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TDS urgent

Jitendra Pathak (Accountant) (63 Points)

14 May 2010

Hi, Can anyone answere my query,

I have not deducted TDS on salary in march

1. Can i deduct now?

2. Will it be effected in 09-10 form 16?

3. What is penalty?

4 Entry effects in march and april?

Please advice

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11 Replies

(Guest)

Hello Jitendra,

Your co. B/S is not final so you are deduct TDS in salary and penalty is 1% per month only

Regards,

Rahul Sharma

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satyanarayan dash (taxation) (54 Points)
Replied 14 May 2010

Hai Jitendra,

If You have not deducted TDS on salary in march, than your Balance sheet till thedate not finalise you follow

1. Can i deduct now? Yes

2. Will it be effected in 09-10 form 16? yes, but provision upto BS

3. What is penalty?1% per month on which amount delay from closing of delay month means 30th or 31st

4 Entry effects in march and april? again provision to BS and effect in march if Books of Account till the date open for rectification.

this is for your information.

Regards,

CA Mohit kumar jain (Searching Source of Money) (149 Points)
Replied 14 May 2010

hi as per my openion u pass salary entry on 31.03.2010 & deduct tds on same day this tds u should deposit up to 30.05.2010 without penalty

SURIBABU (MANAGER ACCOUNTS) (28 Points)
Replied 14 May 2010

Dear Mr.Jidendra,

I fully agree with the reply given by Mohit Kumar Jain

suri babu

Manager - Accounts

abishek thakur (Article) (29 Points)
Replied 14 May 2010

Hi Mohit/Suribabu,

Can anyone provide the notification related to the above discussion whether to pay the penalty or not?

If the penalty amount already remitted to government, then how can we treat the penalty?

Regards,

Abishek

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Dinesh Khurana (Service) (95 Points)
Replied 14 May 2010

The last date for depositing March month TDS in case of salary is 7th April

after that you can deposit TDS with Interest @ 18% p.a. (w.e.f. 01.04.2010)

the same can be duly filled in annual return on 15th june.

and you can issue form 16 after depositing TDS into Govt. A/c

Akash (Accountant) (66 Points)
Replied 14 May 2010

Dinesh is 100% correct regarding above asked qurey

kantijain (Chartered Accountant in Practice) (385 Points)
Replied 14 May 2010

Dear Jitendra,

Let me bring to ur notice some interesting issues/scenarios arising from ur query.

At the outset let me inform u that TDS on salary is due on payment of salary, unlike other payment wherein is TDS is due on payment/credit whichever is earlier. Strictly going by this, then no need to deduct tax only for provision entries for salary.

Further unlike other TDS sections, education cess is also to be deducted at source for salary. There is no surcharge for individuals for AY 2010-11.

I presume that you have already made salary payment before march 31, 2010. Nothing to worry, pass a provision entry for TDS on salary and remit it at the earliest. The due date for provision for TDS on salary made on March 31st also is 7th of next month, unlike 2months for other TDS.

For delay in deduction & payment, TDS on interest @ 1% per month will get attracted u/s 201(1A) of the Income Tax Act, 1961 . (Same has been increased to 1.5% per month from date of deduction till date of payment w.e.f 1.7.2010 by the Finance Act 2010).

The co including the principal officer of the co will be treated as assessee in default u/s 201(1) and Penalty may be levied under section 221. However, no penalty shall be levied unless the assessing officer is satisfied that such person has w/o good & sufficient reasons failed to deduct and pay the tax.

Warm regards

CA.Kanti Salecha

K.Salecha & Co, Blore

98457 75707

Sudhanshu (Partner) (25 Points)
Replied 15 May 2010

TDS is deductible when salary is either due or paid whichever is earlier so, in your case, TDS should have been deducted in March 2010 and should have been deposited by 7th April.

Now whether your books are closed or open, you need to pass the entry for TDS on the current date as per following:

If the employee is still in the company - Dr. Employees account for the TDS amount and

Cr. TDS payable account (then clear this credit by paying to Tax Department)

If the employee is not in the company which means that company can not recover this TDS from the employees BUT COMPANY IS STILL RESPONSIBLE FOR PAYING THE TDS.

In this case pass the following entry - Dr. Expense account for the TDS amount and

Cr. TDS payable account and clear this credit by paying to tax department.

Please note that whether you accounts are closed or open, you should pass an entry on the date of the transaction. Never ever think of doing back dated accounting as there is no benefit out of this as there is no need of hiding anything. Late deduction or not deduction was a fault for which there is a course specified in the Act. Otherwise also please note that by way of booking the entry in March 2010 you would not escape the interest for late deposit of TDS neither the disallowance of expenses for not deduction and not deposit of TDS till the return filing date. Income tax provisions are not dependent on the date of the accounting entry but are based on the date of the actual transaction.

So, please always bear this thing in mind that accounting entry should be recorded on the date of the transaction and not at any back date. Back dated entry will not help in any matter but will definitely make the matter worse.

Sudhanshu