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.
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.
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 .
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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