Tax deduction at source

This is regarding the provision for expenses etc in the case of a private limited company, particularly audit fees.Company follows mercantile system and the chartered accountant follows cash system.In case the company wants to make a provision, two issues would surface-Carry out TDS at appropriate rates and make remittance before 30.4.2012 and sequentially TDS would figure in FY 2011-12 as far as the CA is concerned (26AS also) whereas CA would show the receipt in FY 2012-13 resulting in mismatch and with the CPC processing in place, rectification etc is going to be troublesome. Also, with the change in service tax rates w.e.f. 1.4.2012,  whether it will be proper for the company to include an anticipated bill at the new rates and make an entry on 31.3.2012 where the old rates of service tax applies. Is it possible that we can make a provision by crediting outstanding expenses account towards audit fees where you can avoid the situation of credit or payment -whichever is earlier- concept for TDS, since both are not applicable.Views are welcome.

Replies (1)

Sir, I read you valuable suggestion.Im agree with your  concept. But i had confusion now. i have made provisoin for audit fees included with new Srevice Tax 12.36%  and deducted and deposited  TDS .entry is as folllow  assmed in 2012-13biill comes Rs 100000 + service tax (12500).

 Dr.  Audit fees & Professional  Expenses - 112500

Cr. provison for Audit Fees    Rs.101250

Cr. TDS professional           11250

Is this entry valid Please suggest me.

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