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When is TDS to be deducted?

A. Narendran (Accountant) (41 Points)

18 September 2009

When TDS is to be deducted? I am aware that TDS is to be deducted at the time of payment or credit, whichever is earlier. I want to know what is implied by the term 'credit'? Does it imply the credit given to the deductee's ledger account in the deductor's books or does it imply actual credit of money to the deductee's bank account by way of deposit of cash / cheque / transfer, in which case, it seems to be synonymous with the term 'payment'. Kindly clarify at the earliest.

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15 Replies

SSG (1936 Points)
Replied 18 September 2009

Tax is to be deducted either at the time of credit to the account of the payee, or at the time of payment in cash, cheque, or by any other mode, whichever is earlier. 'credit' imply the credit given to the deductee's ledger account in the deductor's books.

2 Like

Sunil Liladhar Kotak (Manager (F & A)) (2025 Points)
Replied 18 September 2009

Very Rightly said by SSG. It is the day on which the credit is given in the books of accounts by the deductor or the day on which the payment is made by issuing the chq, draft etc whichever is earlier.

1 Like

Batul (Article assistant) (207 Points)
Replied 28 October 2009

credit implies the day provision is made in the books of accounts

Dilip (Working) (408 Points)
Replied 28 October 2009

i agree to SSG. he is absolutely right

jitendrakr (article assistent) (31 Points)
Replied 16 May 2012

tds deducted ,if survice provide

Tax is to be deducted either at the time of credit to the account of the payee, or at the time of payment in cash, cheque, or by any other mode, whichever is earlier

jitendra

cafinal.

bharat Jain (Article) (23 Points)
Replied 06 October 2012

What is the meaning of time of giving credit to the Account ?

TDS to be deducted at the time of booking bills or at the time of paying payment...?

Lalit Nyati (Student) (487 Points)
Replied 22 November 2012

for e.g. one of party giving security service in month of April and also bill made on April

Rama Kant Sultania (Director) (22 Points)
Replied 22 November 2012

TDS is deducted at the time of credit of deductee a/c in the deductor books or at the time of payment by the Deducter whichever is earlier.The same can be explained by the folowing example;

Suppose A places Advertisement in the Newspaper on 10th nov. and Newspaper sends the bill of Advertisement on 15th nov. but the payment is made on 20th dec.The TDS will be deducted on 15th Nov.

And not on 20th dec.

Satish Tripuraneni (Accounting Executive) (27 Points)
Replied 02 July 2014

Dear Sir/Madam,

My question is whether we need to pay TDS returns in the month of making payment(June'2014) or invoice issued month(in this case July'2014).

Kindly some one clarify.

CA Pooja Sharma (Chartered Accountant) (192 Points)
Replied 02 July 2014

You should deposit TDS deducted in the month of June till 7th July.

Satish Tripuraneni (Accounting Executive) (27 Points)
Replied 02 July 2014

That's okay, my query is TDS returns is to be considered for June or July when we receive invoice?

Muralidharan (Self Employed) (1034 Points)
Replied 02 July 2014

Dear Members

Tax (TDS) is to be deducted at the time of payment or at the time of credit to the party account whichever is earlier. Credit to the account includes even if the amount is credit to Suspense a/c.

Forum query

We have paid full amount against proforma invoice on 30-June-2014 (after deducting TDS) towards stall charges for an expo, the event is going tobe conducted in July'2014. Now the vendor is saying that they will issue invoice once event is finished i.e., July'2014. My question is whether we need to pay TDS returns in the month of making payment(June'2014) or invoice issued month(in this case July'2014).

My Answer to the above query

The amount paid by the company to the vendor is in the nature of Advance against proforma invoice. You have correctly deducted tax from the said advance in compliance with the law. As and when you receive the bill account the same and close the advance. The said TDS has to be remitted on or before 7th July 2014. The tax deducted in the month of June 2014 falls under Quarter 1. Accordingly TDS return has to be filed on or before 15.07.2014 for first quarter).

with regards

Muralidharan