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Tds u/s195a diff aspect comments required


Ankit (C.A.-Student)     14 March 2013

Ankit
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Under  section 195A tds is payable net of tax where tds is borne by payer, normally it applies to transaction involving non residents, but in present case it is related with resident individual

An assessee has an contract with HR consultant for a consideration (say 50,000) and tds is borne by assessee.

 

1) I want to ask, TDS has been deducted and deposited, does assessee has to file return of TDS  showing this transaction and later giving benefit to consultant or just by depositing the tax it fulfill all obligation & no further action required??

 

2) Tds deposited is an expense and it has to be shown in Profit and loss account and during filing ITR it has to add back/disallowed this expense.

 

On 1) i want a reply/correct answer,   and on

       2) let me know if my opinion is correct and if wrong please correct me

 

Thanks

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CA Suraj Lakhotia (IndigoLearn)     14 March 2013

CA Suraj Lakhotia
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Assuming total payments to be made to consultant is 50,000/- (net of tds), then the gross amount to be credited to the consultant and debited to expenses would be 55,555.55/- From the amount so credited, you will deduct TDS @ 10% and pay the balance 50,000/- to the consultant.

 

Dr  Consultancy Charges ...... 55,555.55/-

Cr. Consultant......50,000/-

Cr. TDS Payable. 5,555.55/-

Return would be filed.

 

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Ankit (C.A.-Student)     14 March 2013

Ankit
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Sir

 

I know the Tax amount , i am just asking how to file tds return as tds is borne by me and by filing return it will benefit to consultant

 

or we can say in these kind of transactions the receiver here the consultant get the benefit / tax credit of tds

 

Also whether i have to file u/s194J or u/s195A is aaceptable under the tds return

 

As this is my first experience, i dont about the technicalities/practicle aspect.

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CA Suraj Lakhotia (IndigoLearn)     14 March 2013

CA Suraj Lakhotia
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Since the arrangement is such that your payment is net of TDS, it would benefit the consultant. 

194J would be the relevant section

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Ankit (C.A.-Student)     14 March 2013

Ankit
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if consultant would benefit from tds, then assessee/payer has to book the expense @ 55555.55/- or just 50000/- in his books of accounts ????? Please clarify


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