Tds not paid

TDS 897 views 4 replies

Mihir

Wealth Manager

5293 Points Joined December 2008

A service receiver has not deposited TDS. I know u/s 271C, the person failing to deposit TDS will be liable to pay simple interest @ 12 % o.s till the date of actual deposit.

But now, in order to file company returns before 30th September, we are suppose to pay tax because TDS has not been deposited.

Now what do we do? There is no other option but to pay tax from the company's own resources. But what entries to make in the client's ledger and TDS ledger? Can we transfer the TDS balance amount to client ledger account as receiveable from them since we can't show the TDS amount because its not showing in 26AS?

What is wrong in recovering the TDS amount from the client, because they did not deposit the TDS in the Govt, due to which, we had to pay the tax ? In case we recover the undeposited TDS from the client, that means the client has not deducted TDS where the client was liable to deduct TDS, which again creates a violation of TDS rules. What does one do to the TDS receiveable ledger in Books of accounts, wherein the TDS has not be deposited by the client and is unavailable for adjusting with the tax liability?

Replies (4)

valji

Accounts manager-MBA

2150 Points Joined July 2008

TDS liablity for in your case by a service provideder ,if he is deduct the TDS then it is liable pay with interest 1% for delay in deduction & 1.5% p.M for delay in payment

,the person who deduct the TDS is liable to pay the government ,if he make the payment without deduct of TDS then the exepnses which he clian is not allowed i.e added back to the profit

CA Pratik Sirwani

Chartered Accountant

127 Points Joined June 2010

You can transfer the balance in TDS A/c to client ledger A/c only if you can recover the amount of TDS which is not deposited by the client, otherwise it makes no sense showing the receivable in client ledger A/c.

If you cant recover then you (service provider) have to bear the tax and pay the same from your resources, there is no option left then since as per Form 26AS you have not got the credit of TDS.

Mihir

Wealth Manager

5293 Points Joined December 2008

Thanks Valji and Pratik,

I guess the company will have to pay tax from their own resources. But what does one do to impose strict condition for these service receiver to deposit TDS on time and also file returns? Even if the TDS amount happens to be large, it does not make sense to send a legal notice, asking them to deposit TDS immediately or face legal action. Following up with clients for payment is already hard, now one has to follow up for depositing TDS, too.

Is it possible to transfer the TDS receiveable balance to the client ledger, and then writing it off to reduce tax liability? Any rules regarding this?