Section 194A of Income Tax Act, 1961

[Guest]

 If a central government undertaking has made provision for future expenses say for an amount of Rs. 20 crores whether Sec 194A will attract as from the plain reading of section 194A it appears that section will be attrated if payment is paid to payee or has been credited to the account of payee by way book entry but remain silent about the provisiions made for expenses. Now, what is the tax implication i.e whether the same would attract Sec 194A or not.

Your instant reply will be fervently solicited

[Rama Krishana]

Only ascertained libility is subject to TDS as per my understanding. In case of future expenses, where the account of of payee is effected, TDS is required to the deducted. But, where mere a provision is made without making any entry to payee account, in my view, provisions of section 194A are not attracted.

[Rama Krishana]

Only ascertained libility is subject to TDS as per my understanding. In case of future expenses, where the account of of payee is effected, TDS is required to the deducted. But, where mere a provision is made without making any entry to payee account, in my view, provisions of section 194A are not attracted.

AI Summary

Section 194A: TDS Not Required for Mere Provision of Future Expenses Without Affecting Payee's Account. A query was raised regarding the applicability of Section 194A of the Income Tax Act, 1961, when a central government undertaking makes provisions for future expenses, specifically an amount of Rs. 20 crores. The question was whether such provisions would trigger the requirement for Tax Deducted at Source (TDS) under this section. The response indicated that TDS applies only to ascertained liabilities. If future expenses affect the payee's account, TDS must be deducted. However, if only a provision is made without affecting the payee's account, Section 194A does not apply.