Whether creditd of TDS can be claimed on accural basis while
Querist : Anonymous
Suppose a firm following the Cash basis of accounting (as generally follows) shows their PGBP income only when the same is received, but from their client they receive the TDS certificate on accrual basis ( i.e TDS deducted on all the invoices raised to client) and the entire amount of TDS is claimed in the Income Tax Return.
So is this valid under the Income Tax Act, 1961.
Further because of following above practice; TDS claimed in the Income Tax Return and TDS reflecting in the books of accounts dose not match.
Whether the above practice is tenable in the eye of law?
Sec 199 of the Act read along with Rule 37BA will provide an answer to ur query.
You have to claim the credit of TDS in the financial year in which u have offered ur income.
the above mentioned practice of claiming TDS credit w/o offering income is not tenable in the law.
For the reason cited in the opening para of your query, the TDS claim should be defered till realisation of the income.
Querist : Anonymous
but plenty of ca firms are using the same pratice...
so wat u think if we wait till the receving the payment(actual receiving of payment) since the cash basis is followed.. the income tax deptt. will definitely raise an issue because the TDS claim will not match the form 26AS...
if u are having the cash basis of accounting..what do u do in ur case????
Querist : Anonymous
Yes there is practical problem on hand, however if u are able to reconcile form 26AS then the same can be resolved. also the firm must not use this mechanism for double credit of tds as this will attract penal provisions of the act.
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