Reconciling TDS Credits and Contract Revenue

[Gopalarathnam Muralidharan]

Ours is a construction co.  We follow AS7 for recognising the income.    Being a construction company, we will receive mobilisation advance and other advances.   While giving the advances Party deduct tax and pay the balance.    At the time of asst. we are asked to reconcile contract receipts with TDS entries for the year.    AO wants one to one reconcilation with the contract revenue recognised in Profit and Loss.   Almost all construction companies will have problem of this kind.   How it is being handled

AI Summary

Construction firms struggle to reconcile TDS credits with contract revenue under AS7; authorities demand precise matching. A construction company is facing challenges reconciling Tax Deducted at Source (TDS) credits with contract revenue as per Accounting Standard 7 (AS7). The company receives mobilization and other advances, with tax deductions made by the payer. During assessments, authorities require a reconciliation of contract receipts with TDS entries, demanding a one-to-one match with recognized revenue in the Profit and Loss account. A respondent suggests preparing a reconciliation statement, highlighting amounts not yet offered for tax but intended to be included in future assessments. This issue is common among construction companies.