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TDS on provisional entry

CA Devender Chauhan (Group Financial Accountant) (1526 Points)

02 May 2011

TDS is to be deducted on provisions made on 31st march every year.

My question is that do we consider the service tax amount also while deduction TDS.

eg:- if Audit fees payable for the year is Rs 90000 (excluding service tax ).

So do we need to deduct the tds on Rs 90000 or on 90000 plus service tax.

Plz Reply

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13 Replies

Rachit (Analyst) (913 Points)
Replied 02 May 2011

It is always advisable to deduct the TDS on the entire bill amount i.e. incl. service tax, to avoid litigation. Further, in case the bill includes out of pocket expenses, TDS is liable to be deducted on it too. Hence its advisable to take separate bill for out of pocket expenses to avoid TDS.

1 Like

Devendra (Chartered Accountant) (4775 Points)
Replied 02 May 2011

TDS to be deducted on the amount inlcuding the Service Tax amount.

1 Like

CA Devender Chauhan (Group Financial Accountant) (1526 Points)
Replied 02 May 2011

Originally posted by : Rachit
	It is always advisable to deduct the TDS on the entire bill amount i.e. incl. service tax, to avoid litigation. Further, in case the bill includes out of pocket expenses, TDS is liable to be deducted on it too. Hence its advisable to take separate bill for out of pocket expenses to avoid TDS.

But we have not received any bill yet.

The bill will be issued in the next financial year when the audit will be over.

Rachit (Analyst) (913 Points)
Replied 02 May 2011

It's implied that the bill is not received; as had you received the bill you would have booked the bill itself rather than providing for it.

Ask your auditors for the bill amount they would be raising on you (incl. ser. tax) and make the necessary provision for the same alongwith TDS effect.

1 Like

(Guest)

yes it should be deducted on all amount

1 Like

Pragnesh (AM - Taxation) (1259 Points)
Replied 02 May 2011

Book bill amount with service tax on provisional basis. and deduct TDS on Entire Bill u/s. 194J.

1 Like

CA Raghavendra S S (Manager Accounts) (35 Points)
Replied 02 May 2011

TDS is to be deduted on the entire amount

1 Like

CA Govind Gupta (Proprietor) (152 Points)
Replied 02 May 2011

TDS on provision is made on amount including Service Tax amount.

Reason: if we made provision for professional charges for the current FY thus we also have to be made provision of ST on that and what sec. 194J says that TDS is to be deducted on Amount including ST.

So, from the above in your case also TDS id to be deducted on 90000.00+ST

1 Like

CMA. Subhash Kumar Jha (General Manager - Finance) (8391 Points)
Replied 03 May 2011

Of course, including the service tax as you will make the provision for the entire cost & accordingly, TDS would be deducted on the entire value.

1 Like

Mcgupta (CA Job) (47 Points)
Replied 03 May 2011

Shall we get the audit fees bill in date of 31st Mar or is it ok if bill is provided in date of April?

Will there be any problem if auditor gives bill in date of April month, as we have deducted TDS in previous financial year?

Rachit (Analyst) (913 Points)
Replied 05 May 2011

Expenses pertaining to a particular financial year needs to be provided in that financial year in absence of receipt of the bill.

Bill received in the subsequent financial year needs to appropriated against the relevant provision entry. Entries to be passed in subsequent fin. year :

1) Expense A/c Dr.

To Party A/c. Credit

2) Provision for expense A/c ..Debit

To Expense A/c. ..Credit

Date of the bill would surely be of April or subsequent month but not of March.

ABHISEK TOSNIWAL (CA in Practice) (638 Points)
Replied 07 May 2011

Yes TDS is to be deducted on the gross amount including service tax. But only for TDS deduction on Rent, service tax element is not required to be taken i.e. for the purpose of tax deduction on rent paid or payable TDS is to be deducted on (Rent paid or payable - service Tax).

Regards