TDS DEDUCT ON INTEREST PAID TO COMPANY

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rajesh (Querist)
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31 October 2009 DEAR ALL

IF TDS IS DEDUCT ON INTEREST PAID TO COMPANY WHICH BOOK OF ENTRIES IS PASSED AND IN TEREST IS INDIRECT INCOME AND TDS IS WHICH TYPE OF EXP I.E DIRECT OR CURRENT ASSET

PLEASE TELL

THANKS IN ADVANCE

Seema

Seema (Expert)
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31 October 2009 It wld b Liability... as u hav to deduct it & deposit to the credit of Govt

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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31 October 2009 Entries in the books of the person making the payment of interest is as follows :-

1) Interest a/c Dr 1000/-
To TDS a/c 100/-
,, Abc Ltd 900/-
(Being interest payable and its
tds accounted)

2) TDS Dr 100/-
To Bank 100/-
(Being tax deducted from Abc Ltd
remitted to Govt through bank)

3) Abc Ltd Dr 900/-
To Bank 900/-
(Being payment made on account
toward interest)

Rahul Vora

Rahul Vora (Expert)
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31 October 2009 Scheme of entries in the books of the person receiving the interest will be as follows,

1) Bank A/c Dr 90/-
TDS Receivable A/c Dr 10/-
To XYZ Ltd 100/-
(Being interest received from XYZ Ltd. accounted for and TDS thereof)

TDS Receivable is to be shown under Current Assets in B/S

rajesh

rajesh (Querist)
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02 November 2009 IF INTEREST IS RECEIVED TO OUR COMPANY WITH TDS DEDUCT AT THIS CASE WHICH TY PE OF BOOK ENTRIES WE PASSED AND A/C TYPES I.E REVENU AND CAPITAL IF TDS IS SHOWN IN BALANCE SHEET IN ASSETS SIDE THIS A/C HOW TO WRITE OFF AND WHICH ENTRIES WE PASSED

PLEASE TELL

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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27 July 2025 Great question! Here's how to handle TDS on interest **received by your company** and how to pass entries for it:

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### When your company receives interest **with TDS deducted** by the payer:

* The **gross interest** amount is income.
* The **TDS amount** is tax deducted at source by the payer and shown as **TDS Receivable (asset)** in your books.
* When you file your income tax return and claim this TDS credit, it gets adjusted against your tax liability.
* Once the tax department refunds or adjusts this TDS, you write off the TDS Receivable.

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### Book entries for receiving interest with TDS deducted:

| Date | Particulars | Debit (₹) | Credit (₹) |
| ---------------------- | ------------------------ | --------- | ---------- |
| Bank A/c | Dr (Net amount received) | 90 | |
| TDS Receivable A/c | Dr (TDS amount) | 10 | |
| To Interest Income A/c | | 100 | |

*(Being interest income of ₹100 received with TDS of ₹10 deducted)*

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### Writing off TDS Receivable on adjustment or refund:

When the TDS amount is adjusted against your tax liability or refunded:

| Date | Particulars | Debit (₹) | Credit (₹) |
| -------------------------------- | ----------- | --------- | ---------- |
| Income Tax Refund/Tax Credit A/c | Dr | 10 | |
| To TDS Receivable A/c | | 10 | |

*(Being TDS Receivable written off on adjustment/refund)*

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### Classification of accounts:

* **Interest Income** → Revenue (Income Statement)
* **TDS Receivable** → Current Asset (Balance Sheet)
* **Bank A/c** → Asset
* **Income Tax Refund/Tax Credit A/c** → Asset or adjustment account

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**Note:**

* TDS is not an expense; it is tax deducted by the payer on your income, so it’s recorded as receivable until you claim the credit.
* Once the credit is utilized or refunded, TDS receivable is cleared.

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Let me know if you want the entries from the payer’s side or more examples!

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