Availability of TDS credit

[madhavvan n]

x co is a contractor undertaking contract jobs. For FY 08-09 it has received a sum of Rs. 5 crores and TDS deducted is Rs. 10.20 lacs can it accrue income of Rs. 4 crores since only Rs. 4 crores work is completed. In this case will the TDS credit of Rs. 10.20 lacs be available, or it has to accrue the entire Rs. 5 crores as income to claim the TDS of Rs. 10.20 lacs. ( this will be contrary to accounting standards as only work completed can be accrued as income)

[Rama Krishana]

The suggested procedure is to recognise income of Rs. 4 crores only as it has accrued actually per accounting standards and claim the benefit of TDS proportionately. The proportionate claim of TDS can be made in the next year when the remaining amount of Rs. 1 crores would be recognized in the books of account. Now the format of return also permits this. You have to mention the amount of credit claimed out of TDS deducted.

AI Summary

Contractor to Recognize Rs. 4 Crores as Income, Claim TDS Proportionately; Balance TDS Next Year per Accounting Standards. A contractor company received Rs. 5 crores for FY 08-09, with Rs. 10.20 lacs TDS deducted. Since only Rs. 4 crores worth of work was completed, the query was whether to accrue Rs. 4 crores as income and claim TDS proportionately. The response advised recognizing Rs. 4 crores as income per accounting standards and claiming TDS proportionately. The remaining TDS can be claimed in the following year when the remaining Rs. 1 crore is recognized. The current tax return format allows for specifying the claimed TDS credit amount.