TAX TREATMENT AND ACCOUNTING ENTRIEOF PERQUISITES AND BENEFITS ON WHICH TDS MADE UNDER SECTION 194-R

The benefit of ₹25.00 lakhs must be credited as business income under Section 28(iv) to align with Section 194R TDS. However, because the foreign tour was purely recreational for the partners, the Income Tax Department will disallow the ₹25.00 lakhs deduction under Section 37(1) as a personal expense. The firm can claim full credit for the TDS deducted.

Thank you. Can you share journal entries for the said perquisites in books.

To summarize, record ₹25.00 lakhs as Business Perquisite Income under Section 28(iv) with ₹2.50 lakhs credited to TDS Receivable under Section 194R. Debit the remaining ₹22.50 lakhs to Partners' Capital/Drawings or disallow it under Section 37(1) in the tax computation, allowing the firm to claim the full TDS credit while keeping personal expenses out of allowable business deductions.

Thank you very much sir

You can book the Entries as under in journal 

01.  Partner Capital/Current Account  DR    2250000

      TDS RECEIVABLE   (194R)                DR     250000

           prequsites Income  Cr                                  25 ,00,000