Provision Before Amendment by Union Budget 2010
As per existing provision, in case of TDS deducted as per Chapter XVII-B but the payment of the same not deposited with the Government within due date of section 139(1) for the last month of the previous year and within the last day of the financial year for the first eleven months, results in the disallowance of such expenses, the same not being an amount deductible as an expense.
Amendment made in Union Budget 2010
Union Budget 2010 amended the due date for the payment of TDS for the first eleven months of the previous year to align it with the due date prescribed for the last month of the previous year being the due date prescribed under section 139(1) of the Act. So, as per the new amendment the due date of depositing the TDS for all the payments made has been made to Section 139(1) of the Act, being the due date prescribed for the filing of returns.
Analysis & Comments
Present provision pertaining to disallowance of expenses on which TDS is deductible as per Chapter XVII B due to non-payment of TDS had dual treatment, for the first eleven months the due date being last day of the financial year and for the twelfth month being the due date prescribed for filing of tax returns. This differentiation has been done away, post the present amendment. Also, considering the present cash crunch situation of various corporates there are various instances where the invoice billing of sale is done and there are payment’s due for the said contract to other vendors but the same are paid only after the receivable’s are received. In the given case the income gets accounted but the expenses are not allowed due to non-payment of TDS, as the same is based on Cashflow situation of the company leading to the violation of matching concept for the purpose of determining business profit on standalone yearly basis. By the present amendment the due date has been extended for the payment of TDS to the due date of filing returns prescribed under section 139(1) of the Act. So, the grace time provided for payment of TDS has been sufficiently enhanced making the allowability of expense more practical and possible. The amendment has been retrospectively made to give effect from assessment year 2010-2011. So, all the assessees can make the payment of TDS for ongoing financial year till the due date of filing tax returns prescribed under section 139(1) of the Act.
Effective Date
This amendment will take effect retrospectively from 1st April, 2010, and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years.
Can the same be applied on a special case basis by the assessing officer for the assessment year 2008-09 and not disallow the expense as TDS deposited late but before filing of returns
This amendment is really a welcome one because,the main purpose of introducing TDS is fulfilled in the same. The Assessee can claim the expense as an expenditure in the same year when the third party claims it to be its income. And also the mere assurance that the deducted amount is paid to the Government before filing returns. This provision will definitely relieve assesee from unnecessay tensions.
If, according to amendments, I have provide some amount of expenses in my books to a person and pay TDS thereon upto date of filling tax return as prescribed in section 139(1), then how the person who received the amount will show his income in that assessment year.
This amendment is very helpful.At last there are officials in the in the finance ministry who appreciate the practical difficulties of assessees
it is a welcome move ratonalising the IT rules
and extending the benefit of claiming the expenditure pertains to the previous year
thanks