Accounting of tds if vendor became bankrupt & unable to pay

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2015 Dear Expert,

If we issue an invoice for services to a vendor & he deducted TDS & deposited the same but unable to pay balance payment due to bankrupt. So what steps should we be follow for accounting of this situation????

Is TDS amount is our income or advance tax only ???

What steps should follow for income tax purpose???

Thanks in advance

CA Amaljith P J

CA Amaljith P J (Expert)
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28 January 2015 U would already had accounted the income on raising the invoice by debiting the customer account. Now, as the customer (i think u mentioned as vendor) deducted and paid the TDS, the credit will be available to you in 26AS and hence credit the customer account and debit advance tax a/c or TDS receivable a/c or such other account as the company maintains. Now, as the party became bankrupt, he will not be making the balance payment. treat it as bad debt. in taxation, u will have to declare 100% as income, and the amount not received as bad debt.