TDS Receivable Journal Entry

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This discussion addresses how to make journal entries for TDS receivable when a debtor deducts TDS under Section 194Q. The initial entry might incorrectly show a liability in the debtor's ledger. The correct approach treats TDS receivable as an asset, adjusting the payment received for goods sold by the TDS amount deducted. This receivable is then posted to the tax provision account.

Pooja

Pooja (Querist)

14 August 2024 Res/Sir, Madam,
As per form 26AS, Our Debtor has deducted TDS under 194Q, kindly explain how its TDS receivable journal Entries.
Thanks you..

Regards,
Pooja

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

15 August 2024 Dr. Tax provision..
Cr. Debtor.

Pooja

Pooja (Querist)

15 August 2024 Thank you Sir, for your reply, but sir after making this entry instead our liability is arise in Debtor Ledger. even TDS Receivable is our Assets.

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

15 August 2024 The liability is adjusted against the payment receivable. When the payment was received for the goods sold it was short to the extent of TDS deducted.
TDS is receivable, and hence it is posted to Tax provision.

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