Tds deduction before tax

if you are eligible for cenvat credit then entry will be.... commission a/c will be debited with total invoice amt, party a/c will be credited with gross bill amt. and cenvat a/c will be credited with s.tax amt. in bill. now while making payment, party a/c will be debited with gross bill amt., tds payable a/c will be credited with amt of tds deducted on gross bill and cash/bank a/c will be credited with net amt. paid.

if not eligible for cenvat credit then entry will be same as above with little change... at the time of booking expense there will be no cenvat a/c and party a/c will be credited with total invoice amt. and while making payment tds to be deducted on gross bill amt only and balance to be paid to party.

Dear Tribhuvan

If you explain it with example then it very helpful sir

Thanks in advance

Dear Amit,

TDS to be deducted on Gross Amount before Service Tax. Example

Invoice Value	100
Service Tax @ 12.36%	12.36
Total	112.36
TDS to be deducted @ 2% on	100
TDS Amount	2

okkk lets take an example for this...

suppose your bill details are as follows

gross commission -        5000.00

service tax @ 12.36% -     618.00

net total -                      5618.00

 

CASE 1: CENVAT credit available

at time of booking expense

Commission A/c                                              Dr. 5000.00

Cenvat Credit - Input A/c                                   Dr.  618.00

      To Creditor A/c                                                             5618.00

 

at time of making payment

Creditor A/c                                                     Dr. 5618.00

       To Bank A/c                                                              5118.00

       To TDS Payable A/c ( @ 10% on 5000.00)                       500.00

 

CASE 2: CENVAT credit not available

at time of booking expense

Commission A/c                                              Dr. 5618.00

      To Creditor A/c                                                             5618.00

 

at time of making payment

Creditor A/c                                                     Dr. 5618.00

       To Bank A/c                                                              5118.00

       To TDS Payable A/c ( @ 10% on 5000.00)                       500.00

 

please make a correction in my first reply where i said that cenvat a/c will be credited. acutally cenvat a/c will be debited with s.tax amount.