Request for Clarification on TDS Treatment for Backdated Invoice

[Ramanathan Seshan]

We seek your guidance on the following matter:

Company A has recently received an invoice from Company B on 11.04.2025, during FY 2025-26. However, the invoice is dated 01.06.2023, which pertains to FY 2023-24. Company B had failed to raise this invoice earlier due to an oversight identified during their internal reconciliation and has only now issued it.

Company A had not recorded any provision for this expense in FY 2023-24, nor does it have any excess provision available. Consequently, Company A has decided to deduct TDS in the current month and report it in the TDS return for Q1 of FY 2025-26.

In this context, we request your views on the following queries:

1. Is it appropriate to report the TDS deduction in Q1 of FY 2025-26, or should it be reported under FY 2023-24? If reported in FY 2023-24, would the challan need to be paid along with applicable interest for the delay in deduction?

2. If the TDS is deducted and reported in FY 2025-26, how can Company B claim the TDS credit when the corresponding income pertains to FY 2023-24?

3. If Company A decides to revise its return for FY 2023-24 and reflect the TDS in that year, Company B may not be able to claim the credit since the window for revising the ITR has closed. Can Company B utilize Form 71 to transfer the credit, or is there an option to approach the Assessing Officer for a manual adjustment or refund? Additionally, if a refund has already been processed, what remedies are available in this case?

4. Can Company B offer the same to tax this year and take tax credit for the same even though the same has not been offered in the earlier tax period?

Regards,

S Ram

AI Summary

Tax Complexity Resolved: Late Invoice Requires Strategic TDS Deduction and Form 71 Filing for Accurate Financial Reporting A company received a backdated invoice from another company for services rendered in a previous fiscal year. The invoice was issued late, creating tax deduction and reporting complexities. The primary recommendation is to deduct TDS in the current fiscal year, file Form 71 to shift TDS credit, and ensure proper income recognition to comply with tax regulations while avoiding potential taxation issues.