Journal Entry while making Year End Provision

Tds is to be deducted either at the tmie of payment or its credited to the account of payee whichever is earlier

no TDS on provision like audit fees pyable

DEAR ALL,

AT THE TIME OF PROVISION TDS IS REQUIRED TO DEDUCT OTHERWISE SAME EXPENSES GETTING DISALLOWED AT THE TIME OF ASSESSMENT.

SO IN YEAR END

AUDITOR REMUNERATION EXP  DR

TO EXPENSES PAYABLE CR

TO TDS PAYABLE

IN NEXT YEAR

EXPENSES PAYABLE  DR

TO VENDOR

TDS PAYABLE  DR

TO BANK

First of all no provision sholud be created for Income Tax Audit Fees expenses for the audit which has not be done.

(Provision should be made for the liabilities occured on balance sheet  due to past event. such as labour expenses, for eaxample: labour work has been done but no bill recived on B/S date. )

Even if you want to creat provison then please consider following:

You must have to disallowe audit expenses while file a return if amout exceeds specified limit for TDS

you can not deduct TDS from audit provision because you can assign audit work only after ending of F.Y. Its mean you can choose your auditor only after endding of F.Y. and its not possible to deposit TDS in account of unknown person.

current year

1. AUDIT FEE EXP. Dr.

   TO AUDIT FEE PAYABLE Cr.

    TO TDS PAYABLE Cr.

NEXT YEAR

1. TDS PAYABLE DR.

    TO BANK A/C CR.

2. AUDIT FEE PAYABLE DR.

   TO ABC&CO CR.

IF AUDIT FEE PAID

3. ABC & CO DR

   TO BANK CR.

The provision to pay TDS on 30th April and not on 7th April for the month of March is due to TDS applicability on Provision. Hence TDS has to applied on the provisional amount too else shall be disallowed under Income Tax Act. Why only audit fees, any expense which is in the nature of service while making provision shall attract TDS.

TDS has to be deducted on provisions also. So, entry would be

year end provision

Audit Fees A/c Dr....

Party A/c Dr.......

  To, Provision for Audit Fees A/c....

   To, TDS A/c........

In the next year

1) Reversal of Provision  

       Provision for Audit Fees A/c  Dr .....

             To, Audit Fees A/c.

2) Payment of TDS 

       TDS A/c Dr......

           To, Bank A/c.....

3) On actual receipt of Invoice   

Audit Fees A/c. Dr....

        To, Party A/c.....

        To, TDS A/c .. (if, bill amount is inexcess to provisional amount and TDS only on additional amount)

dEAR sIR,

hOW TO BOOK INVOICE IN NEXT YEAR

why audit fees entry reversed on 1st april 2018,in respect of provision made for audit fees on 31.03.2017.

Reversal of Provision        

 Provision for Audit Fees A/c  Dr .....              

    To, Audit Fees A/c.
Above entry is correct ????????

One more doubt buddies ,

Bad detbs prov in year end as 170

Bad debts a/c dr 170

  to Prov for bad debts a/c cr 170

In next year we recived 103 and balance to be written off ? what entry can pass  ? Please help 

We have make payment to ABC Ltd in April-19, against bill of Mar-19.and tds is applicable.then whats entry will be pass in Tally, if TDS is applicable, should be pass provisional entry or not.

Originally posted by : CMA.Baskar.V
	Dear Sommas, Once TDS deducted in current year, we can not reverse the same in next year. According to Income tax act, TDS has to deduct from Vendor Account, at time of accouting of bill or at time of payment whichever is earlier. Dear Jasmeet, Current year to make provision, entry will be Debit - Audit Expeses A/c Credit - Provision for Expenses \ Audit Expeses Payable A/c In next year, after invocie receipt from vendor Debit - Provision for Expenses \ Audit Expenses Payable A/c Credit - TDS Account Credit - Vendor Account  / Creditors Account   I hope above clear your dobut

Rightly Said

In Tally, you can pass the following entry for making a payment to ABC Ltd :

Debit: ABC Ltd (Sundry Creditors) - The amount of the bill
Credit: Bank or Cash - The amount paid
Credit: TDS Payable - The amount of TDS deducted