Tds

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This discussion addresses the accounting treatment for TDS (Tax Deducted at Source) that was not initially deducted from creditor payments but was later paid and filed. The core issue is how to reflect this in the company's books when the full amount has already been paid to the creditor. Advice includes passing TDS entries in creditor ledgers, showing a receivable balance, and practical methods for adjusting or recovering the TDS amount, especially for recurring versus non-recurring transactions.

Padmaja CA

Padmaja CA (Querist)
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27 May 2020 Dear Professional Colleagues

Some of our clients forgotten/unknowing to deduct the tds from the creditors but after we find, then they deduct the tds and file the Tds return(which is very small amounts like Rs.500 in 194 c) , now the problem is they did not enter this tds adjustment entry in the books of accounts as they have alredy paid full amount to the creditor(if they entered in books then that small amount of tds remain shows receivable from that creditor), is it acceptable or not, because as per the tds section total tds paid and tds return filed.

please clarify my doubt Thanks in Advance

CA Sindhu KJ

CA Sindhu KJ (Expert)
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27 May 2020 There are two aspects here
1. Accounting: TDS entries has to be passed in creditor ledgers. On doing so your creditor will show a receivable balance as payment is made in full already.

2. Adjustment of payment:
a. In case of recurring transactions with creditor: Adjust TDS in next transaction & make the payment
b. If it is non recurring in nature : Inform creditor there was an excess payment due to non deduction of TDS & recover the same (Practically i understand recovery is difficult)

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