TDS On advance payment

This query is : Resolved

rajesh (Querist)
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19 February 2010 Dear all,

We have one client who has made a advance payment of Rs. 2 lacs consultancy fees which may or may not be given to him. After a year they provided a service and raised a bill of Rs. 2 lacs. Now the problem is that payment is already made to person who has provided consultancy services of Rs. 2 lacs who is not ready to pay TDS.

So I have two questions.
1. How my client should pay tax ? i.e on advance payment also or not?
2. As party of our client is not ready to bare TDS on what amount Tax should be deducted?

seshadri

seshadri (Expert)
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19 February 2010 In my view advance tax is never against a particular income. It is against a total income expected. Now in the year in which u have paid advance tax, claim in the return for refund if applicable and pay the tax again in the year of receipt if ur net tax is payable.

Deduction is mandatory and it is not liability of the recipient. Tax should be deducted on 2 lacs.