I have received advance payment from client. client has also deposited TDS in 1st quarter. Unfortunately work could not progress and I need to refund the amount. Now in my 26AS , this is an income to me, but actually I will be refunding it. Will it be considered in my gross receipt? is there is process in which client can see cancellation and refund of TDS deposited?
what to do to ensure that this will not be considered as my income as I need to refund
There are several options, including:
A. Refund them the entire amount of your fees and the TDS amount over and above (ie double the ads amount in your 26AS). In your books, the TDS amount will effectively be zeroed out, which means you will not book any income from this client. If you're asked a question later, you will have complete records to explain as needed. And of course you may end up needing to claim a higher refund in the end, but if the TDS value is not unbearably high for you, at least all the records will be in your hands.
B. Have them revise their return and remove your entry. The TDS now available in their challan can simply be applied to any of their other suppliers in any of the subsequent quarters (in my company, one of the directors is the usual target of these revisions - you should see her 26AS it's full of multiple little payments!). This keeps the records clean for you, but it's not only in your hands and you're at the mercy of the client's willingness and efficiency.
Thank you all for taking out time to help others.is option B suggested by JJJ same as TDS correction suggested by others?
Option A seems simple
CAclubindia
