Journal entries for TDS on rent

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. 

Replies (3)
Quick Summary
This discussion explains the process of deducting Tax Deducted at Source (TDS) on rent payments. It details the accounting entries for both the tenant (Shine Pvt Ltd) and the property owner, including how the owner can claim credit for the TDS deducted against their final tax liability. It also touches upon how to handle TDS receivables in the books of the recipient.

In the hands of the recipient you will have to knock the tda receivable against capital account

Why capital account? 

Collect certificate and 

Dr. Tax+Cess liability for current year and 

Cr. TDS Receivables

If the recipient is an individual doing business then you can knock off the TDS receivable against capital account...in any other case you write it off as income tax expenses and disallow the same...🤔🤔

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