ABC Company prepares Profit & Loss statement every month by 15th of next month. For this purpose, it books various expenditure during the month for which P&L statement is to be prepared, on estimated basis because by that time, many service vendors do not provide actual bills.
Expenditure booked on estimated basis are then reversed in next month and actual expenditure is booked against it in that month (i.e. next month). For example, if contractor has done a job during the month of April, 2011, it books expenditure of 100 (on estimated basis) in April 2011. Then reverses this expenditure in may 2011 and books actual expenditure (say 110) in May 2011.
The expenditure is therefore booked in a month and then immediately reversed in the next month in ERP system.
I would like to know if ABC Co.is required to deduct TDS on such "DURING THE YEAR ENTRIES" also?
It is,however, deducting in the next month when actual bill of vendor is processed. Further, it is also ensuring deduction of TDS when such expenditure is provided for at the year end.
It's just for the provisal entries made on monthly basis during the year, TDS is deducted only when actual bill is processed.
Please advise.
Praveen
CAclubindia
