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kamna bisht (Querist)

07 April 2015 Thanx in advance
we are paying commission on sales to the agent and receiving payment from customers through him so he is paying us after deducting his portion of commision and shipping charges as well and issue us invoice with the amount of shipping charges & commision on sales.

can u plz explain the treatment of TDS here
PLEASE REPLY !

Akash Mishra

Akash Mishra (Expert)

07 April 2015 There is no special treatment required for this situation. In the given case the payment mode is different. If the agent is paying you money after deducting his commission then he should deduct his commission net of TDS. and according to the Income tax Act, Date of payment or entry whichever is earlier. TDS should be deposited accordingly. so please explain the situation in detail then only query can be resolved. based on the information first record the sales and then book the commission, and also TDS payable.

1. Sales A/c Dr.
To Cr.
2.Commission A/c Dr.
To Agent
To TDS on Commission Payable.
3.Agent A/c Dr.
To cash A/c
When making payment to Agent Net of TDS
4. TDS on Comm Payable Dr.
To Cash.

In the entry no 2 you can credit the agent with gross amount and pass a entry for TDS deduction separately which will show better presentation. or can also follow net entry depending on you convenience.

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