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TDS Rate for service provided in March 2021

Mariappan (Student CA final new) (106 Points)

14 April 2021

Mr. A Lawyer service provided in March 2021, Bill raised in April date 03-04-2021 payment made in same date. Transaction booked in tally 31.03 2021 based on accrual basis. Which TDS rate applicable 10% or 7.5% (Reduced Rate -covid)?

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14 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 14 April 2021

7.5% TDS rate is applicable u/s 194J

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pooja (b.con) (29 Points)
Replied 14 April 2021

In press release of CBDT on 13/05/2020, It has been stated that tds on amount paid or credited during the period from 14/05/2020 to 31/03/2021 shall be deducted at reduced rate. but in your question, service provided in March but no payment was received. So reduced rate is not applicable. Applicable rate is 10%.

1 Like

Mohanraj J (1174 Points)
Replied 14 April 2021

7.5% only for Provision TDS entries FY 20 21

1 Like

Mariappan (Student CA final new) (106 Points)
Replied 14 April 2021

If we create provision at 7.5% then actual payment on April we have deduct remaining 2.5%?

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 14 April 2021

Actually 7.5% is the reduction in rate from 10% where transactions are occurred between 14.5.21 to 31.3.21

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Tarak Shah (Chartered Accoutants) (105 Points)
Replied 14 April 2021

10% TDS to be deducted

Ankit Neema (2742 Points)
Replied 14 April 2021

TDS to be deducted @ 7.5 % instead of 10%,
as 25% rebate is provided in FY 20-21.

CA Puja Sharma (Chartered Accountant) (4995 Points)
Replied 14 April 2021

TDS liability should be booked in March 2021.

The rate of TDS applicable till march 2021 was 7.5%.

CA Saloni (Manager-Accounts & GST Consultant) (5124 Points)
Replied 14 April 2021

7.5% is the correct rate if TDS booked in March 2021

Susmita Dutta, CA , CPA (CA ) (2141 Points)
Replied 14 April 2021

Tax has to deducted at source when amount is paid or credited on the account of the payee whichever is earlier.So TDS rate as on March 2021is applicable I.e 7.5%.

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Pratibha Karn (Student-CA Final (New)) (2 Points)
Replied 16 April 2021

As per section 194J, TDS on Professional services shall be deducted on payment or credit whichever is earlier.

In the present case, Credit has been done on 31 march 2021 which is earlier than payment date ( that means reduced TDS rates shall be applicable).

Hence 7.5% should the correct rate for TDS deduction in this case.

Manjula (Accountant ) (119 Points)
Replied 21 April 2021

I have received the bill dated 05/04/2021 for freight charges which is pertaining to 2020-21.Now I want pass provision entry for the freight charges for 2020-21 with tds effect.
is the below entry is correct?

Dr.Freight charges -Rs.100/-
Cr.TDS- Rs.2/-
Cr.Expense Payable (not party)-Rs.98/-

or

Dr.Freight charges -Rs.100/-
Cr.TDS- Rs.2/-
Cr.ExpensePayable (not party)-Rs.100/-
Dr.Party A/c -Rs. 2/-

please clarify which is correct entry with reason for the correct entry.

also confirm the tds rate concessional rate or normal rate since the bill date is Apr

Mariappan (Student CA final new) (106 Points)
Replied 21 April 2021

First entry is correct. TDS applicable at concessional rate, because tds deducted at the credit or payment which ever earlier. credit means entry made on our book to the party or suspense account also.