Identify the Nature of the Payment: The payment made is an advance payment for a party, which suggests it is relate to a service or event.
Determine the applicability of TDS: tds is applicable on certain payments as per the Income tax act, 1961. For services, TDS is usually applicable under section 194J if the payment exceeds Rs.30,000/- in a financial year.
Calculate the taxable value: Since the advance payment was made partly during May and June and there's been no purchase till yesterday, we need to establish if the payment is taxable.
Given the scenario, let's assume the payment is for a service that would be rendered in the future.
Apply the tds rate: The TDS rate for services under section 194J is 10% of the taxable value. However, this rate can vary based on the type of service and the receipient's status (resident or non-resident).
Consider the threshold limit: TDS is applicable only if the payment or the aggregate of payments made to a person during the financial year exceeds Rs.30,000/-
Calculation:
TDS = 10% of Rs.61,20,000 =
0.10 X 61,20,000 = Rs.6,12,000