05 January 2012
When is TDS deducted from salaries become due? scenario 1: salary for dec 2011 is paid on 5th jan 2012. TDs on salaries to be remitted on 7th jan 2012 or Feb 2012. scenario 2: salary for dec 2011 is paid on or after 7th jan 2012. when is the tds to be remitted?
05 January 2012
For all other Sections i.e. other than Salary, TDS is to be deducted at the time of credit or payment whichever is earlier. But in case of Salaries, TDS is to be deducted at the time of payment. Note here I am talking about deduction of TDS and not payment of TDS to the Govt.
TDS is payable to the Govt on or before the 7th of the next month in which TDS is deducted.
Hence if Salary for December is paid in January (doesnt matter 5th or 7th) then TDS is to be paid by the 7th of February.
But make sure that if you are passing the Salary entry in the month of December then do not credit the TDS payable A/c, instead credit the Provision for TDS A/c e.g.
31 Dec 2011 Salary A/c Debit Rs. 10,00,000 To Provision for TDS Rs. 30,000 To Salary Payable Rs. 9,70,000
and then when you are paying the Salary on 5th or 7th Jan, following entries would be passed
05/07 Jan 2011 Provision for TDS Debit Rs. 30,000 To TDS Payable Rs. 30,000
Salary Payable Debit Rs. 9,70,000 To Bank Rs. 9,70,000
Above you have to follow in case you are passing the entry for December month in the month of December to show to the Income Tax Authorities that your Actual liability for deduction of TDS arises at the time of payment i.e. on 5th or 7th and only then will you get the benefit of paying the TDS in the month of February 2012.
Above procedure is to be followed to safeguard yourself.....but even if you do not follow the above procedure for booking the TDS, then to TDS is actually payable on 7th February 2012.
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