Tds on provsion for payment of managerial remuneration

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Jinesh Shah

freelancing industry

52 Points Posted on 17 June 2013

Hi everyone,

A company has created a provision for Commission payable to directors as on 31/03/2013, in line with accrual basis of accounting. So Should TDS be deucted on such provision entry itself? or should wait for payment of the same as the figure is liable to change because of certain changes that may have to be introduced on the basis of audit querries raised by the auditor?

Also a querry arises over here is after introduction of the new Section 194 J (1a), how to deduct tax on this commsion? Should it be treated on Par with other remuneration being payable to a director, on which TDS is being Deucted as per provisions of Sec. 192 or should it be booked under the newly introduced amendment to Section 194 J?

My view is of booking the same under Sec 192. Need ur opinions regarding the same.

Replies (5)

CA Kedar Sakhardande

Proprietor

851 Points Posted on 17 June 2013

If the TDS is deducted and paid before filing the return, it can be allowed as deduction

since it is a managerial remuneration/commission , it has to be deducted under 192B (presuming the guy is managing director)

regards

Jinesh Shah

freelancing industry

52 Points Posted on 18 June 2013

Originally posted by : CA Kedar Sakhardande
	If the TDS is deducted and paid before filing the return, it can be allowed as deduction since it is a managerial remuneration/commission , it has to be deducted under 192B (presuming the guy is managing director) regards

Hey Kedar thanks for the reply, I agree on the second part that It will be Remuneration, but Useem to have misunderstood my first part. The querry over here was that since provisin has been made on 31/03/2013, is it necessary for me deduct TDS on the same day itself or can I deduct whent the actual payment is made? And if it is necessary to deduct the tax on th same day itself, will be liable to Penal provsions for not deducting and depositing the same on time?

Guest

Posted on 18 June 2013

TDS on provisional entries have to be deducted while making provision.. i.e; by 31/3/2013

CA Kedar Sakhardande

Proprietor

851 Points Posted on 19 June 2013

Since it is a salary payment under Section 192B, the TDS to be deducted and paid on PAYMENT basis (not Provisional basis)

CA Manish Pawan

Practicing Chartered Accountant

100 Points Posted on 19 June 2013

You have two question.

1st about the time of deduction:- Let me tell you that TDS liability is arised on Payment made or Credited given to the deductee whichever happen earlier.

So the deduction is to be made on making the provision for such commission.

2nd question is about Doubt about section whether it is 192 or 194J:-

As per the latest ammendment TDS is applicable on any amount paid or payable to directors by whatever name (except the salary payable to directors which comes u/s 192) without any threshold limit u/s 194J(1)(ba) at the rate of 10% of such amount paid or payable.