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Tds by mistake

Raman (HR) (49 Points)

03 May 2014

Hello,

I am HR at a software firm, it is a proprietary firm owned by a single person with few employees.

The firm develop custom softwares, turnover is less than 1 crore, we pay 58000 per month building rent and spend about 3 lakhs monthly on online advertisements, I think we don't fall under tax audit(Section 44AB). Someone suggested us to start paying TDS on rent and advertisements, earlier we were not aware of section 44AB and started paying TDS from last three months. As we think that we are exempted under 44AB can we discontinue paying the TDS now ? If yes is there any specific procedure for that or just simply stop paying, please suggest.

Thanks in Advance
Raman

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8 Replies

niket (FINAL STUDENT) (82 Points)
Replied 03 May 2014

to the best of my knowledge:

your company is not covered by 44ab that is your not under audit ! soo u can simply avoid deducting and paying tds .

Raman (HR) (49 Points)
Replied 05 May 2014

Thanks for responding, is there any specific rule for avoiding paying TDS once you start paying it ?

Do we need to surrender the TAN number ?

Income Tax Wala: (Fin. Expert) (Chartered Accountants) (2010 Points)
Replied 05 May 2014

Dear Raman

as you are engaged in providing services to customers hence you are covered u/s 44AB i.e. tax audit.

1. accordingly you required to deducted TDS on rent @ 10% of rent paid.

2. you should not surrender TAN.

Raman (HR) (49 Points)
Replied 05 May 2014

Thanks for replying, but we don't sell our software in India or advertise in India, and hence we don't provide our services in India, we advertise and sell our softwares in western and european countries, do we still fall in the category specified by you ?

Please visit following link: https://in.answers.yahoo.com/question/index?qid=20061201203511AAKzPgw

Income Tax Wala: (Fin. Expert) (Chartered Accountants) (2010 Points)
Replied 05 May 2014

Raman

first tell me you nature of services you provide

Raman (HR) (49 Points)
Replied 05 May 2014

We don't provide any service, we develop software and sell in Western and Europian Markets.

surya (kjhhjk) (41 Points)
Replied 05 May 2014

You are Supposed to do TDS on Rent, Advertisements (If it is a Contract) @ 10% & 1%(PayeeHUF/Individual) or 2%(Others) respectively.

If you wont do TDS as per Sec 40a it can't be allowed as deduction from Income (i.e you can't take it as Expenditure)

Since you are not subjected to tax audit you will not face a problem now.

But,In case of Scrutiny you will face a problem

Raman (HR) (49 Points)
Replied 05 May 2014

Originally posted by : surya
	You are Supposed to do TDS on Rent, Advertisements (If it is a Contract) @ 10% & 1%(PayeeHUF/Individual) or 2%(Others) respectively. If you wont do TDS as per Sec 40a it can't be allowed as deduction from Income (i.e you can't take it as Expenditure) Since you are not subjected to tax audit you will not face a problem now. But,In case of Scrutiny you will face a problem

Thanks Mr. Surya, but both Section 194C and 194-I says that Individual and HUF are only liable to deduct TDS if their account books are required to be audited under section 44AB in the immediately preceding financial year.

You said "But,In case of Scrutiny you will face a problem", why would we face problem if we abide by the Income Tax laws ?, can you please explore it by little bit.

I am completely confused, please suggest.