bajrang Jhawar

CA Bajrang Jhawar (Expert)
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31 October 2014 please provide the payment date and bill date

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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27 July 2025 Hi Gurvinder,

Here’s how you should handle the TDS and billing in your situation:

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### 1. **Booking the bill in FY 13-14 (even if balance sheet not finalized)**

* **Yes, you can book the vendor bill in FY 13-14** because the payment relates to that financial year.
* **TDS should have been deducted at the time of payment or credit (whichever is earlier) in FY 13-14** as per Section 194C.
* If TDS was **not deducted on time**, you are liable to:

* **Deduct TDS now immediately.**
* **Pay interest under Section 201(1A)** for late deduction/delay.

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### 2. **Calculation of interest on delayed TDS deduction**

* Interest is charged @ **1% per month or part thereof** on the TDS amount from the date TDS was deductible till the date TDS is actually deducted and deposited.
* Example:
If TDS was deductible on 15.12.2013 but deducted only on 15.03.2014, interest will be charged for 4 months (Dec to Mar).

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### 3. **If balance sheet is finalized for FY 13-14 but TDS was not deducted**

* The expense and liability belong to FY 13-14.
* You **should not postpone the expense to FY 14-15 just to avoid TDS deduction.**
* You **must deduct and deposit TDS for FY 13-14 immediately** and file TDS returns accordingly.

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### Summary:

| Scenario | Booking Expense | Deduction of TDS | Interest on TDS Delay |
| --------------------------------------- | --------------- | ---------------- | --------------------------- |
| Payment made & Bill relates to FY 13-14 | FY 13-14 | Yes, in FY 13-14 | Interest applicable if late |
| Balance sheet finalized or not | FY 13-14 | Deduct TDS ASAP | Interest applicable if late |

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**Important:** TDS compliance is based on the date of payment/credit, not on the finalization of accounts.

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If you want, I can help you with the interest calculation sheet or TDS return filing process.

Let me know!

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