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Time of deducting TDS

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Harshit Acharya

296 Points Posted on 04 May 2020

Time of deducting TDS of some things is time of payment or making credit to the account of payee - whichever is earlier.
Payment to the account of payee will be done only after payment is made by payer. So anyway it is only going to be earlier to the two.
Is this interpretation correct?

Replies (7)

Quick Summary

This discussion clarifies the timing for deducting Tax Deducted at Source (TDS). The general rule is that TDS must be deducted at the time of payment or when an amount is credited to the payee's account, whichever occurs first. The consensus is that the earlier date dictates the TDS deduction obligation. It also touches upon TDS on provisions, noting that it applies when both the payee and the amount are known or determined, though specific examples like audit fees might have different considerations.

Deepak Gupta

CA Student

8353 Points Posted on 04 May 2020

Suppose your CA. has raised an invoice of Rs. 50,000 on your firm for professional service.

Invoice dated is 10.01.2020.

You pass the payable entry in your books of accounts on 10.01.2020. So, his account gets credited.

But you pay him on 25.02.2020.

TDS should be deducted at the time of credit/payment, whichever is earlier.

So, here, earlier is the credit entry. Hence, deduct TDS on 10.01.2020.

Guest

Posted on 04 May 2020

Exactly....Agree with Deepak Gupta

Guest

Posted on 04 May 2020

Date of credit/posting or date of payment which ever is earlier...

Harshit Acharya

296 Points Posted on 04 May 2020

SO , in this case at the time of writing entry tds should be deposited to govt .
That's it..

harsh desai

ca ipc

22 Points Posted on 05 May 2020

Suppose we created provision for audit fee without receiving invoice for it .

then we should deduct tds on that provision amount of audit fee?

Aashok Kumar Sharma

Finance/Compliance Consultant

68768 Points Posted on 05 May 2020

TDS on Provisions for Exps. can be made where payee name as well amount in respect of the payee ( i.e. BOTH) are known or determined. As per section 194J of Income tax act 1961, a person is required to deduct TDS @ 10% on following payments paid to a resident in excess of Rs. 30,000 during a financial year;