TDS ON WHICH AMOUNT

This query is : Resolved

Gaurav Garg (Querist)
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03 April 2009 HI FRIENDS,
I HAVE A QUERY REGARDING TDS:

X LTD. HAS GOT DONE A FABRICATION WORK FROM A CONTRACTOR Y LTD. INVOICE RAISED BY Y LTD. IS OF RS. 10,00,000.

INVOICE AMOUNT IS IN EXCESS OF JOB ORDER BY RS 50,000. HENCE X LTD. RAISE A DEBIT NOTE ON Y LTD. OF RS. 50,000 ON THE SAME DATE ON WHICH INVOICE IS BOOKED.

NOW MY QUERY IS THAT WHETHER TDS U/S 194C SHOULD BE CHARGED ON RS. 10 LACS OR ON RS. 9.50 LACS.

I KNOW THAT TDS IS TO BE CHARGED ON ANY "SUM" CREDITED TO THE PAYEE ACCOUNT.
BUT IF WE DEDUCT TDS ON RS 10 LACS, IT WILL BE UNFAIR TOWARDS Y LTD. JUST BECAUSE WE ARE BOOKING INVOICE AT FULL VALUE AND THEN RAISING A DEBIT NOTE ON HIM.

SURELY Y LTD. WILL GET THE BENEFIT OF TDS AT THE TIME OF ASSESSMENT. BUT EXCESS TDS CARRIES AN OPPORTUNITY COST IN THE FORM OF INTEREST LOST.

PLEASE ANSWER ELABORATELY.

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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03 April 2009
Since you have made a credit and debit on the same day you can adjust the same and deduct the tds on the net amount.

Infact if you find any mistake on the day of payment of tds also you can rectify the same.

The word on any SUM credited should be interpreted as the net benefit given to the person and not individual items.

K V Subba Rao

K V Subba Rao (Expert)
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03 April 2009 I agree with the view expressed by
Sri Srinivasulu.

If there is any apprehesion about difficulty on account of "any sum" used in statute, you may well deduct Rs 50,000 and pass the Bill for correct amount of Rs 950,000. I think, this is the procedure that is normally followed.

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