Tds applicability

[Guest]

My query is related to TDS on the expenditure provision for year end. At the year end closing companies provided liability on estimate basis against some services but for which bill has not been received from the party. Say we make estimated provison for Rs 100. Now as per tax rules we have time upto 31 May to make the TDS payment(sayRs2). Now the party does not submit his bill upto 31st may and we make payment of Rs 2 to govt. Later on we realise that party will not make and it was a excess liabiltiy. Now we want to reverse this liabilty in next year. Now question is : Do i reverse Rs 98 or Rs 100. Can i clain Rs 2 as tax refund Do I have to issue TDS certificate to party. What is done in your comapny.

AI Summary

Guidance on Handling TDS for Year-End Expenditure Provisions Without Bills: Issue Certificate or File Refund Claim. A user inquired about the treatment of TDS on estimated expenditure provisions at year-end when the bill is not received. They provided an example of making a provision of Rs 100 and paying Rs 2 as TDS by May 31. If the party does not bill by then, they sought advice on reversing the liability and claiming a refund. The response suggested issuing a TDS certificate if the party agrees to pay Rs 2; otherwise, the user should file a refund claim.