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Following Expenses not deductible

Any payment made

  • Outside India
  • In India to a Non Resident

On which TDS is applicable

But TDS Not deducted

      Or

TDS deducted but not deposited within due date of ITR  (31 July/30 September)

(Earlier it was due date of TDS Deposit -30 April)

Examples of Such Expenses are Interest, Royalty, Fees for Technical Services etc

 

Payment Covered here are Interest, Royalty, fee for technical services or any other sum chargeable to income tax

Circular 3/2015 has clarified that if TDS not deducted on payment to non residents,only that portion will be disallowed which is chargeable to Income tax and not the whole payment

 

 

Deduction Allowed in Next Year

 

When TDS actually deducted and deposited in next year (after TDS Deposit date)

Or

When TDS deducted in previous year but deposited in next year

Then

That expense allowed in that next year when actually deposited

QUESTIONS

 

Q 1

Particulars Amount
SALES 6000000
Less  
EXPENSES 4000000
PROFIT 2000000

Suppose  1500000 expenses were paid outside India on which TDS was deductible but not deducted

-a-

Computation of PGBP Income  
Profit as per P& L A/c 2000000
Add  
Expense Disallowed  
TDS Not deducted 1500000
   
Expense Allowed  
   
PGBP INCOME 3500000

 -ea-

Q 2

Particulars Amount
SALES 6000000
Less  
EXPENSES 4000000
PROFIT 2000000

Suppose  1500000 expenses were paid outside India on which TDS was deductible but not deducted 

As per Income tax,7.5% of Income is deemed to be Income chargeable to tax for these non residents

-a-

Computation of PGBP Income  
Profit as per P& L A/c 200000
Add  
Expense Disallowed  
TDS Not deducted 11250
(150000*7.5%)  
Expense Allowed  
   
PGBP INCOME 211250

-ea-

  1. Practical Income Tax
  2. Corporate income Tax
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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