Let’s say for some parties, the TDS threshold under Section 194C was crossed during FY 2024–25, but we made the full payments without deducting TDS. In such cases, what is the correct way to handle this now?
- Since the payments are already made and the financial year has ended, is there nothing we can do now?
- Alternatively, can we deduct the pending TDS now for FY 2024–25 and then adjust it from the next invoice raised in FY 2025–26 if the vendor continues? I understand this may not be legally correct, since the deduction and payment relate to a prior year.
- Or is the correct approach to deduct the TDS now, deposit it along with applicable interest, and bear the cost ourselves, since we’ve already paid the vendor in full?
Also, for FY 2025–26, do we need to wait for the vendor to again cross the TDS threshold before deducting, or can we proactively deduct TDS based on the previous year’s pattern?
CAclubindia
