TDS provision

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CA Krishna Chaitanya M

Chartered Accountant

463 Points Joined October 2009

provision is provided on balance sheet date refer to unknown liability , which happens in future,

for outstanding expenses, we know the actual liability as per bills w.r.t telephone, power, rent ...... on balance sheet date,

but if we see tds to be duducted on interest ,due on 31/3 (last day of py) , if such tds is not deducted on same day , then what is the accounting treatment

here we know the actual tds to be deducted on 31/3, so for known liablity we have to treat it as outstanding expense instead of making provision on 31/3 , is it correct ?

Replies (2)

Kumar Gaurav

Going...to be C.A soon...

1624 Points Joined June 2007

u r rite dear .........i totally agree wid u

Akhil Gupta

Manager F&A

856 Points Joined August 2007

The provision is made for those liabilities which becomes due as expenses according to accrual or mercantile basis of accounting but not due for payment according to periodical payment systems like telephone bills becimes due and paid on or after 10th of every month.

Whereas outstanding expenses are those expenses for which payment is due but not paid till the balance sheet date like salary becomes due on the last working day.

Yea you are right in your point that known liability provision is made on actual basis and treated as outstanding payment. But my dear interest expnse is of such type of expense for which we do not make any provision. Instead we make the following entry

Interest on outstanding A/c (Expense A/c) -- -- -- -- Dr.

To Outstanding A/c (Loan A/c) -- -- -- -- Cr.