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Accounting for tds on receipts in next fy

Sandeep (Self Employed) (125 Points)

19 September 2012

Please help with entries for the following scenario in Tally -

1. Invoice raised on customer ABC on 25th March 2012
2. Payment recieved after deduction of TDS on 10th April 2012

Do we need to create provision for TDS to be deducted on outstanding amount in March? What ledgers (and under what group) and accounting entries need to be made for the same?

Regards

Sandeep

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7 Replies

Sumit Grover (Chartered Accountant ) (3652 Points)
Replied 19 September 2012

Yes, the following journal entry needs to be passed in FY 2011-12

Party A/c Dr. (100-X)

TDS receivable A/c Dr. X

To Income A/c 100

Sandeep (Self Employed) (125 Points)
Replied 19 September 2012

Thanks Sumit. Some clarifications -

1. I am passing a sales voucher entry for the invoice which also has the above entries.

2. The sales voucher would not have any entry to pass for TDS receivable.

3. In this case should I open a "Provision for TDS receivable" ledger or something similar? Which group should this be in ?

Sumit Grover (Chartered Accountant ) (3652 Points)
Replied 19 September 2012

In that case, a the folowing two entries may be passed, instead of the consolidated entry(as shown above):

1) Party A/c Dr. -----with full invoice amount

To Income A/c

2) TDS Receivable A/c Dr.----to be opened under head Current Assets

To Party A/c

Praveen Kumar Agarwal (Accountant) (180 Points)
Replied 20 September 2012

TDS is not applicable on sales of goods

Sandeep (Self Employed) (125 Points)
Replied 20 September 2012

Praveen the nvoice is for services and not goods (should have clarified).

Sumit what about the entries in next fy when the payment is actually received?

Also if I credit the party account for TDS receivable won't that create a service tax liability in Tally in the current year? Instead of when the payment is actually received in April?

Regards
Sandeep

Sumit Grover (Chartered Accountant ) (3652 Points)
Replied 20 September 2012

At the time of receiving payment in next year

Bank A/c Dr.

To Party A/c

And Dear Sandeep, w.e.f 01-Jul-11, the service tax has become payable on due basis, so, in your case, the service tax liability arose in FY 2011-12 only,irrespective of the fact that the payment has been recevied in subsequent month.

Praveen Kumar Agarwal (Accountant) (180 Points)
Replied 20 September 2012

let me make one thing very clear first dat if u r providing services to anyone then u dnt need to pass any entry thru sales voucher.. U cn pass a journal entry first thru journal voucher i.e. Debtor A/c......................debit TDS receivable A/c........debit To Income from service A/c To service tax payable A/c