Accounting of tds

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2011 A co. has received a bill of professional fee of Rs.200000 and TDS is to be deducted @10% i.e. Rs.20000 and balance payment is to be made for Rs.180000.
I have made following entry:-
Professional fee Dr.200000
To TDS payable 20000
To Party 180000
whether this entry is wrong?

anurag

anurag (Expert)
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09 December 2011 entry is correct.
can further check for
service tax amount on the bill,
and
convert tds payable to tds payable on professional services.

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2011 Thanks sir
A senior person in our co. is saying that entry is wrong he wants to make following entry
Professional fee Dr.200000
To Party 200000
and, Party Dr.20000
To TDS payable 20000
I had clarified him sir u have make 2 entries i had simply clubbed them effect of both style would be same....he says don't argue with me....party has send the bill of Rs.2lakh so first credit him with 2lakh

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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09 December 2011 Both entries are correct. But the 2nd one is more advisable. 1st credit the bill and then pass deduction entry of TDS. Your method is not wrong. But making two entries will reflect more clarity while viewing ledger and taking reports.

anurag

anurag (Expert)
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09 December 2011 which software u r using.
which ever softwere the company will be using, it must follow its accounting manual.
u can use either of the entries.
second entry have more clarity.
first entry is more smart as it saves time, if u have to enter a lot of bills and the time is the key factor than use first type.
it is better to form an accounting manual so that it does not look awalward in front of the auditors ,that half of the entries are done in one way and half are in another way.
ASK THE SENIOR PERSON WHY HE DID NOT PREPARE ACCOUNTING MANUAL IN ALL THE LAST YEARS, WHAT HE WAS DOING.......

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2011 Thanks Mr. Sanjay Gupta but mine view is that if we pass two separate entries and no. of transactions are there then it would be haphazard as it would be little bit difficult to identify that on which bill what amount has been deducted and is deducted or not.
And if one entry would be passed it would be clear from the entry then on what amount what tds has been deducted.Please consider the view

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