Query ON belated tds deduction

Save Share

This query is : Resolved

Quick Summary

This discussion addresses the belated deduction of Tax Deducted at Source (TDS) on a painting service bill. Even though two years have passed, TDS must be deducted on the remaining payment of ₹20,000. The advice includes passing retrospective accounting entries for the expense and liability, reversing the initial partial payment, and then making the final payment with the correct TDS deduction. Failure to deduct TDS earlier may result in interest and penalties.

ntc pioneer

ntc pioneer (Querist)
Follow

20 November 2025 bill of 40000 received from x enterprises for painting services

bill of 40000 received from x enterprises for painting services

rs 20000 was paid by debiting expenses and crediting bank .

bill was not accounted nor was TDS deducted

now after 2 years the remaining amount is to be paid

whether tds is to be deducted ?

what are the entries to be passed ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

21 November 2025 Now, when paying the balance ₹20,000, TDS must be deducted because this is the first time you are crediting the vendor’s account (or making payment).

• On the earlier ₹20,000, you are exposed to TDS default consequences (interest u/s 201(1A), possible penalty).
• On the current ₹20,000, you must deduct TDS before payment.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

21 November 2025 Since the full ₹40,000 was never accounted, the entry should be passed now:

Painting Expenses A/c Dr. ₹40,000
To X Enterprises (Creditors) ₹40,000
(Being painting expense and outstanding liability accounted now)

Reverse prior expense entry:
Bank A/c Dr. ₹20,000
To Painting Expenses A/c ₹20,000
Pass correct payment entry:
X Enterprises A/c Dr. ₹20,000
To Bank A/c ₹20,000

TDS to be deducted on ₹20,000 (remaining amount).

Assume TDS rate under Section 194C: 1% (if to individual/HUF) or 2% (if to other than individual/HUF); for this example, assume 1% = ₹200.

X Enterprises A/c Dr. ₹20,000
To Bank A/c ₹19,800
To TDS Payable A/c ₹200
(Being payment of balance to X Enterprises after deducting TDS)

ntc pioneer

ntc pioneer (Querist)
Follow

21 November 2025 Thanks sir.

But is it correct to pass a journal dr/cr bank/cash.
Can I cr expenses 20000 and Dr x enterprises for reversal of prior expenses entry

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

21 November 2025 Yes, without that you cannot deduct TDS over the aggregate bill of Rs. 40k.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now