TDS Mismatch

[Ethirajan Parthasarathy]

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.

[Rajendra Prasad]

Dear Mr Ethirajan,

1. In ITR forms there is are columns to address this problem. Credit Available , Credit taken , Credit carry forwarded. Please follow it. We are doing this for our office.

2. The other way is raise receipt to the extent of TDS amount as and when TDS received . Then you are eligible to take TDS credit. But check the GST impact. 2nd solution is some what difficult to follow.

[Ethirajan Parthasarathy]

Dear Mr.Prasad,

The ITR filing utility facilitates deferment of utilization of TDS reported for the current assessment year to subsequent assessment year. My question is TDS is reported by the client who follows cash system of accounting in the subsequent assessment year but income is offered by the recipient who follows mercantile accounting system in the preceding accounting year

AI Summary

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.