Tds on month end provision

This query is : Resolved

Prashant (Querist)
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19 February 2016 Every month while closing our books for any calendar month we accrue the provisions and are reversed in the next month.
For example, The Provision is accrued on 30-Nov-15 for Nov 15 close and is reversed in Dec 15 not necessarily on 1st of Dec 15 but may be at the month end
In the above case, do we need to deduct the TDS on the provision for expense

We do deduct TDS on the provision at the year end (March) but not on monthly provision which are reversed in the next month within the financial year

Please guide us on the applicability of TDS provisioning

Ganeshbabu K

Ganeshbabu K (Expert)
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19 February 2016 NO TDS ON MONTHLY PROVISIONS WHICH ARE BOOKED AND REVERSED, AMOUNT CREDITED TO THESE ACCOUNTS ARE CLOSED MONTHLY ,HENCE THEY CANNOT SUBJECT TO TDS.

1)These book entries will be reversed and not final entries.
2)And these book entries are mere approximation of expenditure to be incurred, these book entries passed only for management information purpose to know profit/loss monthly
3)So, i can say these type of mere book entries, being notional and interim nature cannot make assesse to deduct tax at source. These are just entries temporary in nature and reversed before completion of relevant financial year.

SO,NO TDS APPLICABLE ON MONTH END PROVISIONS.

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Prashant

Prashant (Querist)
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22 February 2016 Thanks for the clarification. Is it backed up by any Supreme Court Decision / CBDT Circular etc

Ganeshbabu K

Ganeshbabu K (Expert)
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22 February 2016 Yes there are some case studies and few cases contradicting with other case laws ,,
It will be okay, you can rely as above,

and you may search in google you will get some case laws,

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