Go AD-Free with CAclubindia Pro and get a FREE CCI Coffee Mug. Subscribe Now!

Labour Cess entry in books of accounts

Ramit (Accountant) (135 Points)

09 November 2024

If a govt organisation deducts 1% labour Cess
from vendor payment then
In the books of accounts of vendor how will this entry be done?

Reply
Follow
Share

1 Replies

Rama chary Rachakonda (Master in Accounts & high court Advocate email ID:ramachary64@gmail.com voice no:9989324294) (7339 Points)
Replied 09 November 2024

In the books of accounts of the vendor, the entry for labour cess deducted by the government organization would be:

Debit: Debtors (or Receivables) account = XXX (invoice amount) Credit: Sales account = XXX (invoice amount)

Debit: Labour Cess payable account = 1% of XXX (labour cess amount)

Credit: Debtors (or Receivables) account = 1% of XXX (labour cess amount) When the labour cess is paid to the government:

Debit: Bank account = 1% of XXX (labour cess amount) Credit: Labour Cess payable account = 1% of XXX (labour cess amount)

Note: - XXX represents the invoice amount. - Labour Cess payable account is a current liability account. - Debtors (or Receivables) account represents the amount owed to the vendor.

By passing these entries, the vendor accounts for the labour cess deducted by the government organization and pays the cess to the government.

Upgrade to CAclubindia Pro. Subscribe Now!

Join CCI Pro

Recent Topics

More recent discussions | Post

Related Threads

Popular Discussion

Start a New Discussion

CCI Pro

Trending Online Classes

Certification Course on Chat GPT and AI Tools for Professionals

CA Deepak Gupta

Enroll Now

25 April 2025
Live Course on DTAA - International Taxation (Batch 2)

CA Sachin Sinha

Enroll Now

25 May 2025
GST LIVE Certification Course - 42nd Weekend Batch(With Govt Certificate)

Industry Expert

Enroll Now

17 May 2025

view all classess

Subscribe to the latest topics :

Search Forum:

Forum Home

Popular Threads

Recent Posts

Unreplied Threads

Settings