TDS paid on cancelled invoice, Accounting - Auditing

[Subramanian N]

A invoice was first accounted and subseuqently cancelled for some reasons & in between TDS paid.     Would like to know the Accounting treatment for the TDS paid 

Posts / Replies

[Pradeep Khatri]

Since no payment is made then TDS would not be applicable on such transaction.

[Hitesh Shah]

Commercially you are having two options -

1. Adjust the subsequent payments with Customer. In this case Customer will claim the refund in its Income Tax Return hence the amount receivable will either get reduced from total receivables or it will reflect as advance from customer

2. You can also take burden of refund on your shoulder by claiming the refund of TDS in 26Q in this case Refund will remain in your Financials under current asset