Which entries are correct

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Chandan Arora (Querist)
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29 September 2016 Kindly tell me which of the following method of passing journal entry is correct and also tell the reason. 1st method) at the time of due Dr Commission on sales A/c 1000 Cr. A's Commission A/c. 950 Cr. Tds A/c. 50 at the time of payment Dr. A's commission a/c. 950 Dr. Tds a/c. 50 Cr. Bank A/c. 1000 2nd Method at the time of due Dr commission a/c. 1000 cr. A's commission a/c. 1000 at payment time Dr A's commission a/c. 1000 cr cash. A/c. 950 cr. Tds A/c. 50

Amol S Joglekar

Amol S Joglekar (Expert)
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29 September 2016 If you want to keep the books of accounts as per Income Tax Act, then 1st option is followed....with a small exception
For commission due
debit commission 1000
credit A 1000
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on the same day
debit A 50
credit TDS 50
for tds due to be deducted
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at the time of payment of tds within due date as specified in the income tax act
debit tds 50
credit 50
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at the time of payment to A
debit A 950
credit bank 950
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please note if interest is paid on TDS, the same has to be accounted for accordingly.

Chandan Arora

Chandan Arora (Querist)
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29 September 2016 why we need to deduct the tds on the same day in first case