TDS

This query is : Resolved

Abhi123 (Querist)
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10 June 2011 A Firm has received a sum of Rs. 25 lacs towards job work (TDS 50,000)which includes advance payment of Rs. 5.00 lacs (TDS 10000).

We show Job work of Rs. 20.00 lacs and claim TDS of Rs. 40000 for this year (2010-2011) and TDS of 10000 to be claimed in next f.Y.

But section 198 say, all sum deducted in accordance with ( ) shall for the purpose of computing the income of an assessee, be deemed to be income thereof

Whether Rs. 10000 shall be added in the computation of income of the asseseee for the year 2010-2011

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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10 June 2011 In my opinion, its quite ok.. to show 20L in 2010-11 & 5L in next FY. TDS should also be claimed accordingly.

I understand.. the confusion regarding section 198. But just tell me, the accrual principle says that an income should be recognized, as & when the sale is complete or the service is provided.

In this case, 5 lac is only advance, sale is not complete or service is yet to be provided, then how can you consider the same as income for 2010-11 ?

TDS rule are different & it applies to advance payments too, but does not mean that those advance payment should be recognized as income or expenses.