TDS APPLICABILITY

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B K Panchal (Querist)
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23 September 2010 Dear Sir - is TDS applicable under the following circumstances?
Orgn.'A'issues a debit note to orgn 'B'(both are separate leagal entities)for professional/tech services rendered by 'A's employees to 'B',asking B to debit it in its books with corresponding credit to 'Grant from 'A'. In fact 'A' pays salaries to its employees and recovers TDS u/s 192 regularly. In short 'A' wants the total salary costs of some of its employees to be booked by 'B'. What could be the best accounting head for 'B'? Should TDS be recovered by 'B'?

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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23 September 2010 Your question in not very clear.

Even though, i am trying to reply to your apparent query.

(A)'s employee serves for (B). (A) sends debit note on (B).

So entry in (B)'s books :

1. Professional services Dr.
To (A) Cr.
2. (A) Dr.
To Grant from (A) Cr.

Now, (A) pays salary to its employee after deducting due TDS.

But (A) raises debit note on (B) for gross salary amount.

If my above understanding of your query is correct then,

Salary payment by A to its employee is its internal matter.

Raising debit note is separate matter.

the TDS question will arise when the debit note is booked by (B).

In the entry in (B)'s books will be :

1. Professional services Dr.
To (A) Cr.
2. (A) Dr.
To Grant from (A) Cr.
To TDS payable (Prof Services) Cr.

I hope its clear...

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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23 September 2010 Tell me if your query is still not resolved ?

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