If TDS for F.Y. 2009-10 of a professional has been deducted but his fee has not been received yet and it . What have to be done in the accounting books and IT Return?
CA AYUSH AGRAWAL
(Kolkata-Pune-Mumbai)
(26986 Points)
Replied 02 July 2010
SSG
(1936 Points)
Replied 02 July 2010
Thanks Ayush.
But the professional is maintaining books on cash basis. He doesn't think that he will be able to get his fee.
CA Shiv
(Business Controller)
(2987 Points)
Replied 02 July 2010
Nothing to be done... Income is already booked in books and the party ios booked as debtor. Income is charged to Income tax and TDS is already been deducted...
So nothing to do with it... Take credit of TDS deducted when certificate is received....
CA AYUSH AGRAWAL
(Kolkata-Pune-Mumbai)
(26986 Points)
Replied 02 July 2010
SSG
(1936 Points)
Replied 02 July 2010
But then won't there be mismatch between his income and TDS? His income will be shown on cash basis and fee on which TDS has been deducted will not be shown in the return. But in TDS schedule we will be showing this amount of fee also.
CA Shiv
(Business Controller)
(2987 Points)
Replied 02 July 2010
Can you tell me one thing Pls...
How the TDS has been deducted and amount not paid... Is it the part amount left to be recovered?
SSG
(1936 Points)
Replied 02 July 2010
Ok so here are the details of his income for F.Y. 2009-10 :-
1. Income from one client on which TDS has been deducted :-
Gross Income - Rs. 1,20,000.00
TDS deducted on above - Rs. 12,180
Net Income - Rs. 107820.00
Amount received during F.Y. 2009-10 from above - Rs. Nil
2. Income from other clients on which no TDS has been deducted:-
Net Income - Rs. 1,00,000.00
All this amount has been received in cash.
CA AYUSH AGRAWAL
(Kolkata-Pune-Mumbai)
(26986 Points)
Replied 02 July 2010
Akhil Gupta
(Manager F&A)
(856 Points)
Replied 02 July 2010
Dear SSG
I am unable to understand that where is the confusion.
First of all as you mentioned in point No. 1 Net Income as income after deducting TDS is wrong. The Net Income is Rs. 120000/- itself. TDS is not an expense.
Secondly, As per Rule 6F read with Sec. 44AA only mercantile system of accounting is allowed as per Income Tax Act.
SSG
(1936 Points)
Replied 02 July 2010
Dear Akhil,
Rs. 1,07,820.00 is the amount that is to be received by the professional after deduction of TDS. But yes, his income will be Rs. 1,20,000.00.
Being professional, he is maintaining books of accounts on cash basis and I don't think Rule 6F and Sec. 44AA ask for maintaing books on mercantile basis.
Now the problem towards which I want to draw your attention is:-
We will be showing his Net Profit Rs. 1,00,000.00 i.e. the amount he has received in cash.
But in Schedule TDS2 - Details of Tax Deducted at Source on Income [As per Form 16 A issued by Deductor(s)], under Amount Paid column, we have to mention Rs. 1,20,000.00 and TDS deducted Rs. 12,180.00.
Now there will be mismatch between income shown under business head i.e. Net Profit of Rs. 1,00,000.00 and amount on which TDS is deducted Rs. 1,20,000.00.
SSG
(1936 Points)
Replied 02 July 2010
Dear Akhil,
Rs. 1,07,820.00 is the amount that is to be received by the professional after deduction of TDS. But yes, his income will be Rs. 1,20,000.00.
Being professional, he is maintaining books of accounts on cash basis and I don't think Rule 6F and Sec. 44AA ask for maintaing books on mercantile basis.
Now the problem towards which I want to draw your attention is:-
We will be showing his Net Profit Rs. 1,00,000.00 i.e. the amount he has received in cash.
But in Schedule TDS2 - Details of Tax Deducted at Source on Income [As per Form 16 A issued by Deductor(s)], under Amount Paid column, we have to mention Rs. 1,20,000.00 and TDS deducted Rs. 12,180.00.
Now there will be mismatch between income shown under business head i.e. Net Profit of Rs. 1,00,000.00 and amount on which TDS is deducted Rs. 1,20,000.00.
CA Shiv
(Business Controller)
(2987 Points)
Replied 02 July 2010
@ SSG:
I am not understanding whats the confusion...
First thing is you cannot change basis of accounting daily as adviced by our friend before. If you are not receiving the amount than do not offer to Income and also you cannot take credit of TDS as surely the other party is not going to issue TDS certificate....
SSG
(1936 Points)
Replied 02 July 2010
@ Shivang:
The professional is maintaing books of accounts on cash basis from inception.
The party making payment to him is maintaining books of accounts on mercantile basis and therefore issuing Form 16A on the basis of credit made to the professional.
How the party making the payment is able to know that the person, to whom they are making payment, is maintaining books or not?
CA Shiv
(Business Controller)
(2987 Points)
Replied 02 July 2010
@ SSG:
So what.. Do not worry.. DO not claim TDS on the basis of Certificate... its ok.. Its not compulsory to claim TDS if you have certificate with you... IF you receive the amount than only do it.... If you offering your income for tax than only you can take credit of the certificate....
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