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TDS on provision of audit fees

CA. Rashi Goyal (Chartered Accountant) (512 Points)

21 October 2009

Hi,

Is TDS required to be deducted and deposited on the provision for audit fees.

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28 Replies

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 21 October 2009

Yes. TDS deductible on payment or credit whichever is earlier.

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Dharmesh k. Dubey (Student) (188 Points)
Replied 21 October 2009

yes tds is deductible on payment or credit whichever is earlier , hence tds would b deducted on provision for audit fees.

Sreedhar Atchutuni ACA,GradCWA (Service) (496 Points)
Replied 21 October 2009

Yes, TDS has to be deducted, because TDS attracts at the time of credit or payment which ever is earlier.

CA. Rashi Goyal (Chartered Accountant) (512 Points)
Replied 21 October 2009

Thanks........

And for other type of expenses which have been booked on priovisional basis and for which the bill has not been recieved as the end of financial year.

huzaifa (student) (27 Points)
Replied 21 October 2009

Yes TDS is deductible at the time of credit or payment whichever is earlier. You need not worry about the receipt of Tax Invoice / bill. further If its the year end & the provision entry is passed in the month of march one gets enough time (due date of filling of return) to deposit the said TDS with the government.

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Natesh (CA Practice ) (71 Points)
Replied 22 October 2009

i feel there is practical problem arising in this we have to see that what is the Asst year on which tds deductable should be written as the financial year ends on 31.03.2009 but auditors will file the return within 31/07/2009 in maximum cases but the audit finalisation takes place upto 30.09.2009 then which year the tds challon to be paid whether Ay 2009-10 or Ay 2010-11

Some more issues which arises are

1. 4 th quarter tds return already filed to be again revised

2. Many auditors are following cash system of accounting in such cases cash/cheque may not be received TDs to be considered without receipt of cash there may be problem in accounting as revised return to be filed with income of TDS Certificates only

3. Verification to be done whether TDS have deducted on their fees also

4.instead another way is Audit Fee is shown as payable it does not recoginises any name of person provision for expenses have to be made the breakup can be made in the next year alloting each party wise whether it is ok

Batul (Article assistant) (207 Points)
Replied 27 October 2009

According to Section 194J TDs shallbe deducted at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of cheque or any other mode whichever is earlier

Natesh (CA Practice ) (71 Points)
Replied 27 October 2009

here when provision is made no sum is credited to the account of the payee

as expenses payable doesn't indicates to whom it relates and in

second instance cash or cheque is not received till filing date then where is the question of deduction of tds in Ay 2009-10 comes here whether it is right

1 Like

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 27 October 2009

The tax has to be deducted on the provision of audit fees payable. Mr. Natesh mentioned that the expenses payable doesn't include to whom it relates, it has to be noted that the auditor is appointed before the end of financial year and the remuneration of auditor is also fixed in advance. So, in this case where the amount and the payee both are certain, the tax has to be deducted. As many of you mentioned, tax has to be deducted at the time of credit or payment whichever is earlier. In this sense, as the law requires, tax has to be deducted on the provision for audit fees, if at all it is above the threshold limit for deducting tax.

Regards,

CA. Amol G. Kabra

1 Like

huzaifa (student) (27 Points)
Replied 27 October 2009

rightly said Amol sir, i wud like to add that irrespective of identity of deductee is known or not the TDS is to be deducted. in other words tds is deducted even if the credit is given to SUSPENSE account.

thus assessee is liable to deduct TDS in respect of AY 2009-10

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Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 28 October 2009

the provision itself contains that the tax has to be deducted even if it is credited to suspense account.

S.Fayaz (Team Leader) (37 Points)
Replied 23 January 2010

What if no credit is given to party account.??

Divya K S (CA) (289 Points)
Replied 23 January 2010

If credit is not given to party account, then Tax must be deducted at the time of payment.

Tax must be deducted at the time of credit or payment whichever is earlier.

Deborshi Roy (Manager Accounts) (30 Points)
Replied 05 March 2010

Income Tax Act states that TDS to be done by payee where the amount of such sum credited or paid or likely to be credited or paid during the financial year for professional fees exceed twenty thousand rupees