Nisha Yadav (Accounts exe) (455 Points)
21 September 2012Dear All,
I made a payment in favour of a contractor for amount Rs 1 Lac.
But problem is that he cheated with us, he didnt do any work and didnt return our amount.
Should i deposit tds on that amount? what the treatment for this?
Please help me
Thanks to all
CA Navin Jain
(MANAGER (FINANCE & ACCOUNTS))
(11768 Points)
Replied 21 September 2012
i think no need to deposit tds. and written off the amount in the books.
Nisha Yadav
(Accounts exe)
(455 Points)
Replied 21 September 2012
thanks mr naveen .....
Anybody confirm what to do in this case!!!!!
Sunil
(Internal Auditor)
(334 Points)
Replied 21 September 2012
The words used in the law in this regard is " Payment of Credit whichever is later". So if your amout paid is more than the limit specified you are under liability to deduct and pay tax to Govt. The cheating of creditor of you is a separate matter and to be dealt separatly not affecting income tax act.
CA.Vinita Gupta
(Deputy Manager- Finance)
(2923 Points)
Replied 21 September 2012
In my opinion you should not deposit TDS
Nisha Yadav
(Accounts exe)
(455 Points)
Replied 21 September 2012
Now i got much confused whether deposit or not?
Nisha Yadav
(Accounts exe)
(455 Points)
Replied 21 September 2012
Please anybody help me to shortout this issue!
Sandeep Yadav
(CA Final )
(67 Points)
Replied 22 September 2012
Dear Nisha,
When we pay advance, it means first we deduct the TDS and paid the balance whether it is billed amount or advance whatsover. So you paid advance after deducting the tax. So this is your statutory liability to deposit the TDS.
Secondly, you have to communicate with that firm and kept the communication record for further proceedings. If you wish to go legally the it would help out. Without any communication record, you cant go for write off the amount.
I would not suggest to write off the amount immediately.
Regards,
Sandeep
Ramanuj
(Accountant.)
(834 Points)
Replied 22 September 2012
I think did not tds deposit & write off amount.
Varshit Shah
(Self Employed)
(676 Points)
Replied 22 September 2012
Nisha ,
You have to deduct and pay the TDS. Some point is explained by Sandeep. There is one more important point which is applicable to you.
"If any such payment is credited by PAYER in its BOOKS of ACCOUNTS to SUSPENSE a/c or ANY OTHER SUCH ACCOUNT , then such credit is deemed to be credit of such income to payee's account "
Problems you will face if you will not Deduct TDS :
1.) Expenditure of 1 lakh rupees will totaly be disallowed. To claim such as an expense you need to follow TDS rule. By not deducting 1000 or 2000 rs of TDS , u'll have to pay higher tax on 100000 instead the amount of TDS. So your total loss will be more than 130000 ( 1 lac basic expense + 30% Tax - presumed you are covered under 30% slab). Your liability towards TDS arose when you made the advance payment.
Finaly if you planning for written off such amount , it is adviceable to deduct TDS.
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 22 September 2012
any amount paid as advance would be advance or suppliers or debtors ( asset side of balance sheet), the next treatment of cheating or whatsoever is legal proceedings.
for TDS purpose, amount should be booked under the expenses head, if such amount is not booked under expenses head anytime during the financial year, question of TDS does not arise.
Sandeep Yadav
(CA Final )
(67 Points)
Replied 23 September 2012
Varsh*t is right...u cant dispose off the amount without deducting the TDS as well as legal procedding.
Varshit Shah
(Self Employed)
(676 Points)
Replied 24 September 2012
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