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Accounting/tds entries when receipt of payment is in next fy

Sandeep (Self Employed) (125 Points)

20 September 2012

Looking for help on how to book the following transaction in Tally when invoice for services is raised in March and payment is received in April.

1. Services billed in March 2012

2. How to make provision for TDS to be deducted for the receipt in March?

3. While making provision how to avoid service tax liability accruing in March on the provision?

4. How to account for final payment received in April?

Please povide detailed accounting antries with ledgers/groups.

Thanks & regards

Sandeep

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10 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 20 September 2012

Where the services are rendered in the month of March i.e. during the current F.Y. but payment is received in subsequent months i.e in the enxt F.Y. then in the month of March the entry for booking the Service Receipts & TDS will be as follows:

Customer A/c Dr

TDS Receivable Dr

To- Invomce(with the account ehad for services rendered)

In the subsequent F.Y. when payment si received the entry would be as follows:

Bank A/C Dr

to Customer A/c

For TDs receivable A/C in case of individual, teh same would transferred to capital A/c. In other cases the same would be adjusted against the Provisino for Taxation.

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

Thanks Giridhar,

This doesn't account for service tax entries in current FY. Also when payment is received then how to account for TDS Receivable?

Regards

Sandeep

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 20 September 2012

You have to adjust the TDS receivabel against the Provision for TAxation created in the previous year, or if no provison for taxatino account is tehre then tranfer the balance to Capital Account by Debiting Capital A/c of teh Proprietor & Crediting TDS REceivable

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 20 September 2012

in march

party a/c dr

to service billed

----------------------

TDS a/c dr ( or income tax advance a/c , in case of proprietorship)

to Party a/c

-------------------------

in april

cash/bank a/c dr

to party a/c

-----------------------------------------------------------

after making the TDS entry the party a/c ( receivable) will get reduced with the amount of TDS so deducted.

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

Only part of the problem solvd by above solutions, please see following issues -

1. Sales invoice is generated as follows-
Cr Party a/c
Dr Income a/c
Dr. Service tax a/c

2. TDS Receivable is accounted as follows -
Dr TDS Receivable
Cr Party a/c

3. Proprietor a/c Dr as follows on 31st March
Dr Proprietors a/c
Cr TDS Receivable

4. On receipt of payment
Cr Party a/c (amount after reducing the TDS Receivable)
Dr Bank a/c (amount received after TDS deduction)

However since the final payment is not reflecting the TDS Receivable therefore the Service Tax liability on the TDS Receivable ledger is not reflecting properly and therefore these is a shortage in Service Tax payable in Tally.

How to account for the same?

Regards
Sandeep

Jairam J (CA, B.COM(Hons.)) (382 Points)
Replied 20 September 2012

1) Income(Rs.10000) from Party X recognition where tds is attracted on March assuming 194c

X A/c ......Dr 11030

To Income A/c 10000

To Service Tax 1030

2) Tds @ 2% of 11030

TDS Receivable A/c 221

To X A/c 221

ASSETS =11030

Sundry Debtor

X = 11030-221= 10809

Advances & Deposits

TDS Receivable =221

LIABILITIES=11030

Profit & Loss A/c =10000

Provisions

Service Tax @ 10.3% =1030

3) Next FY -

Say April when amount is recd net of TDS

Bank A/c...Dr 10809

To X A/c 10809

4). TDS adjusted to Income Tax Payable or Provision for Tax

Provision for Tax A/c Dr.. 221

To TDS Receivable A/c 221

5). Service Tax payment by 6th of following month in which payments are receievd ( 6th May since payment recieved in April)

Service Tax A/c ...Dr 1030

To Bank A/c 1030

In the last entry I am unsure if tds component of service tax i.e 1030 x 2% = Rs. 21 will be discounted and we pay only Rs.1009 or we pay Rs.1030...

2 Like

Venkat (Dy. Manager Finance) (272 Points)
Replied 21 September 2012

in the above example given by Mr.Jairam.... Service tax has to payed = Rs.1030.00..

as Total amount billed to customer = Rs.11030.00 on that TDS = 2% - 221.00 aganin 2nd time tds will not be applicable on service tax portion which is already covered in 221 it self.

Hats off to Jairam ... for his explanation which is very nice and gr8....

deepak (assistant accountant) (26 Points)
Replied 14 April 2017

FIRST ENTRY ANY EXMPLE

deepak (assistant accountant) (26 Points)
Replied 14 April 2017

Only part of the problem solvd by above solutions, please see following issues

- 1. Sales invoice is generated as follows-

Cr Party a/c

Dr Income a/c

Dr. Service tax a/c

WHEN ENTRY POST IN FIRM BOOK YA ANOTHER PERSON SERVICEPROVIDER

deepak (assistant accountant) (26 Points)
Replied 14 April 2017

Originally posted by : Jairam J
	1) Income(Rs.10000) from Party X recognition where tds is attracted on March assuming 194c X A/c ......Dr 11030 To Income A/c 10000 To Service Tax 1030 2) Tds @ 2% of 11030 TDS Receivable A/c 221 To X A/c 221 ASSETS =11030 Sundry Debtor X = 11030-221= 10809 Advances & Deposits TDS Receivable =221 LIABILITIES=11030 Profit & Loss A/c =10000 Provisions Service Tax @ 10.3% =1030 3) Next FY - Say April when amount is recd net of TDS Bank A/c...Dr 10809 To X A/c 10809 4). TDS adjusted to Income Tax Payable or Provision for Tax Provision for Tax A/c Dr.. 221 To TDS Receivable A/c 221 5). Service Tax payment by 6th of following month in which payments are receievd ( 6th May since payment recieved in April) Service Tax A/c ...Dr 1030 To Bank A/c 1030 In the last entry I am unsure if tds component of service tax i.e 1030 x 2% = Rs. 21 will be discounted and we pay only Rs.1009 or we pay Rs.1030...