Section 194A of Income Tax Act, 1961

[Asked by 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

TDS on provisioned expenses arises only when liability is ascertained or credited to the payee's account, not for mere provisions.
Withholding under Section 194A applies only when the liability is ascertained and paid or credited to the payee's account; mere provisions for future expenses without crediting the payee's account do not attract withholding.