Hello Sir
i have a contractor income from THE ORIENTAL INSURANCE COMPANY.. OF Rs. 52500/-.. Insurance company deduct TDS on that amt and charge service Rs.52500/- is inclusive of service tax & after TDS ... Please tell me the Journal Entry and their calculation also... amt of TDS ? Service Tax ? Service Tax Rate is @ 2% (under 194c)
Thankyou
Dear Gopal,
Journal Entries with calculation
1. Dr: Oriental Insurance Company Rs: 51450
Dr: TDS Receivable A/c Rs: 1050 (calculated as 52500*2%)
Cr: Income A/c: Rs: 46725 (calculated as 52500*100/112.36)
Cr: Service Tax payable A/c: Rs.5775 (calculated as 52500*12.36/112.36)
2. when u receive the amount
Dr: Cash/Bank A/c Rs. 51450
Cr: Oriental Insurance company A/c Rs.51450
Dear Rajesh,
How you came to such amounts?? as gopal asked, TDS has already been deducted and service tax has already been included in Rs. 52500, then why are you calculating such amounts on Rs. 52500.. you need to do reverse calculation... i.e. gross amount is Rs. 47800... add 12.36% service tax on such amount i.e. 5908.... total 53708.. and then deduct 2% TDS from such amount which comes to Rs. 1074.. that will round off to 52500 (approx.) there is variation because i did reverse calculation in a way:-
52500/(100- 2% of 112.36%)=53707... then, 53707/112.36 X 100 = 47800....
and yes, your journal entries are right...
I think Rajesh Entries are right.
Gopal also says that Insurance company deducts TDS on Rs. 52500.
Its just the framing of the question that's creating bit of confusion.
Shivani
Dear Gopal,
Journal Entries:-
1-Dr...Oriental Insurance Co. Rs.52500
Dr....TDS Receivable Rs.1071
Cr. Income Rs.47678
Cr. Service Tax Payable Rs. 5893
2- Dr....Cash/Bank Rs.52500
Cr.Oriental Insurance Co. Rs.52500
TDS will be deducted on Income + Service Tax.
Gopal says that his income is Rs. 52500 and then goes on to say that Rs. 52500 includes service tax.
So in effect what he is saying is that his income is 46725 and Service Tax on 46725 is 5775.
So Income is 46725
Service Tax charged is 5775
TDS will be deducted on 52500 i.e. 46725+5775. Gopal confirms that TDS is deducted on 52500.
Its only when he further says that Rs. 52500 is after tax that creates confusion.
First he says that TDS is deducted ON Rs. 52500.
Then he says that Rs. 52500 is after TDS.
You cant have both, hence the confusion and different entries from different members.
Shivani
CAclubindia
