Security deposit adjustment

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Prajakta save

CA STUDENT

54 Points Posted on 05 September 2011

" I AM UNDERGONE A RENT AGREEMENT OWNED FLAT WITH A NEW TENANT FIRST TIME @ 15,000 P.M. WITH Rs. 45,000/- AS SECURITY DEPOSITS AGAINST THIS PROPERTY FOR 11 MONTHS TENURE & ELECTRIC BILL WILL B PAID BY TENANT ONLY."
AFTER 11 MONTHS DECIDED TO TERMINATE AGREEMENT & NOT PAID RENT FOR 3 MONTHS AS IT IS ADJUSTED AGAINST SECURITY DEPOSIT.

MY REQUEST IS HERE CAN ANYBODY PLS LET ME KNOW FOLLOWING INFORMATION : -

1) ACCOUNTING TREATMENT OF RENT & SECURITY DEPOSIT
2) ADJUSMENTS & APPLICABILITY OF TDS U/S 194 I.

3)SHALL I LIABLE TO PAY TDS ON RENT FOR THREE MONTHS .

Replies (2)

Jyoti Goyal

Manager

86 Points Posted on 05 September 2011

1. The Security Amount is an advance against rent and the entry for this transaction should be

Bank A/c Dr 60000

To Rent A/c 15000

To Security (Rent) 45000

At the end of 11th Month (each month):

Security (Rent) A/c Dr. 15000

To Rent A/c 15000

Now there are Rs. 30000 remaining in Security (Rent) A/c which will be showing at Liability Side of B/Sheet and transferred to Rent account in Apr & May month.

2. Since Rs. 45000/- is an advance so there are no TDS liability on this amount. You should pay TDS on Rs. 15000/- PM (rent Amount)

3. No, You have to pay TDS on 12 months' rent only in this year. 3000/- will be as Income from next FY earned in current year