TDS Deduction

I received a Invoice Dated :- 18.05.20
of AMC contract period is from Feb-20 to Jul-20

So i have to make provision in FY 2019-20 proportionately but in this whether to be deducted in the m/o Mar-20 or in May-20

If to be deducted whether Proportionately or in full

kindly guide
Replies (6)
Quick Summary
This discussion clarifies TDS deduction for Advance Maintenance Contracts (AMC). The consensus is to deduct TDS proportionally based on the period the expense relates to. For an AMC spanning February to July 2020, with an invoice in May 2020, TDS should be accounted for in March 2020 for the February and March expenses. The remaining expenses for April to July should be treated as prepaid expenses for the next financial year. TDS should be deducted on the full amount excluding tax, and applied proportionally to the expense booked in the current financial year.

First allocate the amount proportionately, then determine Tds applicability based on the amount.
But my CA advised to book TDS in the m/o march -20 with full amount
You need to deduct TDS on full amount excluding tax.
Further, Expenses will be booked for 2 month i.e. Feb & Mar and remaining 4 months expenses will be debited to prepaid expenses so that it can be expensed off in the next year which it pertains to.
But Invoice is of May -20, then how we can make prepaid expense of remaining amount
A prepaid expense is a type of asset on the balance sheet that results from a business making advanced payments for goods or services to be received in the future.

in the given case payment is not made in advance thus it is not a case of prepaid expense.

secondly the bill dated May, 2020 since expenses belongs to previous year also thus expense pertaining to feb and March need to be booked in that particular month else expenses will not be allowed. TDS need to be deducted proportionally as expenses booked meaning tds for the month of feb and march to be deducted in feb and march and to be paid.
TDS needs to be deducted in the month of March itself.

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