Tdsreceivable and cash system of accounting

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Querist : Anonymous

Querist : Anonymous (Querist)

31 July 2012 Hi we follow cash system of accounting.
we provided Rs.2 lacs services in the previous year. The other party depoisted the tds Rs.20,000 in the previous year whereas Rs. 1,80,0000 the payment was made to u in the current year.

I would like to know can i claim the TDS in current year as my income would be in the current year , even though my 26AS showing tds amount as related to previous year. Provide any case law or section if u have.

Futher do i have to show Rs.20000 details in the Previous year ITR TDS dedution details?
PLEASE REPLY ASAP.

Vishakha Kejriwal.

Vishakha Kejriwal. (Expert)
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01 August 2012 TDS claim would be in the year in which income pertaining to such TDS is assessable. Please refer to Income Tax Circular No. 5/2001 on this.

Thus for Rs. 20000 received in the previous year you could claim proportionate TDS deducted on such amount in the previous and the balance amount can be claimed in the current year.

You can also refer to the case of Pradeep Kumar Dhir, v. Asst. comm. of Income Tax (ITAT- Chandigarh).

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shibu

shibu (Expert)
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01 August 2012 The person who deducted TDS should have paid it for the corresponding quarter of the PY. No chance to make it shift to another PY.

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Querist : Anonymous

Querist : Anonymous (Querist)

01 August 2012 Hi Shibu ,
can u please explain ur view with an example. Thanks.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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02 August 2025 Sure! Let me break this down with an example to explain how TDS claim works under the **cash system of accounting**:

---

### Scenario Recap:

* You provided **Rs. 2,00,000** worth of services in the **previous year (PY)**.
* The other party deducted **TDS Rs. 20,000** in the previous year.
* However, you **received Rs. 1,80,000 payment in the current year (CY)**.
* Your income is recognized in the **current year** (because of cash system).
* Your **Form 26AS shows TDS Rs. 20,000 in the previous year**.

---

### How should you claim TDS?

* Under the **cash system of accounting**, income is recognized only when actually received.
* The **TDS deducted in the previous year** (Rs. 20,000) relates to the services rendered in the previous year, but since you received most of the money in the current year, your income recognition is in the current year.
* You **cannot claim the entire Rs. 20,000 TDS in the current year** because that TDS was deducted and deposited against the **previous year**.
* You should:

1. **Claim TDS Rs. 20,000 in the previous year’s ITR**, matching the TDS shown in Form 26AS for that year.

2. For the **Rs. 1,80,000 received in the current year**, if any TDS has been deducted in the current year, you can claim that TDS in the current year.

---

### Reference:

* Income Tax Circular No. 5/2001 explains that the credit of TDS is allowed in the year in which the income is assessable.
* Case Law: *Pradeep Kumar Dhir v. Asst. Commissioner of Income Tax (ITAT Chandigarh)* supports this view — TDS is to be claimed in the year in which income is taxable.

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### Summary:

* You must report Rs. 20,000 TDS in the **previous year’s return** (matching Form 26AS).
* You can claim TDS for payments received (and TDS deducted) in the current year in the current year’s return.
* You cannot shift TDS credit from one year to another.

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If you want, I can help you draft the exact disclosures or how to report this in your ITR. Would you like that?

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