Tds on contractor
This query is : Resolved
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
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
31 October 2014
please provide the payment date and bill date
27 July 2025
Hi Gurvinder,
Here’s how you should handle the TDS and billing in your situation:
---
### 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.
---
### 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).
---
### 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.
---
### 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 |
---
**Important:** TDS compliance is based on the date of payment/credit, not on the finalization of accounts.
---
If you want, I can help you with the interest calculation sheet or TDS return filing process.
Let me know!
Here’s how you should handle the TDS and billing in your situation:
---
### 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.
---
### 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).
---
### 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.
---
### 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 |
---
**Important:** TDS compliance is based on the date of payment/credit, not on the finalization of accounts.
---
If you want, I can help you with the interest calculation sheet or TDS return filing process.
Let me know!
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