What are The cases in which TDS Is Treated As An Expense And Charged To P & L A/c
8 Replies
CA Nitin Kothari
(CA)
(144 Points)
Replied 14 December 2010
how can tds deducted will be an expense its a liability which is to be deducted from the creditors bill and to be paid to government.. according to me in no case TDS deducted will be charged to P&L
But in recent one of the ruling given TDS by client ie our tds deducted by debtors can be charged to P&L as bad debts if the same is not paid by Client/debtor
Your query is not clear plz elloborate it little
Devendra
(Chartered Accountant)
(4775 Points)
Replied 14 December 2010
TDS paid cannot be claimed as an expense. It is a liability shown in the Balance Sheet.
Regards,
Devendra Kulkarni
CA Manikandan.A.V
(FINANCE & ACCOUNTS)
(789 Points)
Replied 15 December 2010
TDS not deducted from the deductee but paid from the pocket of the company can only be treated as an expense. such an expense is to be disallowed also. though this is a common practice in small enterprises, the same is not so recommendatory.
CA Abhishek Singh
(practice)
(2106 Points)
Replied 16 December 2010
Hi manish.
i have also found such cases while doing internal audit of a listed company. payment made to NRI for professinal charges. it was decided that tds will be borne by the company. so company charged to p&l expense+tds and subsequently tds was paid to the govt.
As per my opinion it is allowed as expense.
CA Manikandan.A.V
(FINANCE & ACCOUNTS)
(789 Points)
Replied 16 December 2010
In my opinion , tax deduction at source for the payer is legal compliance and it is not an expenditure. The TDS providion under I T Act requires that the payer of an expenditure shall deduct a portion of such expenditure and deposit to government. So , the payer of the expenditure is , for that purpose , agent of the Government. If such payer fails to deduct the tax and deposit the tax from its own fund, the amount of deduction can never be an “expenditure ” incurred for earning income from a business.The only benefit from such an exercise is non application of section 40(a)(ia) of the I T Act , i.e depositing from own pocket is non disallowing of whole of expenditure on which TDS was required to be done .
CA Nitin Kothari
(CA)
(144 Points)
Replied 16 December 2010
according to me even though company is paying from their pocket it can not be treated as expense
Abishek
(Student)
(1108 Points)
Replied 22 December 2010
In most of the times, tds u/s 195 is treated as an expense by most of the companies as the receiver will not agree for deduction of Tds
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