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TDS on TDS payment

755 views 4 replies

Ashish

76 Points Posted on 18 June 2010

Our company has book the invoice of foreign party for Interest Rs. 1 Lac and make the payment of same without deduction TDS. afterwards we realise to deduct TDS, now we deduct TDS Rs. 10 Thausand u/s 195 and paid it to the government, the respective debit is given to party a/c.

We will not issue TDS certificate to party as they got full payment. This TDS deposited is actual our cash loss.

Now the Question is whether we have to again deduct TDS on Rs. 10K as this amount has been debited to party a/c.

Replies (4)

Aditya Maheshwari

CA in Practice

35867 Points Posted on 18 June 2010

Yes as per section 195A income should be paid net of tax. So your payment should be grossed up and then TDS should be deducted. In this case the expense will be Rs. 111,111 and TDS Rs. 11,111/-. Net amount payable Rs. 100,000/- which has been paid already.

Aditya Maheshwari

CA in Practice

35867 Points Posted on 18 June 2010

However in cases Refund to the person making payment under section 195 is allowed if income does not accrue to the non-resident. The amount paid into the Government account in such cases, is no longer ‘tax’. In view of this, no interest under section 244A is admissible on refunds to be granted in accordance with this Circular or on the refunds already granted in accordance with Circular No. 769.