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ASSESSMENT YEAR of income accrued in FY 21-22, paid in FY 22-23

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Ashwini Nagia

23 Points Posted on 17 June 2022

I have received a consulting income from a CPSU for work performed in FY 2021-22, during April and June 2022.

Although my invoice was raised in April 2022, and paid also in two parts in April and June 2022, the Form 16A for Q4 FY 21-22 generated in June 2022 shows that amount is paid/credited as on 31.03.2022, and TDS is also deducted in FY 2021-22, the accounting is in order, and revision is not possible.

What is the correct position as per IT rules?

Replies (4)

Quick Summary

This discussion addresses a tax query regarding income earned in the financial year 2021-22, but paid and with TDS deducted in the subsequent financial year (2022-23). The core issue is whether the income and TDS should be accounted for in the year of accrual or the year of payment. While the payer has accounted for it in FY 21-22, the recipient believes it should fall into FY 22-23 due to the invoice date. Advice suggests that income is taxable in the year it accrues, regardless of payment date, and the TDS should ideally be claimed in the same year. If a mismatch occurs, carrying forward the TDS to the next year for claiming is a potential solution.

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 17 June 2022

If the invoice is raised in April then Tds should be covered in Q1 of 2022-23 FY and not in Q4 of2021-22 FY.

They might have considered in provisional basis and you may get the details from them

Ashwini Nagia

23 Points Posted on 17 June 2022

They have informed that since liability was created in anticipation of invoice, during FY 2021-22, credit and TDS are both shown Q4 21-22. Revision was requested to Q1, but they express inability.

CA Raj Doshi

Practising CA

5649 Points Posted on 18 June 2022

You should carry forward the TDS from current year to next year and claim it in the next year as your invoice(income) would be offered there and also the corresponding tds would get claimed there.

JJJ

Need help

436 Points Posted on 18 June 2022

As you mentioned, the income was accrued in the past year. That means it is taxable for the past year too, regardless of when you got paid.

Even if you didn't ultimately get paid, it doesn't change what happened in the past year.

The standard way of handling this is reporting your income, claiming the TDS and listing the unpaid fees (ie invoice value less the TDS) as a receivable in your balance sheet.