09 May 2011
Dear All we make provision for expenses payble on 31.3.11 without deduction of TDS on the ground that nither we are credited to party nor we are making any payment. Subsiquantly we deducted the TDS at the time of credit to party on Receipt of Bill in the month of april -11. IS the treatment is right or we have to deduct TDS at the time of Provison, Please Advise
09 May 2011
Tax has to be deducted at the time of provision only. Because the TDS sections specifically require that Tax should be deducted at the time of payment of credit whichever is earlier. However, even if you are not crediting to the party yet, the section requires that tax has to be deducted irrespective of the account to which the amount payable is credited. So deduct tax at the time of provisions only.
CAclubindia
