Question ID :
44676
TDS Receivable adjusted against demand
One of my clients has demand related to previous years and dept is adjusting TDS receivable against demand. They have filed appeal against the matter and are still recording TDS receivable for previous year under assets. How to treat this from financial reporting perspective? What are recommended/ suggested disclosures or reporting steps for same.
Posted by
AYUSH AGARWAL
on
Jul 04, 2024
Filed Under
AUDIT
From a financial reporting perspective, the TDS receivable should continue to be recognized as an asset until the appeal outcome is known. The tax demand should be disclosed as a liability, and if the department adjusts the TDS receivable against the demand, this should be reflected as an adjustment in both assets and liabilities. Since the client has filed an appeal, the status of the appeal and its potential impact should be disclosed in the Notes to Accounts, along with the nature of the dispute and the contingent liability, if any. If the appeal is unsuccessful, the TDS receivable will be adjusted accordingly, and any tax liability should be recognized.
Posted by
SACHIN KUMAR RAI on
May 12, 2025