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TDS on cash system of Accounting

CA Raj Doshi (Practising CA) (8723 Points)

02 June 2021

how does the tds provisions apply for a business whose accounts are maintained on cash basis ??????

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5 Replies

Sivaramaraju G (Learner) (2398 Points)
Replied 02 June 2021

We have to deduct and pay TDS when amount credit in our books or payment done which ever is earlier as you are saying if assessee follows cash basis of accounting then TDS has to deduct and pay at the time of payment only.

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 02 June 2021

Yes in case of cash basis TDS should be recorded when it is paid

sabyasachi mukherjee (26055 Points)
Replied 03 June 2021

TDS PROVISIONS ARE NOT APPLICABLE FOR ONLY CASH BASIS.
TDS MEANS TAX DEDUCTED AT SOURCE .
CASH WITHDRAWN FROM BANK IS SUBJECTED TO TDS IF IT IS IN EXCESS OF Rs. 1 crore.
CASH BASIS ACCOUNTING IS ENTIRELY DIFFERENT.

Ankit Neema (2742 Points)
Replied 03 June 2021

In my view, if we see TDS Sections they said TDS to be deducted payment or credit whichever is earlier , so I think TDS to be deducted at the time of payment.

If someone has deducted your TDS and payments is not received that means you have not recorded your income then you should not record the TDS, and while filing Income Tax return, You can carry forward the same.

sabyasachi mukherjee (26055 Points)
Replied 03 June 2021

Raj
payment or booking of bills can be on accrual basis .
Since the query is based on cash basis, tds is applicable on both cash or accrual basis.
Tax is deducted at source for contractors , third parties.
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