Tds on provision

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abhishek jain (Querist)
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13 January 2015 KIndly clarify whether TDS is to be deducted on provision of EXpense made during the Year or Not ? If TDS is to be deducted on provision, How it is deposited i.e.against which PAN No. since in this case Vendor and Amount is not ascertainable .

Mohit Singla

Mohit Singla (Expert)
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13 January 2015 Dear Abhishek,
Method 1:
Usually as per industrial Practice Provision are created on the basic of Invoices which are yet to receive.
If you know the Amount, then you can also determine which amount belongs to which party.
And accordingly you can deduct TDS.

Method 2:
The other way just create a provisional entry in the books for the TDS amount and reverse it on next day of the close of the FY or Qtr.
and when actual expense or payment is done
then deduct TDS on the same.

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Rupesh Jain

Rupesh Jain (Expert)
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13 January 2015 you can deposit the tDS on basis of estimated basis and you know the person whom you make payment. then you can deposit the tds.

abhishek jain

abhishek jain (Querist)
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13 January 2015 Thanks Mohit,
I got Method 1 but as per method 2, first we pass Provisional entry for TDS and reverse it,then why should entry for tds should be passed ?

Mohit Singla

Mohit Singla (Expert)
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15 January 2015 The reason for provisional entry of TDS is just for the true and fair view of the Financials.
So that the investors would be able (users of financials) to know that what amount of Statutory dues company is liable to pay.

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