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TDS u/s 194J

Amit (84 Points)

10 May 2007

I would like to ask the learned members if for F.Y. 2005-06 the provision required to be made for Audit fees exceeds Rs. 20000.00 due to inclusion of Service Tax, is Tax required to be deducted at source? If yes, in which year, as the bill will be raised by CA in F.Y. 2006-07.

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10 Replies

Sourabh (67 Points)
Replied 10 May 2007

As the provision is made in earlier year than TDS must be deducted in that year itself because TDS to be deducted earlier of Credit given to party or any payment made to it.

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Amit (84 Points)
Replied 10 May 2007

Thanks, but pl. brief - for which F.Y. the TDS Certificate shall be issued as the CA firm will raise bill only at the time of Auditing.If TDS certificate be issued for FY 2005-06, it will not be applicable to CA firm.

Jasmeet (25 Points)
Replied 10 May 2007

The TDS is required to be deducted in the financial year 2005-2006 itself as provision was made in the books ended 31.03.2006. As far as ur question regarding issuance of TDS certificate is concerned the certificate will be issued for the finacial year 2005-2006 as TDS was dedeucted in that year.

Hope i was able to solve ur problem in case u need any clarification u can mail me at Jasmeetca @ gmail.com

Amit (84 Points)
Replied 10 May 2007

Thanks for the reply, but my question is that since the CA firm will raise bill in FY 2006-07, it will be their incoem for FY 2006-07, how the TDS cert. issued by the co. will be claimed by them?

Jasmeet (25 Points)
Replied 10 May 2007

its not a problem na becz even if dont take credit of TDS in one year we can still claim the same in the next year. So if the C.A firm will raise bill in the f/Y 2006-2007 it can claim the TDS deducted in the A/Y 2007-2008

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Natrajan (19 Points)
Replied 10 May 2007

Since the provision is made on 31st March ie the last day we have time upto 31st may to remit the tds and the certificate will be part of 05-06 itself.

Raghu (13 Points)
Replied 10 May 2007

Hi friends ,

here is the perfect solution for your query as i have done extensive research on this issue.

client needs to dedcut tds either when he credits or pays whicheverr is earlier.so client will deduct and pay before may 31st as he must have made a provision on march 31st.

Now we chartered follow cash basis. so we will not account the income..

Therefore what we should do is.. just account income to the extent of tds certifictae received.

regards
raghu

Vk Duggal (320 Points)
Replied 10 May 2007

Most of the professional firms follow the cash system of accounting and credit for TDS will be claimed in the year in which income is offered for tax.

Carao (30 Points)
Replied 10 May 2007

Dear Mr. Komal,
Re.the first point, as TDS is not to be made on Service tax, no TDS would apply if the audit fees is Rs.20000 or less and service tax will have no bearing on this limit.

Re.second point,
For the Client:
if the audit fees alone is more than Rs.20000, the client has to make provision for audit fees in FY 2005-06, deduct tax at source, pay the amount before 31st May 2006 and isuue TDS certificate to the CA firm.
For the CA firm:
As the CA firm will raise the bill in FY.2006-07, will account the income on cash basis in that FY and claim the TDS in the Asst.year 2007-08.

Hope the position is clear.
Carao