Dear Experts,
what if incase 31st March 2021 invoice recieves in may 2021?
Does it attract any interest ?
since I will be booking invoice in the month of May 2021 and making TDS payment on or before 7th June 202.
I mean Does date of invoice have relevance here ?
Thanks in advance
25 Replies
CA ABHAY GUPTA
(Practice)
(3230 Points)
Replied 26 April 2021
Yes according to accrual or Mercantile system of accounting expenses pertaining to FY 2020-21 must be booked in FY 2020-21 only, since your books are not finalized kindly book the same pn 31 03.2021 and make provision of TDS on the same date. TDS need to be paid on or before 30.04.2021 else it will attract 1.5% p.m. interest.
Lotus Agrawal
(Practice)
(1361 Points)
Replied 26 April 2021
You should book the invoice on 31st march only and accordingly TDS payment due date will be 30th April. If not paid, interest liability will arise.
Prathyusha Varma
(ArticleShip)
(393 Points)
Replied 26 April 2021
Sorry ! I didn't say that my books are not finalised. my books were closed on 10th April 2021.
please understand my query correctly and kindly respond correctly.
what if March dated invoice recieved in April or May 2021 if we had provision or if we don't have provison !
please understand my query correctly and kindly respond correctly.
what if March dated invoice recieved in April or May 2021 if we had provision or if we don't have provison !
Lotus Agrawal
(Practice)
(1361 Points)
Replied 26 April 2021
If provision is not made, it means books have not been closed correctly. In all cases, TDS liability would arise on 31st March. One can not say that the invoice is received 2-3 months late and hence no interest liability should arise.
Prathyusha Varma
(ArticleShip)
(393 Points)
Replied 26 April 2021
Outof box, forget about closure of books. Please advice on current senarios,
Case1: March dated invoice recieved in April 2021, whn does tds Liability arise ? is it 30.04.2021 or 7th May 2021...Here we had Provision.
Case2: same like case1 but we don't have provison.
kindly advice
Case1: March dated invoice recieved in April 2021, whn does tds Liability arise ? is it 30.04.2021 or 7th May 2021...Here we had Provision.
Case2: same like case1 but we don't have provison.
kindly advice
CMA Poornima Madhava
(CMA)
(13112 Points)
Replied 26 April 2021
1) If provision is made, then obviously you would have deducted tax at source when the provisional entry was made.
2) If provision is not made, then such expense when accounted in the subsequent year would qualify to be a prior period expense and such expenses are specifically not allowed as deductions
CMA Poornima Madhava
(CMA)
(13112 Points)
Replied 26 April 2021
Liability to deduct tax at source arises on the date when such transactions are accounted or on the date of payment, whichever is earlier.
Prathyusha Varma
(ArticleShip)
(393 Points)
Replied 26 April 2021
Right , So now I'm Accounting in April 2021, so now I need to pay tax on before 7th May 2021? I'm I right
Other case we made provision but not TDS Liability, Should we need to pay interest here ?
Other case we made provision but not TDS Liability, Should we need to pay interest here ?
CMA Poornima Madhava
(CMA)
(13112 Points)
Replied 26 April 2021
1) Yes, you are right. If you account the transaction in April, you may pay TDS before 7th May (provided no advance payment has been made)
2) If provision has been made but tax not deducted (on the date when provision was made), then you will have to pay interest @ 1% pm or part thereof from the date of provision to the date of actual deduction.
Lotus Agrawal
(Practice)
(1361 Points)
Replied 26 April 2021
Ok, if provision for expense was made and provision for tds was not made, then tds liability would arise in march itself. accordingly due date will be 30th april. Hence, you need to pay interest if you failed to deduct tds on march.
Lotus Agrawal
(Practice)
(1361 Points)
Replied 26 April 2021
In the 2nd case, if you have not made provision, u can choose to deduct tds when u receive the invoice. (in ur case April 2021). accordingly due date will be07th May.
Prathyusha Varma
(ArticleShip)
(393 Points)
Replied 26 April 2021
Okay noted understood.
Case1 we haven't made provision but as per statue we should make provison. okay in this case also if we would have made provison our duedate for making TDS payment will be 30th April 2021. I'm I correct ?
Now I will make an entry in books and will pay tds payment before 30th April 2021 does it attracts interest ? If Yes how ?
Case1 we haven't made provision but as per statue we should make provison. okay in this case also if we would have made provison our duedate for making TDS payment will be 30th April 2021. I'm I correct ?
Now I will make an entry in books and will pay tds payment before 30th April 2021 does it attracts interest ? If Yes how ?
Lotus Agrawal
(Practice)
(1361 Points)
Replied 26 April 2021
Yes u are correct. Due date would be 30th April. No interest, if paid before 30th April.
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