My client has paid Rs. 35,000 towards legal fees to a lawyer. TDS @10% has been deducted at Rs. 3,500. But the client has made payment of Rs. 35,000 at gross amount only.
Now what is the entry & action i have to take to rectify the above mistake.
Now that your client has paid an amount of Rs.35,000 that means it is 90% of the total amount since 10% needed to be deducted as TDS. Therefore now the TDS liability comes out to be Rs. 3,889(35,000/90%-35,000). Hence an extra amount of Rs. 389 needs to be deposited.
I think the only remedy left for you is to show the refund of Rs.3,500 received back from your client being the excess amount paid i.e. Cash a/c dr. 3,500 to Lawyer a/c 3,500
CAclubindia
