Statutory liability
This query is : Resolved
01 September 2017
Please tell,
May i issue a check against tds liability of march . and liability not shown in the balance sheet.
may i do this?
May i issue a check against tds liability of march . and liability not shown in the balance sheet.
may i do this?
02 September 2017
Kindly explain it clearly. You may refer www.wealth4india.com
25 July 2025
Good question! Here’s a quick answer on **issuing a cheque against TDS liability not shown in the Balance Sheet**:
---
### Can you issue a cheque against TDS liability of March if it's not shown in the Balance Sheet?
**Technically, no.**
* The liability should be **recognized and shown in the Balance Sheet** as a current liability (e.g., "TDS Payable" or "Statutory Dues Payable").
* If the TDS liability existed as on the Balance Sheet date (March 31), but is not recorded, it means the financial statements are **not presenting a true and fair view**.
* Issuing a cheque without recognizing the liability violates the **matching principle** and **accounting standards** (AS 1 – Disclosure of Accounting Policies, and AS 29 – Provisions, Contingent Liabilities, and Contingent Assets).
---
### Proper treatment:
* Before issuing payment, you must **accrue the liability** by making the entry:
`TDS Expense/Expense Account Dr`
`TDS Payable (Liability) Cr`
* This way, liability appears in the Balance Sheet, and payment reduces that liability.
---
### Summary:
| Situation | Can you issue cheque? | Notes |
| -------------------------------- | --------------------- | ----------------------------------------------------------- |
| Liability shown in Balance Sheet | Yes | Proper accounting treatment |
| Liability **not shown** in B/S | No | This distorts financials and violates accounting principles |
---
**If you issue payment without recording liability, you understate liabilities and expenses — this is not advisable.**
---
Would you like me to help draft the correct journal entries for TDS liability?
---
### Can you issue a cheque against TDS liability of March if it's not shown in the Balance Sheet?
**Technically, no.**
* The liability should be **recognized and shown in the Balance Sheet** as a current liability (e.g., "TDS Payable" or "Statutory Dues Payable").
* If the TDS liability existed as on the Balance Sheet date (March 31), but is not recorded, it means the financial statements are **not presenting a true and fair view**.
* Issuing a cheque without recognizing the liability violates the **matching principle** and **accounting standards** (AS 1 – Disclosure of Accounting Policies, and AS 29 – Provisions, Contingent Liabilities, and Contingent Assets).
---
### Proper treatment:
* Before issuing payment, you must **accrue the liability** by making the entry:
`TDS Expense/Expense Account Dr`
`TDS Payable (Liability) Cr`
* This way, liability appears in the Balance Sheet, and payment reduces that liability.
---
### Summary:
| Situation | Can you issue cheque? | Notes |
| -------------------------------- | --------------------- | ----------------------------------------------------------- |
| Liability shown in Balance Sheet | Yes | Proper accounting treatment |
| Liability **not shown** in B/S | No | This distorts financials and violates accounting principles |
---
**If you issue payment without recording liability, you understate liabilities and expenses — this is not advisable.**
---
Would you like me to help draft the correct journal entries for TDS liability?
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