Our Company paid an advance to another company Rs. 2,00,000/- after deducting TDS Rs. 4000/- Net Rs. 1,96,000/- for jobwork in 1st Quarter. Now in 4th Quarter We received a bill of Rs. 10,000/- and deductee company is unable to complete jobwork and ready to refund Net amount of Rs. 1,90,000/- (Rs. 2,00,000 - Rs. 10,000). TDS deductible on Rs. 10,000/- is Rs. 200/- but we have deducted Rs. 4000/-, deductee company will claim Rs. 4,000/- in their Income Tax Return, whether this procedure is Right or Wrong? If this procedure is wrong then what will be right procedure. Please describe in detail.
Menu
Tds deduction on advance payment
Replies (7)
I think there is nothing wrong in the method you have advocated.
I think the person making refund should not deduct any amount.as the amount paid was for execution of contract.under which section will he be making payment?
is interesting question.
For claiming the refund the deductor should FURNISH FORM NO. 16A to deductee, wherein the deductee will provide refund. This is however applicable where Payment was done In full without deduction of Tds.
No. Deductee can't claim Rs. 4,000 TDS credit. Because AO will demand without admitting income of Rs. 2,00,000 how the credit claimed??. It is better to reverse the entry that u have made in TDS return rather than letting the assesse to calim the entire Rs. 4,000.
Check with the provisions to avoid hardship.
they can claim refund. There is no problem
you can't return TDS to them because it is deposited in Govt account
now give them Form 16A.
@ Abhishek..
this is wht ur company can do....instead of gng for refund process....u can issue thm a tds certificate of complete amt...in ur case rs. 4000 and take a cheque of rs 3800 from thm (balance amount of tds for services not rendered)....this way u wud be able to square up their account in ur books.....
Now at the End Process Rs.4000 Deducted for Rs.10000/- Work @ the rate of 40%. The Deductor has to File a correction Statement of the Original Deduction on Rs.200000/- Correcting the Amount Paid as Rs.10000/-. Then the Deductee will get a TDS Certificate for Rs.4000/- and Amount Paid as Rs.10000/-. During Assessment there will not be any mismatch and the Deductee Company will get full credit of Rs.4000/-
Recent Threads
- Property registration without physical PAN card
- Paying Rent in Cash: This Could Trigger an Income
- Market Down, Portfolio Down: Need suggestions for
- How much tax is payable If I withdraw my mutual fu
- GST Penalty Provisions under Section 73 vs Section
- How VFA Academy Helps Traders Build Discipline and
- GSTR-3B Relationship
- Section 194T: TDS on Payments to Partners: Applica
- Tax planning with HUF
- FCN ( Financial Credit Notes) Treatement in Books
Related Threads
CAclubindia
