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TDS Deduction

Vipul Acharya (Account Officer) (639 Points)

24 May 2020

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

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6 Replies

jashwanth (CA-PRACTICE) (400 Points)
Replied 24 May 2020

First allocate the amount proportionately, then determine Tds applicability based on the amount.

1 Like

Vipul Acharya (Account Officer) (639 Points)
Replied 25 May 2020

But my CA advised to book TDS in the m/o march -20 with full amount

Pradeep Gupta (Accounts Manager) (298 Points)
Replied 25 May 2020

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.

Vipul Acharya (Account Officer) (639 Points)
Replied 25 May 2020

But Invoice is of May -20, then how we can make prepaid expense of remaining amount

CA ABHAY GUPTA (Practice) (3230 Points)
Replied 25 May 2020

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.