TDS Deduction on Advance ?

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Guest

Guest (Querist)

02 June 2011 Pls. tel me whether TDS should be deducted on Advance amount also or is it only after the bill is receieved from the concerned that TDS entry be booked?Im confused...Pls. help me....

Aditya Maheshwari

Aditya Maheshwari (Expert)
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02 June 2011 TDS deductible at the time of payment or credit whichever is earlier.

So TDS deductible on advance payment also.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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02 June 2011 TDS to be deducted on payment or credit whichever is earlier. So if advance payment is made TDS needs to be deducted from such payment under respective section at respective rates.

Guest

Guest (Querist)

02 June 2011 Thanks a lot Sir,but if bill is not received and if the concern insist on accounting the transaction only when bill is received from the party.Even then will this provision apply?Since its a contract work,the concern keeps receiving part payment and when the whole contract is completed they make the provisional entry for TDS.The reason they explain is that they are not aware of the amount to make entries in advance and hence they account TDS only at the time of final payment and keeps a separate track of their outstanding receipts.If its wrong,then pls. explain me the correct method.
Thankyou.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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02 June 2011 In any case TDS is deductible at the time of payment or credit whichever is earliest.

So TDS dedutible at the time of making payment.

When u receive the bill then deduct TDS on the differential amount i. e. bill amount less advance amount on which TDS has already been deducted.

Guest

Guest (Querist)

02 June 2011 Thanks a lot.:)

Pankaj Gandhi Jaiswal

Pankaj Gandhi Jaiswal (Expert)
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07 June 2011 Read relevant section carefully if it refer payment or bill which ever is earlier then on advance you have to deduct TDS

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