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Tds on provision

Santosh V. Thakur (Sr. Accountant) (187 Points)

22 April 2014

Is there is TDS on provision?

if a bill of ABC CO. of Rs.1,00,000/- dtd. 12-Apr-2014 for professional
fees for the period Mar-2014. following entry has been passed.

Prof.Fees Dr.1,00,000
TDS on prof.fees cr. 10,000
Provision for exps. cr. 90,000

is this above entry in the month of Mar-14 is correct or suggest entry.

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11 Replies

Vishal Gupta (CA) (59 Points)
Replied 22 April 2014

Creating Provision as on 31.03.2014:-

Provision for prof fees A/c Dr. 1,00,000

To Vendor/Creditor 90,000

To TDS payable 10,000

Transfer entry as on 31.03.2014:-

P/L A/c Dr. 1,00,000

To Provision for prof fees 1,00,000

On payment in the month of april,2014:-

Vendor/Creditor Dr. 90,000

TDS payable Dr. 10,000

To Bank 1,00,000

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Kashyap Joshi (Proprietor ) (260 Points)
Replied 22 April 2014

Hi Santosh,

Entry is correct. However, you can also credit ABC & Co.

sourav jain (INTERNAL AUDITOR) (128 Points)
Replied 22 April 2014

Hello

TDS need to be deducted

I have a query that why provision for expenses account is created instead of directly crediting the party name as the expenses is related march

srikanth (CA Practice ) (26 Points)
Replied 22 April 2014

Dear Santhosh

It is professional Bill and dated 12th April 2014 and expenses related to march 2014.

As per th act, the person needs to deduct the TDS on making the payment or credit to his account ( Entry) which ever is earlier.

In your case, the bill is dated 12th april 2014, because it is a professional bill you need not to create a provision and its not necessary to deducted TDS for FY 2013-2014.

Regards

Harish kumar goud (Finance Manager) (84 Points)
Replied 22 April 2014

Hai sir, As per tds section, an assesse required to deduct tds at the time of payment or credit whichever is earlier. In your case credit entry has come early, hence u need to pass the following entry. Professional fee a/c Dr 100000 ABC a/c Cr 90000 Tds payable 10000

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ayaz (student) (161 Points)
Replied 22 April 2014

Point of taxation u/s 194J is credit or payment, whichever is earlier. So every o/s expense in which TDS need to deduct should be shown on TDS payable otherwise it will treated as TDS NOT DEDUCTED at the time of credit. Hence the entries shown by Santosh Thakur is correct one.