Tds deduct on adjusted value or invoice value

sivakumar (Asst Manager - F&A) (324 Points)

16 October 2013  


 We have received Rs. 100000 bill from service provider and booked on Aug-13. we deduct TDS 2% on Rs. 100000 and remit the same to department . After we passed one credit note to same party Rs.20000 against same bill ( due to poor service  ) on sep-13. 

Now, service provider ask to us " you should deduct TDS on adjusted value otherwise refund excess deduction of TDS amount to us".

Kindly advice what we do? Is The service provider statement correct or wrong?

Urgent pls.