Accounting treatment of reversing the payment entry with TDS

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My reply is to Ashish Arya. This pertains to accounting treatment of reversing the the payment entry involving tax deduction where the TDS amount is already deposited into the bank by the deductor.

In this situation, the gross amount payable to the deductee (i.e., it includes the TDS deducted) must be recovered from the deductee and he may be informed that the amount in respect of which TDS was deducted, was cancelled due to the non-compliance with the agreement. So, he(Deductee) can claim the refund in respect thereof by showing that his total income falls short of that amount.

Where, the amount actually deducted from the payment payable to a party falls short of the amount required to be deducted, the amount by which the tds deducted falls short of the amount required to be deducted must be claimed from the deductee and deposited into the bank account of the Government.

Replies (1)

U WILL PASS 

party 

to cash 

gross amount , as u r not concerned with the bifercation of the amount paid , it is as if u have paid for a benefit to be enjoyed by the other party.


CCI Pro

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