TDS/professional tax on Consultancy fees

[Guest]

Dear Sir / Madam,

 

I need your suggestion regarding the Tds deducted on Consultancy Service. I am proprietor of the small Clearing & forwarding firm.

In the assessment year 2012-13, I had raised the Bill of Rs. 3, 86,050/- to one of our manufacturer for Consulting Charges. They give me advance payment of Rs. 1, 00,000/ & rest kept due/balance 

for as per term decided once work complete. I deposited cheque. Unfortunately work not had done yet & in month of Nov 2012 they took file back from me & gave to other company for the same work.

I filed the IT & recd the refund also for assessment year 2012-13. Now, I have to return the payment of

1, 00,000/ which I recd as a advance. But customer is asking to refund TDS amount as well of Rs. 38,605/-

Please suggest, shall I return full amount 1, 00,000 + TDS 38,605 or only 1, 00,000.00

[Padma Balakrishnan]

TDS Deducted is as good as amount recd & hence u will have to treat it in the same way as the amt of Rs 1 lac actually recd.However how much to refund will have to be evaluated by you based on the contract terms.

Secondly whether u have shown 1 lac as income & paid the tax on it also to be considered.

CA Padma Balakrishnan

AI Summary

TDS treated as receipt: refund of deducted tax when an advance is returned depends on contract terms and tax reporting. TDS deducted on consultancy fees is treated as effectively received and should be handled like the advance payment. The obligation to refund the deducted TDS when returning an advance depends on the contract terms and whether the recipient declared the advance as income and paid tax on it; these factors determine how much must be refunded.