10-07-2011, 03:01 PM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Bilal_JF</i>
<br />if the whole income stream of a company is subject to FTR then can that company claim withholding tax on cash withdrawal in its return?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Every tax deduction has its own nature, viz, final, adjustable or minimum.
General Rule is that all tax deductions & collections are adjustable unless expressly stated as final/ minimum [s.168]
Suppose a person sells goods of Rs.1 Lac in a tax year on which final tax of Rs.3,500 has been deducted. Simultaneously, from his bank account Rs.100 have been withheld as tax on cash withdrawal.
Under s.168 he is allowed tax credit for tax collected on cash withdrawal. But as Rs.3,500 is a final tax so according to
s.168(3)"No tax credit shall be allowed for any tax collected or deducted that is a final tax".
Now what with the tax collected on cash withdrawal.
S.168(5) addresses this situation. "A tax credit...that is not able to be credited ... for the year <u>shall be refunded</u>."
So he may claim refund of Rs.100 collected as tax on cash withdrawal from bank.
In annexure B following entries shall be made
Rs.100 for tax deducted on cash withdrawal
Rs.3500 for tax deducted as final tax.
Total of Annexure B would be 3600
From there transfer this value of Rs.3600 to page 1 of Return. Tax Chargeable would be Rs.3500 (transferred from page 2). 3500 - 3600 = Tax Refundable = (100)
<br />if the whole income stream of a company is subject to FTR then can that company claim withholding tax on cash withdrawal in its return?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Every tax deduction has its own nature, viz, final, adjustable or minimum.
General Rule is that all tax deductions & collections are adjustable unless expressly stated as final/ minimum [s.168]
Suppose a person sells goods of Rs.1 Lac in a tax year on which final tax of Rs.3,500 has been deducted. Simultaneously, from his bank account Rs.100 have been withheld as tax on cash withdrawal.
Under s.168 he is allowed tax credit for tax collected on cash withdrawal. But as Rs.3,500 is a final tax so according to
s.168(3)"No tax credit shall be allowed for any tax collected or deducted that is a final tax".
Now what with the tax collected on cash withdrawal.
S.168(5) addresses this situation. "A tax credit...that is not able to be credited ... for the year <u>shall be refunded</u>."
So he may claim refund of Rs.100 collected as tax on cash withdrawal from bank.
In annexure B following entries shall be made
Rs.100 for tax deducted on cash withdrawal
Rs.3500 for tax deducted as final tax.
Total of Annexure B would be 3600
From there transfer this value of Rs.3600 to page 1 of Return. Tax Chargeable would be Rs.3500 (transferred from page 2). 3500 - 3600 = Tax Refundable = (100)
