Tds reconciliation

TDS 1938 views 2 replies

Nupur Sharma

426 Points Joined November 2008

I have been asked to prepare a TDS Reconciliation (year wise) for the purpose of quarterly closing.

Now, my focus is on 3 things: entries passed in books; Form 26AS; TDS certificates recd from parties.

While reviewing I noticed, that TDS entries in the books have been passed after receiving TDS Certificates from parties. Hence, in some cases, while the TDS deduction is being reflected in Form 26AS in the FY 2011-12, the entry for the same is passed in books in FY 2012-13 (because TDS certificates were recd in this FY i.e. 2012-13)

I have these queries:

1. Is my method of reconciling is correct?

2. Can somebody provide me with a format for TDS Reconciliation?

3. The difference could be due to following reasons:

- TDS certificates not recd hence not claimed in FY 2011-12 ( also not entered in books): in this case I should call the parties to provide certificates at th earliest??

- TDS certificate recd but entry not reflected in Form 26AS: I should ask the party to verify e-tds return filed? Now if return is correct but incorrect certiicate was provided, based on which We claimed excessive TDS in FY 2011-12, then what corrective action can we take?

- what other reason for difference could be there?

Kindly provide my point wise reply. I would be really thankful.

Replies (2)

Nikhil Kaushik

Fellow CA

86871 Points Joined June 2009

Dear Nupur,

1. Your methods is correct.

2. Format for TDS recon is normally subjective and needs to be customized according to your needs.

3. even if for the cases where TDS certificate was not received in time, the credit for the same should have been claimed on the basis of Form 26AS. Follow the matching principle.

So, you may follow the following approach (on the assumption that books for FY 2011-12 have been closed and aren't open for restatement :

a. list out all the incomes booked in the financial statements. Create a master of the TDS deducted on the basis of the supporting documents.

b. match the Form 26AS with the master created and claim the same in respective years.

c. try to match the TDS certificate received with the master. Now, even if the certificate is received late, what matters is the assessment year to which it pertains. the receipt date of the certificate is irrelevant and should not be basis of accounting at all.

d. for the cases where clients have filed the wrong TDS returns and have changed the return on your request, the best practice is to obtain new Form 16A. Anyways, you may follow the revised form 26AS for such cases.

e. For the cases of non-receipt of TDS certificates and consequent non-entry in the books (which is a wrong habit), whether you call for TDS certificate or not is a secondary issue. The primary issue is: the relevant TDS is showing up in Form 26AS for which year 2011-12 or 2012-13? If the same is being reflected in 2011-12 Form 26AS and you haven't claimed the credit for the same in your tax returns, then you may revise your return accordingly. In case the same in being reflected in 2012-13, kindly ask the vendors to issue tax certificate for AY 2013-14 and claim the credit for the same in AY 2013-14 tax return.

Guest

Please note that I am giving my idea of how yyou should proeed Only from the discussions I had with my clients-clients. ( This may or may not help you but you can pay thought.)

First go through the ledger accounts of the party.

What are the accounts for which the TDS provisions apply.

Who are all the parties billed for those services.

Is there any balance against those accounts. If so is it for deduction of TDS.

here once you get an idea that there is some relation - then you see the payments for which are all invoices the party did not get the amount in full.

then is the difference because of deduction of TDS.

By this stage - you know what is the percentage of TDS applicable for such services

as a result it would be very easy for you to verify....

Ultimat test is total sales as per invoice (for which TDS is applicable) minus payment received against these invoices.

The payment received against these invoicesis is Rs.90 invoice value is 100 applicable TDS rate is 10% then the payment recd. divided by 90 x 100 should be the value of certificates you must have recd.