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TDS ON ADVANCE PAYMENT

Surendra (tax consultancy) (146 Points)

06 January 2009

IS IT REASONABLE TO DEDUCT TDS ON ADVANCE PAYMENT TO ANYONE. IN MY OPINION THERE ARE NO. OF SITUATION ARISED WHEN ADVANCE PAYMENT TO BE REFUNDED. WHENEVER THE ADVANCE PAYMENT TURN OFF AS EXPENSES OF ADVANCE GIVER THEN TDS HAS TO BE DONE. ULTIMATELY IN NEW SCHEME THE GOVT. SAYS EXPENSES YOU CLAIMED IN THAT PARTICULAR YEAR IN WHICH TDS HAS DEPOSITED. THEN WHY NOT TDS ON ADVANCE PAYMENT WHEN ADVANCE PAYMENT TURN OFF AS EXPENSES.

THINK ABOUT THIS EVERY ONE

THANKS

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13 Replies

Sandip Kumar Sen (Sr.Manager(F&A)) (114 Points)
Replied 07 January 2009

yes , TDS will be deductable on Advance pament under respective Section fo rpamet.

raghuraj (CA-Final-Asst.Manager Accounts) (30 Points)
Replied 07 January 2009

TDS to be deducted at the time of payment or credit whichever is earlier. When the TDS is made on advance payments that can be adjusted while booking the bill against that advance payment whether in the same financial or in the next financial year.

M.Sriram Shenoy (CA Final) (814 Points)
Replied 07 January 2009

TDS needs to be deducted at applicable rates for respective assessees on advance payments. If advance payment is returned at a later stage, there is going to be no issue as the other party is going to claim it. Give adequate info in your TDS certificate.

Manoj Mhatre (Practising Chartered Accountant) (68 Points)
Replied 05 May 2010

As Raghuraj said TDS has to be deducted at the time of payment or credit whichever is earlier. If you are doubtful whether you are going to avail services or not and going to refund such advances then don't pay TDS. wait until you finalise your terms and conditions and then pay together with interest any which way u r not going to claim as expenses in which year you have given advance. If you paid also then you can adjust the same for another payment also. it is not bound by department that payment should be for that expenses/advances. so you have time till completion of year. you can adjust anytime.

Think about this and Please confirm me friends if i am wrong.

Thanks

NAVEEN (STUDENT) (23 Points)
Replied 06 September 2011

Advance to professionals will attract tds or not ?

Mihir (Wealth Manager) (5293 Points)
Replied 06 September 2011

Deducting TDS from advance payment should be left to the discretion of the person concerned, because in case TDS is deducted and contract is cancelled, the administrative work following the rectification is doubled.

prakash mehta (Account Executive) (21 Points)
Replied 21 March 2012

As per the tds provision of income tax act,(Expanses Due or paid, whichever is earlier ) Assessee shall deduct TDS & deposited in time to avoid penalty and interest on late payment if assessee makes ANY ADVACE PAYMENT to any person whom TDS to be deducted.

In case amount paid is refunded, then than assessee charge, such tds amount paid to department, from the person whom payment was made. Because amount so deposited is credited into the A/c of the person whom ADVACE PAYMENT is made. He can view this credit in 26 AS.

Thanks

Prakash mehta (cma final.)

siva nagi reddy .p (Service) (53 Points)
Replied 07 June 2013

what if TDS not deducted on Advance payments ?

Plz reply to my query

Jackuline Vanaja (Accountant) (24 Points)
Replied 09 July 2015

I am a machine manufacturer, I recveived advance payment with purchase order from the party for Machinery Sale. if there is any TDS amount dedected by the party . pls clarify

Siddharth Goel (Chartered Accountant) (3026 Points)
Replied 05 July 2018

Hi,

As per the general Rule of TDS, it is liable to be deducted at the time for payment or at the time of credit whichever is earlier.

Therefore, TDS should be deducted on advance payment,

Read more at: https://www.caclubindia.com/forum/whether-tds-applicable-on-advance-30585.asp

Ritik Chopra (student) (8123 Points)
Replied 01 April 2021

TDS is deducted at the time of payment or credit - whichever is earlier

Prajakta Shigwan (2 Points)
Replied 03 March 2023

If in advance payment of rent amt refunded by lessor to lease then aslo we need to TDS ? in which Sec ?

JAANU (ARTICLE) (101 Points)
Replied 13 June 2023

IS THERE ANY CASE LAW PROVIDING THAT AO CAN DEMAND INTEREST ON LATE DEDUCTION OF TDS WHERE ADVANCE PAYMENT WAS DONE ON 01-MAY-22 AND INVOICE BOOKED AND TDS DEDUCTED ON 20-MAY-22 AND TDS PAID ON 07-JUN-22.