TDS on Provision for Expenses as on March 31st, 2009
This query is : Resolved
14 April 2009
Hi,
The provision for expenses (on which TDS is applicable) as on March 31st, 2009 amounting to Rs. 1000/ - and the entry passed as :-
Expenses A/c 1000/-
To Outstanding Expenses 1000/-
No TDS was deducted at the time of making provision nor TDS was deposited before May 31st, 2009.
The Actual invoice amounting to Rs. 800/ - was received in July 2009 and tds on the same was deducted and deposited on or before August 7th, 2009 after reversing the provision amounting to Rs. 800/ -.
Secondly, amount of Rs. 200/- was excess provision which is written back.
Following questions have come up: -
1. The TDS amount deducted and deposited on or before August 07th, 2009 and considering tds amount in AY 2010 -11, would it be right approach !
2. The amount written back amounting to Rs. 200/ - provided in FY 0809, is TDS to be deducted on the same.
3. Is the above mentioned approach be the right apporach with respect to tds provison and 40(a)(ia) ?
The provision for expenses (on which TDS is applicable) as on March 31st, 2009 amounting to Rs. 1000/ - and the entry passed as :-
Expenses A/c 1000/-
To Outstanding Expenses 1000/-
No TDS was deducted at the time of making provision nor TDS was deposited before May 31st, 2009.
The Actual invoice amounting to Rs. 800/ - was received in July 2009 and tds on the same was deducted and deposited on or before August 7th, 2009 after reversing the provision amounting to Rs. 800/ -.
Secondly, amount of Rs. 200/- was excess provision which is written back.
Following questions have come up: -
1. The TDS amount deducted and deposited on or before August 07th, 2009 and considering tds amount in AY 2010 -11, would it be right approach !
2. The amount written back amounting to Rs. 200/ - provided in FY 0809, is TDS to be deducted on the same.
3. Is the above mentioned approach be the right apporach with respect to tds provison and 40(a)(ia) ?
Manmohan ACA, CS
(Expert)
14 April 2009
1. The TDS amount deducted and deposited on or before August 07th, 2009 and considering tds amount in AY 2010 -11, would it be right approach !
answer: Yes, it is right approach
2. The amount written back amounting to Rs. 200/ - provided in FY 0809, is TDS to be deducted on the same.
answer: TDs has to be deducted at the time of payment or crediting party whichever is earlier, no TDS on provision should be deducted.
3. Is the above mentioned approach be the right apporach with respect to tds provison and 40(a)(ia) ?
answer: Yes it is right approach , You can claim allowenace for the exepnses from the income.
answer: Yes, it is right approach
2. The amount written back amounting to Rs. 200/ - provided in FY 0809, is TDS to be deducted on the same.
answer: TDs has to be deducted at the time of payment or crediting party whichever is earlier, no TDS on provision should be deducted.
3. Is the above mentioned approach be the right apporach with respect to tds provison and 40(a)(ia) ?
answer: Yes it is right approach , You can claim allowenace for the exepnses from the income.
CA Nitin Wadhwani
(Expert)
14 April 2009
1.No.
The TDS should have been deducted as on 31st March and paid to government treasury by 31st May and if not paid it is to be with 1% interest p.m thereafter.
Anyhow since you have paid it before filing of return, the expense will not be disallowed.
2.Adjustment of excess TDS on 200/- to be done if tds is done of accrual basis i.e on 1000 at 31/3.
3.No.
Answer is combination of 1 & 2.
The TDS should have been deducted as on 31st March and paid to government treasury by 31st May and if not paid it is to be with 1% interest p.m thereafter.
Anyhow since you have paid it before filing of return, the expense will not be disallowed.
2.Adjustment of excess TDS on 200/- to be done if tds is done of accrual basis i.e on 1000 at 31/3.
3.No.
Answer is combination of 1 & 2.
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