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Re:Implication of TDS not deducted

Rushab Jain (CA Practice ) (83 Points)

14 July 2007

Hi Everybody,

I have small query.An assessee is a Firmengaged in business of construction.All expenditure incurred transfered to Work in Progress.They had not deducted TDS on payment to contractors and advertisement agency.What is the implication of such non deduction of TDS.

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2 Replies

Shyam Lal Naik (Service) (6156 Points)
Replied 15 July 2007

The expenditure on which TDS is not deducted will be disallowed in Income Tax assessment. How ever the amount can be claimed, once tax is deposited, may be in some later assessment year.

The person liable to deduct will be liable to pay interest at the applicable rate for the delay.

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Rajagopal (19 Points)
Replied 16 July 2007

The concerned expense will be disallowed and it will result in to taxable income because you can not expect the assessing officer to lower the work in progress to the extent the expense is disallowed. So that means you have to pay tax on that disallowed expenses in addition to usual interest for for non deducting( hope u may deduct at least next year to claim that expenses). If you do so, you get those earlier expenses along with current year expenses.