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Tds on prior period?

Amit Gupta (Loosening Myself) (1508 Points)

22 December 2010

Hiii

In case there is prior period and the bill has been booked in the current yr. Whether the tds need to be deducted as it is already disallowed in income tax..but do we need to deduct tds on the same..Further what are the consequences of the same??

Please support ur answer with the legal provisions

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10 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 22 December 2010

on cash basis u can deduct on payment day !!

Vivek Jarial (Student) (272 Points)
Replied 22 December 2010

Yes, At the time of payment you have to deduct TDS.

Abishek (Student) (1108 Points)
Replied 22 December 2010

Tds is deductible at the time of payment or credit which ever is earlier .

So tds is deductible on Prior year expenses since you are booking it in the current year only

Amit Gupta (Loosening Myself) (1508 Points)
Replied 22 December 2010

THE QUESTION IS IF I DOES NOT DEDUCT TDS , DOES ANY LEGAL PROVISION IS CONTRAVENED???

Vivek Jarial (Student) (272 Points)
Replied 22 December 2010

you have to deposit the tds and recover from the vendor...

Amit Gupta (Loosening Myself) (1508 Points)
Replied 22 December 2010

Originally posted by : Vivek Jarial
	you have to deposit the tds and recover from the vendor...

VIVEK: what i m asking is: if i dont deduct tds , will any penalty be attracted towards the co.??

CA. Dashrath Maheshwari (TaXpert) (15090 Points)
Replied 22 December 2010

Boss, the question was clear but answer going wrong...

In my opinion, there is no provision other then disallowance of expenses where TDS was deductible but not deducted.

in case you mentioned, as the expense is already disallowed, how can they will disallow the same item again.

So what is the need to deduct the TDS!!!

CA. Dashrath Maheshwari (TaXpert) (15090 Points)
Replied 22 December 2010

Used 'He' in place of “Client”, 'you' in place of “CA Practitioner”

You need not disallow the same amount twice in the Computation of Income. In the year of payment, the amount stood in the Balance Sheet since he forgot to transfer it to the appropriate expense account. TDS should've been deducted, but wasn't. He'd be charging it to the P & L a/c this year. It can't be allowed since it is a prior-period item. Since you have declared it to be a prior-period expense and aren't going to claim it, where is the question of disallowance u/s 40a(ia) for non-deduction of TDS? The idea behind Section 40a(ia) is to create a disincentive for the assessees who shy away from their TDS responsibilities. But for ad is incentive to take effect, there has to be an incentive first. Since you are foregoing claiming the amount on account of it being a prior-period expense, you never had an incentive to begin with! It does not seem you can claim this expense by revising the return either, because he hadn't deducted TDS on it last year. If he deducts it now, that won't alter the nature of the expense being prior-period.

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pulkit (article) (80 Points)
Replied 23 December 2010

is section 206AA applicable on it ??

if the bill does'nt have PAN no. on it??

CA. Dashrath Maheshwari (TaXpert) (15090 Points)
Replied 23 December 2010

Originally posted by : pulkit
	is section 206AA applicable on it ?? if the bill does'nt have PAN no. on it??

Dear Pulkit,

All the provisions are applicable on it.. we are not discussing about applicability. Even TDS provisions are applicable on prior period expenses too! But the matter is, if we do not deduct TDS, what will happen!!!

Naturally, those expenses will be disallowed... but mere bhai "Mare hue ko koun maar sakta hai", those expenses are already disallowed due to nature "prior period expense".