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URGENT TDS on Provisions

Navita (profession) (96 Points)

25 January 2008

In case we make provision of rent in our books then the TDS liability arises or not.

As per the language tds arises if apid or credited To PAYEE Account W.I.Earlier.but here we are not crediting to the payee account.

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6 Replies

CA S Sundararajan (CAO) (536 Points)
Replied 25 January 2008

Tax has to be deducted on amount payable or paid which ever is earlier.

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Ranganath AAGJ (CA Final Student) (147 Points)
Replied 25 January 2008

yes. what sundarajan has said is correct..

Ranganath AAGJ (CA Final Student) (147 Points)
Replied 25 January 2008

yes. what sundarajan has said is correct..

Nagaraju Pogula (Partner) (175 Points)
Replied 25 January 2008

TDS shall deducted at the time of expenditure crediting to the party account or payment made to the party wichever is earlier, but not on creation of provisions. Provision creates for known expenditure, at the time creation of provision there is no question of tds.

(Guest)

Please refer to Explanation ii to Section 194 I which says " Where any income is credited to any account whether called suspense account of by any other name in the books of account of the person liable to pay such income such credit shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly".