Tds and tcs

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 September 2012 I WANT TO KNOW THAT WHAT IS TAX DEDUCTION AT SOURCE AND TAX COLLECTION AT SOURCE AND WHAT IS RATE OF TDS AND TCS. WHAT SHOULD BE THE ENTRY OF TDS AND TCS IN ACCOUNTING BOOKS.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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13 September 2012 Tax deducted at sources means "deduction of tax from the expenditure to the payer" this would be deducted according to the sections 192,193,194A,194B,194BB,194C,194D,194E,194EE,194F,194G,194H,194I,194J,194LA,195,195A,196,196B,196C,196D at different rates for each section after considering 197 exemption if any(please refer these section for details about liability to deduct TDS).

Tax collect at source means "Collection of tax from the payer(i.e collected in addition to the income from the payer). It would be collected according to the section 206C there is 4 types of rates for 7 types of collections( please refer this section for details).

Entries in the books:

For TDS

1) expenditure a/c dr ****
To TDS a/c ****
To Payee a/c ****
( Being expenditure incurred and the amount is payable after deduction of TDS)

2) at the time of amount paid to payee

Payee a/c ****(After TDS amount)
To Bank/Cash a/c ****
(Being amount payable to payee paid now)

In case payment made at the time of expenditure incurred then second entry not required and replace payee a/c with Bank/cash a/c in the first entry other wise both the entries can pass at the same date and time.

3) at the time of payment of TDS to government

TDS a/c dr ****(With TDS amount)
To Bank/cash a/c ****
(Being TDS remitted to the government)

For TCS.

1) at the time of collection

Payer a/c dr ****
TO TCS a/c ****
TO Income a/c ****
(Being income receivable along with TCS)

2) At the time of receipt

Bank/cash a/c dr ****(with gross amount)
To payer a/c ****
(Being amount receivable received now)

In case payment received at the same time of income arised then second entry not required and replace payer a/c with bank/cash account in the first entry other wise both entries can be pass at the same day and time.

3) at the time of TCS remitted to the government

TCS a/c dr ****(with TCS Amount)
To Bank/cash a/c ****
(Being TCS remitted to the government)

OM SAI SRI SAI JAI JAI SAI

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