Tds Provisions

Year end TDS Compliance – Points to be kept in mind

You kind attention is invited to the amendment made vide Notification No. 41/2010 dated 31st May 2010 and the notable features of the amended TDS Rules which are applicable to the month of March and to the Quartered ended 31st March 2011 are as under :

(a) Time limit for deposit of TDS for the entire month of March will be 30th April instead of
two separate time limits viz. 7th April for TDS up to 30th March and 31st May for TDS as of 31st March.

(b) Non-salary TDS certificates will need to be issued on quarterly basis (instead of monthly
      or annual basis)

(c) Time limit for filing quarterly TDS statement for last quarter of FY is advanced to 15th          
      May instead of 15th June.

As can be seen from the above that the time limit for deposit of TDS deducted during the month March 2011 (i.e., on payment basis OR on provision entries made at the year end) shall be April 30th 2011 as against the due date of April 7th and May 31st.

Please note that failure to deduct TDS attract :

(i) disallowance of expenditure u/s. 40(a)(ia) on which TDS not made while computing
income under normal provisions;

(ii) Levy of interest under section 201 (IA) at the rate of One and Half Percent or part of the
month for the period of delay in deduction and/or deposit of TDS (iii) levy of Penalty under section 271C for failure to deduct TDS.

Further, please note that the expenditure relating to work/services availed during the period from April 1st 2010 to Mach 31st 2011 should only be accounted in FY 2010-11 and in the event any of such expenditure are accounted in the accounts of the immediately succeeding year then the same will qualify as “prior period expenses” requiring reporting in annual accounts as well as in the Tax Audit Report. The amount of prior period expenses   will not be allowed as deduction under Income tax Act in the succeeding year(s).

In view of the above, Finance and...