Tds and wct payment
This query is : Resolved
28 May 2013
Sir,
I want to ask one question that when I received payment from party I always divide in Bank Receipt, Tds Payment and WCT payment.I Want to know whether Tds Payment to be shown in Assessment year i.e.Year 2013-14 and WCT in Financial Year 2013, I always post in Tally this manner, whether I am right or wrong?
I want to ask one question that when I received payment from party I always divide in Bank Receipt, Tds Payment and WCT payment.I Want to know whether Tds Payment to be shown in Assessment year i.e.Year 2013-14 and WCT in Financial Year 2013, I always post in Tally this manner, whether I am right or wrong?
28 May 2013
you enter one entry and related tax claim in single year as per accural accounting method
28 May 2013
Sir,
As Per my above query (if i enter today 28-5-2013),I want to know that TDS receipt entry to be in Assessment Year i.e.Year 2014-15 and WCT to be enter in Financial year i.e.Year 2013-14.This entry to be correct or wrong? what is the accounting rule, whether TDS receipt entry to be done in Financial year or Assessment year and same question for WCT receipt entry.
Please guide me.
Thanks,
Pravin
As Per my above query (if i enter today 28-5-2013),I want to know that TDS receipt entry to be in Assessment Year i.e.Year 2014-15 and WCT to be enter in Financial year i.e.Year 2013-14.This entry to be correct or wrong? what is the accounting rule, whether TDS receipt entry to be done in Financial year or Assessment year and same question for WCT receipt entry.
Please guide me.
Thanks,
Pravin
27 July 2025
You're asking an important and practical question regarding how to **account for TDS and WCT (Works Contract Tax)** entries — specifically, **which year they should be recorded in**: **financial year (FY)** or **assessment year (AY)**.
Let’s break this down clearly and simply:
---
## ✅ Basic Accounting Principle:
Under the **accrual (mercantile) system of accounting**, **all income and related tax entries** (TDS, WCT, etc.) should be recorded in the **same Financial Year (FY)** in which the **income is earned or receivable** — **not** in the Assessment Year (AY).
---
## 🔁 Understanding Financial Year (FY) vs. Assessment Year (AY):
| Term | Meaning |
| ------------------------ | ---------------------------------------------------------------------------------- |
| **Financial Year (FY)** | The year in which income is **earned** (e.g., 01-Apr-2013 to 31-Mar-2014) |
| **Assessment Year (AY)** | The year in which income is **assessed** for tax (e.g., AY 2014-15 for FY 2013-14) |
---
## 🧾 So, for your example dated **28-May-2013**:
* This falls under **FY 2013-14**
* And will be assessed in **AY 2014-15**
---
## ✅ How to Account for the Entries:
### 🔹 1. **TDS Entry:**
When you receive a payment that includes TDS, you should pass the entry **in the same Financial Year** (i.e., when income is booked), not in the Assessment Year.
**Tally Entry Example (Date: 28-May-2013):**
```
Bank A/c Dr. ₹90,000
TDS Receivable A/c Dr. ₹10,000
To Debtor/Client A/c ₹1,00,000
```
✅ This entry is correct in **FY 2013-14**. You will claim the TDS credit while filing return for **AY 2014-15** — but accounting happens in **FY 2013-14**.
---
### 🔹 2. **WCT (Works Contract Tax):**
Similarly, **WCT deduction by the client** should be booked in the **same Financial Year** in which the bill/invoice is raised or received.
**Tally Entry Example (If WCT deducted):**
```
Bank A/c Dr. ₹88,000
TDS Receivable A/c Dr. ₹10,000
WCT Receivable A/c Dr. ₹2,000
To Debtor/Client A/c ₹1,00,000
```
✅ WCT is also accounted for in **FY 2013-14** — not in assessment year.
---
## ❌ Incorrect Understanding:
You mentioned:
> "TDS receipt entry to be in Assessment Year... WCT in Financial Year"
❌ That is **incorrect** from an **accounting standpoint**.
✅ **Both TDS and WCT should be recorded in the year when the income is earned or invoice is raised — i.e., in the Financial Year**, not in the Assessment Year.
---
## ✅ Final Summary:
| Item | When to Record in Books (Tally) | Why? |
| --------------- | -------------------------------------------------------- | ----------------------------------------------- |
| TDS | In **Financial Year** when income is booked | Matches income recognition under accrual method |
| WCT | In **Financial Year** when invoice/payment is received | It is a deduction against that period’s income |
| Assessment Year | Only used for **tax filing**, not for accounting entries | -- |
---
Let me know if you want help structuring these entries in Tally or reconciling with Form 26AS.
Let’s break this down clearly and simply:
---
## ✅ Basic Accounting Principle:
Under the **accrual (mercantile) system of accounting**, **all income and related tax entries** (TDS, WCT, etc.) should be recorded in the **same Financial Year (FY)** in which the **income is earned or receivable** — **not** in the Assessment Year (AY).
---
## 🔁 Understanding Financial Year (FY) vs. Assessment Year (AY):
| Term | Meaning |
| ------------------------ | ---------------------------------------------------------------------------------- |
| **Financial Year (FY)** | The year in which income is **earned** (e.g., 01-Apr-2013 to 31-Mar-2014) |
| **Assessment Year (AY)** | The year in which income is **assessed** for tax (e.g., AY 2014-15 for FY 2013-14) |
---
## 🧾 So, for your example dated **28-May-2013**:
* This falls under **FY 2013-14**
* And will be assessed in **AY 2014-15**
---
## ✅ How to Account for the Entries:
### 🔹 1. **TDS Entry:**
When you receive a payment that includes TDS, you should pass the entry **in the same Financial Year** (i.e., when income is booked), not in the Assessment Year.
**Tally Entry Example (Date: 28-May-2013):**
```
Bank A/c Dr. ₹90,000
TDS Receivable A/c Dr. ₹10,000
To Debtor/Client A/c ₹1,00,000
```
✅ This entry is correct in **FY 2013-14**. You will claim the TDS credit while filing return for **AY 2014-15** — but accounting happens in **FY 2013-14**.
---
### 🔹 2. **WCT (Works Contract Tax):**
Similarly, **WCT deduction by the client** should be booked in the **same Financial Year** in which the bill/invoice is raised or received.
**Tally Entry Example (If WCT deducted):**
```
Bank A/c Dr. ₹88,000
TDS Receivable A/c Dr. ₹10,000
WCT Receivable A/c Dr. ₹2,000
To Debtor/Client A/c ₹1,00,000
```
✅ WCT is also accounted for in **FY 2013-14** — not in assessment year.
---
## ❌ Incorrect Understanding:
You mentioned:
> "TDS receipt entry to be in Assessment Year... WCT in Financial Year"
❌ That is **incorrect** from an **accounting standpoint**.
✅ **Both TDS and WCT should be recorded in the year when the income is earned or invoice is raised — i.e., in the Financial Year**, not in the Assessment Year.
---
## ✅ Final Summary:
| Item | When to Record in Books (Tally) | Why? |
| --------------- | -------------------------------------------------------- | ----------------------------------------------- |
| TDS | In **Financial Year** when income is booked | Matches income recognition under accrual method |
| WCT | In **Financial Year** when invoice/payment is received | It is a deduction against that period’s income |
| Assessment Year | Only used for **tax filing**, not for accounting entries | -- |
---
Let me know if you want help structuring these entries in Tally or reconciling with Form 26AS.
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