A professional who follows mercantile system of accounting raises a bill to one of his client for ₹ 2,00,000/- in the month of Mar’19. The client concerned follows cash system of accounting.
The client makes payment of ₹ 2,00,000/- minus TDS of 20,000/- in the month of July’19 & reports the TDS for A.Y 20 – 21. There will be difficulty for the professionals to claim credit for the TDS for A.Y 20 – 21 because there is no corresponding income for that relevant year. Can experts give their view how to address this situation.
Navigating TDS Credit Mismatches: Solutions for Mercantile vs. Cash Accounting Systems and GST Compliance Challenges A professional using the mercantile accounting system issued a bill for 2,00,000 in March 2019, but the client, using the cash accounting system, paid in July 2019, deducting 20,000 as TDS for the assessment year 2020-21. This creates a mismatch since the income was recognized in the previous year. A respondent suggests using ITR forms to manage TDS credit across different years or issuing a receipt for the TDS amount when received, though the latter might complicate GST compliance. The professional seeks further clarification on handling TDS reported in a different assessment year than the income. (AI Summary)
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