Tds impact on provision for expenses

This query is : Resolved

Vijay Kumar (Querist)
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31 August 2011 Dear Friend,

A query on TDS deducted on Provision for Expenses Account.

Herewith

JV was passed on 31.03.2011

Cab Hire Expenses A/c Dr 2,10,000
To TDS u/c 94C 4,200
To Provision for
Expenses A/c 2,05,800
(being provision entry made Cab hire charges under Contract Basis for the month of Mar'11

When I received the Invoice from the Service provider

Actual Bill amount was 1,90,000

JV on date of receipt of Invoice

Provision for Expenses A/c Dr 1,86,200
To Service Provider A/c 1,86,200

(Rs.1,90,0000-(TDS=Rs.1,90,000*2%)) = 1,86,200

Adjusting the excess amount left in Provision for Expenses i.e

(2,05,800 - 1,86,200 = 19,600)

Provision for expenses A/c Dr 19,600
To Cab Hire charges 19,600

(being Adjustment entry passed for excess amount charged to Cab hire charges Ag. Provision for Expenses on 31.03.2011)

Now my query is Above journal Entries are correct

Then how shall be impact of TDS

I have deducted 4,200 (Rs.2,10,000*2%) at the time of credit and paid. but actual payable was 3,800 (Rs.1,90,000*2%).

Rs.400 I paid excess. How could I account this and What will be the Tax treatment in such cases.

Kindly Advice me the above queries

Thanks & regards,

Vijay Kumar.

MAHENDRA KUMAR BAGRECHA

MAHENDRA KUMAR BAGRECHA (Expert)
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31 August 2011 Hi,

If you have already deducted and paid also this TDS amount to Govt, You can claim this excess amount from Cab agency as you will give them TDS certificate and they also can claim this TDS in their IT Return based on your Certificate.

CS Bijoy

CS Bijoy (Expert)
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01 September 2011 DS IS Deducted on Paymnt basis not on due basis .There is no need to deduct TDS from the provision of expanses that made at the end of year .

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MAHENDRA KUMAR BAGRECHA

MAHENDRA KUMAR BAGRECHA (Expert)
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02 September 2011 Hi,

TDS provisions says it is deductible at the time of payment of expenses or credit of the same whichever is earlier and hence if as per accrual system of accounting, provision has been made, tds provisions will attract and assessee has to deduct tds from provision amount also.

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