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Under the accrual basis, the clients would deduct and pay the TDS against the Assessment Year relevant to the financial year. However, under cash basis, the professional firm would recognise unpaid bills as income only whenthey are realized.
This often creates confusion among professionals as to which assessment year they should claim TDS credit? and how? Rule 37BA of Income Tax Rules which was inserted w.e.f. 01-11-2009 provides for apportionment of TDS in such situations. As per rule 37BA tds credit should match with the income assessable. Sub Rule (3) of Rule 37BA is reproduced as under:
(3) (i) Credit for tax deducted at source and paid to the CentralGovernment, shall be given for the assessment year for which such income isassessable. Following rule 37BA(3) as above, the professional firm should file its income tax return and claim TDS as under:
FY:2012-13, AY 2013-14 In TDS Schedule ITR-4, leave column 5 blank, incolumn 6 write 10000/- and in column 7 write 0.00. FY:2013-14, AY 2014-15
In TDS Schedule ITR-4, in column 5 write 2013.In column 6 write 10000/- and in column 7 write 10000/-
What is Cash Basis of Accounting? ...common mis-beliefs and associated myth... Read more >>
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