Tds applicability on barter deal

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 January 2012 Hello Friends

My company is making the barter Deal with some one , that they will provide us the cab & we will advertise their brand

so whether we need to deduct the tds
if yes , then both company has to deduct TDS on it

please give supporting case law

& Secondly what will be entry

i.e. we have to book income & expense in the same entry

party is not credited so no tds liability

or i have to pass 3 entries
1 for booking income & 2nd for booking expense & 3rd for netting of the account

friends i am confused
please clarify

waiting for your reply

Vineet Goyal

Vineet Goyal (Expert)
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15 January 2012 Both the companies will have to deduct TDS on the transaction amount. All TDS sections clearly specifies that you need not to credit the amount to the party, it can be credited to any account including suspense account. That is why TDS is deducted on provisions also in March month. As you will have to pass the entry in accounting books, you will surely quantify the transaction amount. On this transaction amount you will have to deduct expense. TDS sections does not allow setting off of expenses. So, pass the entries as if these are separate entries. Do not mix all the entries in one entry. Pass separate entry and credit party account.

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