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Tds applicability on provision of audit fees

bhavesh Vasoya (CA) (36 Points)

09 March 2012  

Please clarify whether TDS is applicable on year end provision of of audit fees or other professional fees?


 15 Replies

SIDDHARTH KOTHARI (N.A) (280 Points)
Replied 09 March 2012

Application of Sec 194J comes to play role in the following situaltion.

1) On Profession Services 

2) On Royalty

3)

Only if the total on the any of the above is billed more than 30000INR.

TDS under section 194J is deducted 

                   Credit of the said amount 

                             or 

                   Payment of the same 

                    Which ever is earlier.....

So,If you make the provision of the audit fees which is more than 30000INR then your are required to make the TDS on the date of making the Provision of the same.

 

Rajesh (student) (193 Points)
Replied 09 March 2012

Dear Bhavesh,

Even though Provision you have to deduct TDS and remit

Mar'12 Provision - TDS has to be remitted April'12

And Quarterely return for 4th quarter to be filed on or before May'12

 

valji (Accounts manager-MBA) (2148 Points)
Replied 09 March 2012

agreee with Mr rajesh

 

CA ANKIT GUPTA (CA) (54 Points)
Replied 09 March 2012

 i totally agree with Mr. Valji

santhosh kumar (article student) (79 Points)
Replied 09 March 2012

TDS is applicable when ever an amount is paid or liability is created to specific person. In case of provisions payment is neither accrued nor paid hence TDS is not applicable on provision for audit fees. Correct me if i am wrong.

santhosh kumar (article student) (79 Points)
Replied 09 March 2012

TDS is applicable when ever an amount is paid or liability is created to specific person. In case of provisions payment is neither accrued nor paid hence TDS is not applicable on provision for audit fees. Correct me if i am wrong.

Rajesh (student) (193 Points)
Replied 10 March 2012

Dear Santhosh,

Please Note,

TDS Not only Applicable for liability or specified person on bill. Even TDS Applicable for Provision too.

 

CA. Deepak Narula (B.Com., ACA, DISA) (536 Points)
Replied 10 March 2012

If TDS is applicable on provision, then in whose name TDS return will be filed because 4th quarter TDS return has to be filed by 15th May and the organisation may not have appointed the auditor by then. Because, unlike companies, in small businesses the appointment of auditors is sole discretion of businessmen. So, in my opinion TDS should not be deducted on provision amount. Please clarify with reasons.

Rajesh (student) (193 Points)
Replied 10 March 2012

Dear Deepak Sir,

I agree with you.But, they can't levy audit fees in the particular Assessment year during the audit.It has to be levy in the next FY.

By doing this , Profit of the company will be high.So, They have to pay more IT on that.

Also note,

as per accrual concept, organization should provide all the possible expenses / loses .

Kindl clarify me, if iam wrong

 

 

CA.Sourabh jain (chartered accountant) (71 Points)
Replied 10 March 2012

TDS is deductible only when on payment or credit to a person....by way of making a provision we are only booking an expenditure as per accrual concept and not giving credit to any person nor making payment. Hence TDS should not be deductible.

 

 

1 Like

santhosh kumar (article student) (79 Points)
Replied 10 March 2012

Agree with sourab

 

1 Like

chandra sekar (Manager-Accounts) (387 Points)
Replied 12 March 2012

Also pls ensure that u are calculating the TDS on the amount of the bill excluding Service Tax, under sec 194 J.  If i am wrong, pls correct it.

Chetan (Senior Auditor) (172 Points)
Replied 12 March 2012

Dear Chandra Sekar,

 

TDS is always deducted on gross bill amount,i.e. including service tax.

Sumeet (CA Final) (110 Points)
Replied 12 March 2012

TDS is deductible on provision of expense also. Just because the auditor is not appointed cannot be the reason for non-deduction of TDS if the Audit fees is more than Rs. 30,000. If the Auditor is not appointed yet then the company has to deduct TDS and pay the interest accordingly otherwise the expense of Audit Fees would be disallowed u/s 40(a) of the Income Tax Act on account of non-deduction of TDS.


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