Hello FReinds !!
I wanted to know about the procedure for deducting the tds on provisions made on expenses ? Its effect under section 40(a)(ia) ?
Regards
Rajat Singhal
3 Replies
Sunil Liladhar Kotak
(Manager (F & A))
(2025 Points)
Replied 30 December 2009
Dear
Provisions are same for expense which are paid & expenses which are accrued except for the expenses which are accrued in the last month of the financial year i.e. march
sunil
Sunil Liladhar Kotak
(Manager (F & A))
(2025 Points)
Replied 30 December 2009
Kindly refere the Ready Reckoner for further details
sunil
Amir
(Learner)
(4016 Points)
Replied 30 December 2009
Hi Rajat,
Liability to Deduct TDS arise on EARLIST OF FOLLOWING EVENTS:-
a) Credit to supplier ( Entry :- Expense a/c........Dr
To Creditor A/c )
or
b) Payment to supplier ( Entry :- Creditor a/c ..................Dr
To Bank A/c)
But in case of Provision there is neither Credit nor Payment,
Entry : -Expense a/c...................Dr
To Provision for Expenses
Hence there is no TDS Implication on Provisions..
Now, You might be wondering that how easy is this to avoid/ defer the deduction of TDS that instead of crediting to the account of creditor, expenses should be credited to Provision for Expenses A/c..
BUT MY FRIEND REMEMBER ONE THING THAT PROVISIONS ARE NOT ALLOWED AS DEDUCTION UNDER INCOME TAX ACT (Except in case of Rural Bank Branches)
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