TDS on Credit Note & Debit Note

This query is : Resolved

Quick Summary

TDS is not applicable on credit or debit notes separately. It should be deducted on net payment. Deducting TDS on full invoice is incorrect if reduced by credit note; excess TDS must be refunded or adjusted.

Sanjay Sharma

Sanjay Sharma (Querist)
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27 May 2023 Dear Experts, I have a query related to TDS, we have raised tax invoice for services to the party for Rs. 1,00,000/- (GST), Party issued a Debit Note of Rs. 40,000/- + (GST) against the above Tax Invoice as well as we had also issued Credit Note for the same. Party paid a sum of Rs. 60,800/- to us after deducting TDS @ 10% on Rs. 1,00,000/-. Now party said that we have to deduct TDS on Credit Note i,e. on Rs. 40,000/-.
Should we liable to deduct TDS on the Credit Note issued by us or Debit Note issued by the party?
Thanks in advance

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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27 May 2023 No need for any TDS on credit note.
Party should deduct TDS on the amount paid and not on 1 lac. Party has to refund 4000 of excess TDS deducted.

Sanjay Sharma

Sanjay Sharma (Querist)
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29 May 2023 Thanks Seetharaman Ji

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 May 2023 You are welcome..
...

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