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TDS deduction liability

seema (Associate Accounts Consultant) (122 Points)

15 January 2009

If any Proprietor having annual income below 40 lacs in begining of financial year and not having any TAN, payments made to vendors without dedcuting any tax. If in mid of financial exceeds 40 lacs and simultaneously applies for the TAN after that on which amount tax should be deducted from vendors. Should it including past payments or liability will be only on current payments made after obtaining TAN? is any regulation exists for the same?

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9 Replies

C V RATNAM DHAVEJI (CHARTERED ACCOUNTANT) (56 Points)
Replied 15 January 2009

Seema

Your question is not very clear. But I would attempt to answer it.

TDS provisions are applicable to deductors being individuals etc. only if their annual turnover IN THE IMMEDIATELY PRECEDEDING FINANCIAL YEAR exceeds the limits prescribed u/s 44 AB of the IT Act, ie., to say Rs.40 Lakhs in case of non professionals and Rs.10 Lakhs in the case of professionals.

In the instant case you are referring to a situation where at the beginning of a year when receipts are less than Rs. 40 Lakhs. Pl be advised that income at the beginning/mid/end will not make any sense w.r.t TDS. Any income will be for a period/year.

Pl decide the instant case on the above lines. Should you to deduct tax, it is on entire payments and on payments after obtaining TAN. Broadly a TAN application is to be made within one month from the date of deducting/collecting tax. Pl refer to Rule 114A for details

Pl keep posted your comments/queries

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seema (Associate Accounts Consultant) (122 Points)
Replied 15 January 2009

Thanks Mr. Dhaveji,

I just wanna know if any proprietor avail TAN in mid of financial year then after that on which amount tax should be deduct from vendors it should include previous payment of same financial year or on the payments made after TAN?

CA CS CIMA Prakash Somani (Landmark Group) (23502 Points)
Replied 15 January 2009

It should be inclusive of all past payments too.

Shudhanshu Agrawal (Business) (2570 Points)
Replied 15 January 2009

TDS willbe deducted from the beginning of the F.Y. ....

CA. Manthan Ruparelia (Chartered Accountant) (94 Points)
Replied 15 January 2009

Yes It has to Pay From Begining of the Pay else Expeses would be Disallowed...

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C V RATNAM DHAVEJI (CHARTERED ACCOUNTANT) (56 Points)
Replied 15 January 2009

Ms. Seema

I am sorry I missed out "NOT ONLY" in my discussion, which caused confusion.

As already put by others, the TDS is applicable on past payments (before obtaining the TAN) also in the FY concerned.

vinodp (CA,CS) (36 Points)
Replied 27 September 2010

Hay.... all..

Please can i know whether a concern once it is liable for deduction of TDS in any one of the previous financial years , whether it falls under the same provision , though if its gross turn does not exceed 40lakhs during the financial year, ( i.e whether such a expense to be Disallowed as per income tax act )

SRIKAR BABU (AM) (102 Points)
Replied 06 January 2012

Hai,

In case the payments not exceeded threshold limit in last one or two or three quarters but exceeded later, then we have to deduct tax amount calculated on the whole amounts including earlier payments at the applicable rate from the latest payment.

Further, while filing TDS return we have to mention our earlier payments with zero tax deducted, but don’t forget to put “‘Y” flag in TDS return under “Remarks reason for non deduction / lower deduction / higher deduction / threshold”.

For more clarification ref article attached.

Attached File : 128931 901334 guidelines for reporting tds transactions where amount paid to deductee has not exceeded the threshold limit.pdf downloaded: 266 times