My question is "Is required to deduct TDS on Debit amount of TDS in Party's ledger?
We paid a contractor covered u/s 194C XYZ amount Rs.1,00,000. We paid without any deduction.Now at quarter or month end we are deducting amount Rs.2,000 @ 2% from it and debited to his account.
Now total debit increase by Rs.2000 so if calculate after this debit entry total payment increase by Rs.2000.
We have to calculate on total Rs.1,02,000 @ 2 % Rs.2,040 out of which Rs.2,000 is already debited so extra amount Rs.40 we have to pay.
So total TDS amount will be Rs.2040 instead of Rs.2000 on Rs.1,00,000.
Which is correct amount of TDS in above case?
Kindly give reply at earliest ...