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

[Mukesh Kumar]

You should furnish the reconciliation statement. With the statement mark the amount which was not offered to tax being to  be offered during the next year or so?

AI Summary

TDS reconciliation: furnish a reconciliation statement and identify receipts not yet offered to tax for later inclusion. Construction companies under AS 7 often face mismatches between TDS credits and contract revenue recognised, because mobilisation and other advances attract tax at source while revenue recognition is deferred. Tax authorities may demand a one to one reconciliation between contract receipts in profit and loss and TDS entries for the year. Taxpayers should furnish a detailed reconciliation statement and mark amounts not offered to tax in the current year for offering in a subsequent year.