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TDS paid out of Pocket


SANJAY KUMAR GANNA

2014-04-30

Hi All,

Assessee failed to deduct TDS from the party, Later on he deducted TDS and deposited. But he couldnot recover from the party. Can Assessee claim TDS amount paid from his pocket as expense.

 

Ca SKG

2014-04-30

HI,

It is a very interesting case.

There is no clarity in Income Tax Act with regard to it.

TDS paid from his own pocket therefore TDS deposited and Expenses related to it Can be claimed.

 

 

and i think TDS paid out of his pocket will become Bad Debt and hence can be claimed as expenditure.

 

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Rahul Rai

2014-04-30

TDS, if it was not deducted then its liability of deductor to pay. He paid from his pocket is not a point.

It was deductor's liability and he paid it. Nothing will go to P&L account (As tax paid is not expense).

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SANJAY KUMAR GANNA

2014-05-17

Please pass the entries in BOOKS and think it

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Rahul Rai

2014-05-17

Entries in Books will be as follow:

Party Acccount Debit

Bank Account Credit

Party account will be outstanding. If party does not pay in later years, this can be claimed as expense.

I agree finally something has to go to P&L, do you have any case law for this?

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Ganesh babu k

2014-06-09

If it is clearly evident that it is one time transaction and not possible to collect tds from him,then tds amount may vary

Suppose 194J on Rs.100:= Rs.10 is required to be deducted

But if we are paying Rs.10 from our pocket and not getting this amount back means our expenditure is Not Rs.100 but it is Rs.110(100+tds10)

.

The TDS reqired to be deposited is Rs.11 and not Rs.10

.

 

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Ganesh babu k

2014-06-09

But generally some persons will fairly refund the money if we can request them

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better debit the party account on payment of TDS on behalf of him,and there after Generate TDS return and write a letter(Mail) to the party along with tds certificate and request him to pay that money

.

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I have seen the people give back after following this process

.

.

Bye the way,

It is most likely happen in repayment of Loans taken from NBFC 

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where it is not possible to deduct TDS as we have to issue postdated cheques for full repayment of loan,

So in this case we have to pay tds from our pocket and can claim refund of TDS as advised above...

.

definetely they will pay this money back as they are doing business by fair means,but we should act timely,

have to file TDS returns early and claim the amount before party closes his books, be cause he cannot claim this TDS in next year

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