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

TDS credit mismatch: use ITR credit fields or recognise TDS receipt to align credit when reporting and income years differ.
A professional using mercantile accounting faced a TDS timing mismatch because a cash accounting client paid and reported TDS in a later assessment year; solutions include using ITR fields for credit available/credit taken/credit carry forward or recognising a receipt for the TDS amount when received so the recipient can claim credit in the relevant year, with attention to GST implications and the filing utility's deferment facility for TDS utilization.