Journal entries for TDS on rent

Yasaswi Gomes new (Finance ) (4469 Points)

22 February 2024  

Shine Pvt Ltd make a payment for office rent of Rs 80,000 per month to the owner of the property. TDS is required to be deducted at 10%. Shine Pvt ltd must deduct TDS of Rs 8000 and pay the balance of Rs 72,000 to the owner of the property. Thus, the recipient of income i.e. the owner of the property in the above case receives the net amount of Rs 72,000 after deduction of tax at the source. He will add the gross amount i.e. Rs 80,000 to his income and can take credit of the amount already deducted i.e. Rs 8,000 by shine Pvt ltd against his final tax liability.

So in the property owner boos,

Dr. Bank 72k

Cr Income 80k

Dr. TDS receivable 8k- Until they receive a TDS certificate

in tenants books

Dr. Rent expense 80k

Cr. Bank 72k

Cr. TDS payable 8k

This is what I know. How will you add it to income tax liability like the above example mentions.