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Can TDS payment be on the Basis of date of receipt of the bill?

RANJIT (MANAGER - ACCOUNTS) (84 Points)

09 February 2012

My labour contractor submits his bill dated 31st December 2011 for the month of December 2011 on January 10th. I have already made all TDS payments for December on January 7th itself. Should i pay the TDS along with late payment interest OR can i take the stand that i got the bill in my hand on January 10th only so I will treat it as payment for January 2012 and pay the amount before February 7th 2012? Please advice which is right?

Ranjit

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5 Replies

kanagaraj (CHARTERED ACCOUNTANT) (793 Points)
Replied 09 February 2012

The tds is to be deducted at the time of payment or debited whichever occurs first. So, in yr case you received only on 10 th and accounted only on 10th the tds is to be deducted on 10th January and pay tax in Feb

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valji (Accounts manager-MBA) (2150 Points)
Replied 10 February 2012

AGREEE WITH ABOVE

RANJIT (MANAGER - ACCOUNTS) (84 Points)
Replied 10 February 2012

Thanks a lot for your replies. If i do this, then my auditor is going to report to the top management that i am not following mercantile system of accounting. I guess i will have to manage it with the contractor by telling him to give me the approximate figure. Thanks a lot.

Ravishankar K (Accountant) (461 Points)
Replied 10 February 2012

Well in this case if the period of service is 01 Dec to 31 Dec 2011 then you insist contractor to submit bill on 31 itself, also in accrual / mercantile system of accounting the period as a whole year is considered so this will affect only in cases of payments pertaining to 31st March of any year.

Hope i am not wrong, because even we follow accrual basis of accounting but while recording the telephone bill for Jan comes on Feb 15 only, hence its booked in Feb 15, same with mobile bills, rent, Salary of contract staffs etc, For permanent staff salary we pay on 30 or 31st itself and book all entries.