Dr all,while auditing a/cs of a client,i came through the entry pass for rent received.It goes as following
eg; rent=100000,s/tax on it =12360,tds=100000*10%
1.whether tds calculated is correct or it shall be calculated on 100000+12360=112360
2.if s/tax of 12360 is to be shown separately or to be punched with rent received (client passed following entry_
party DR 122360
to rent recd(rent +s/tax)112360
to tds(on 100000)10000
Pls suggest yours opinion
Only for Rent TDS shud be made on the NEt amount exclusive of ST. The following entry needs to passed:
PArty Dr 102360
TDS Dr 10000
To-Rent Recd 100000
To- ST 12360
Since teh assessee is collecting ST on behalf of teh govt from the party & paying it to teh assessee it is not considered as his income. Hence it shud be shown either as a liability or shall be shown as seperate item in the P&L on the receipts side and debit it t P&L after paying the P&L, so that effect would be Nil
To a great extent Mr. Giridhar clarified the same. Entries for Rental Income may appear as follows (with the example cited):
Party Debit Rs.100000
To Rental Income Rs.100000
On receipt of payment with ST and net of TDS
Bank Account Debit Rs. (90000+12360) 102360
TDS Recoverable-Rent Account Debit Rs10000
To Party Account Rs.100000
To Service Tax Payable Account Rs.12360
Since TDS Certificate may not be available on that moment but lator on, following effects also need to be accounted for:
On collection of TDS Certificate from the party:
Advance Income Tax Account Debit Rs.10000
To TDS Recoverable-Rent Account Rs.10000
* Advance Income Tax needs to be adjusted per relevant rules and procedures.
CAclubindia
