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If an invoice of March is paid after 7 April, is the TDS due on 7 May?

Reena (Partner) (139 Points)

19 April 2021  

If we pay an invoice dates 30th March 2021 on 20th April 2021, should we deposit and sho the TDS in April 2021? Would that affect the other person's income in their ITR as the income will be shown in the next financial year? In GST return, it would be shown in the previous year.

How should we pay the amount?

 5 Replies

Sourav (Student) (23917 Points)
Replied 19 April 2021

The TDS amount should be deposited in April 21

CMA Poornima Madhava (CMA) (13007 Points)
Replied 19 April 2021

The trigger point for deduction of tax at source (in most cases) would be at the earlier of the following: 1) At the time of credit (book entry) or 2) At the time of payment. Since, the invoice will be accounted in March, tax to be deducted at source in March itself. Due date for payment of TDS (related to March) will be 30th April.

Replied 19 April 2021

I agree with Poornima Madam's views

Deepshikha Sharma (Tax Manager) (135 Points)
Replied 21 April 2021

Your payment in April would not impact your party's income as the invoice is of March'21 so it will be considered as income of March'21. For both GST and TDS, it will be the income of March'21.

Also TDS is applicable in payment or booking of invoice, whichever is earlier. So TDS should've been booked along with the invoice in March'21 and should be deposited till 30th April (due date for payment of ar'21 TDS).

Manjula (Accountant ) (117 Points)
Replied 21 April 2021

I have received the bill dated 05/04/2021 for freight charges which is pertaining to 2020-21.Now I want pass provision entry for the freight charges for 2020-21 with tds effect.
is the below entry is correct?

Dr.Freight charges -Rs.100/-
Cr.TDS- Rs.2/-
Cr.Expense Payable (not party)-Rs.98/-


Dr.Freight charges -Rs.100/-
Cr.TDS- Rs.2/-
Cr.ExpensePayable (not party)-Rs.100/-
Dr.Party A/c -Rs. 2/-

please clarify which is correct entry with reason for the correct entry.

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