regarding tds on expenses payable

This query is : Resolved

kumar (Querist)
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07 February 2011 Dear sir,

whether TDS applicable or not on expenses provided and credited to expenes payable instead of party a/c ?

pl. reply.

K V Subba Rao

K V Subba Rao (Expert)
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07 February 2011 As per the law regarding tax at source, a payer is liable to deduct the tax , moment of either actual payment or crediting the sum to payee.

When you make provision, it is actually neither credit to any one’s account nor it is actual payment. Therefore, law of tax at source is not applicable.

The only point one must check is whether the provisioning is not bypassing the accounting norm one must follow.

Note: The above Reply extracted by me from the following link --

http://taxworry.com/is-tds-required-if-only-provisions-for-expense-made/#axzz1DGgVtyse

kumar

kumar (Querist)
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07 February 2011 sir,

in income tax act they have whether credited to suspensa account or any other account different from party account, TDS will applicable in that case also.

pl. reply what will be the if we provide the same for MIS purpose.

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Guest

Guest (Expert)

07 February 2011 TDS will be required.

K V Subba Rao

K V Subba Rao (Expert)
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07 February 2011 Please read the sentence "The only point one must check is whether the provisioning is not bypassing the accounting norm one must follow" extracted by me from taxworry.com

The above implies that one should be prepared to justify action in crediting "suspense" account especially if the amounts are big to prove that action is not to circumvent the rule position.

Looking it in a different way, if you remit TDS, to whom would you issue the TDS Certificate and how do you submit Deductee's particulars including PAN No

Let us wait for a directie from any Tribunal or Court over a period of time

Anyway lead time between Mar 31 and due date for remitting TDS, is sufficient enough to take a clear view about amount, party etc