Deepak Tapse (Accounts Manager - Taxation) (1771 Points)
08 January 2011We are making transaction of Sales and purchase through Commission Agent. In this case we are making provision on 31st of March and paying to them in next year.
Is thieir any law to make provision entires on monthly basis and deduct tds monthly.
In case, if you are required to deduct Tax from the Commission amt. then it must be deducted at the time of Credit of the same or its payment whichever is earlier.
As commission amt. is based on sales & purchase, therefore the same accrues as & when the transactions of sales or purchase takes place. Consequently, Tax is required to be deducted on accrual basis. You may deduct it on monthly basis.
Making Provision of the commission amt. on last day & paying it in next year is inconsistent with the Accrual Principle of Accounting.
Deepak Tapse
(Accounts Manager - Taxation)
(1771 Points)
Replied 08 January 2011
Thank you sir
In view of Income Tax we have to make provision or not, is their any case law available or can u inform the section.
CAclubindia
