Accounting Entries for Lottery scenario

Others 5441 views 1 replies

Hi ,

Can anyone help me with the accounting entries for the foillowing scenario (TDS on lottery payment in kind):

Prize in Kind Worth Rs. 10,00,000/-

TDS Rate at the time of payment : 30% , ECess: 2%, SHEC: 1%. -> 30.9%

Gross Amount on which TDS to be deducted to effect net payment of Rs.10,00,000/- : 10,00,000 * (100 / 100-30.90) = Rs. 14,47,178/-

Effective TDS to be deposited with Govt. before Prize release : Rs.4,47,178/-

Gross income for the winner : Rs.14,47,178/-.

Need accounting entries at:

time of buying the gift as mktg expense

at the time of tds calc and payment to govt

at the time of payment to winner

Replies (1)

Since you have stated that the purchase of gift is marketing expenses, it is assumed that, the lottery is in the nature of Business Promotion(not the regular business). The following accounting may be suggested.

At the time of purchase

Gift against Lottery(Current Asset) Debit

Cash/Bank/Creditor Credit

 

At the time of Crediting the winner

Business Promotion Debit(Amount of Gift + TDS there on)

Winner's Account Credit(Amount of Gift)

TDS Payable Account Credit

 

At the time of handing over the gift

Winner's Account(Debit)

Gift against Lottery

The entry for discharge of TDS may be passed as usual


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