What would be the accounting entries for the scenario:
a) Bought Car worth Rs. 10,000,00 for Lottery Prize.
b) Car gifted to the winner
As per the legal provisions , it is necessary to deduct TDS on the value of gift in kind.. The Gross amount (10 lcs + tax ) will be considered as winners income on which tax is paid by the gifting co.
What will be the accounting entries in the books of the gifting co. and whether the TDS cert issue to the winner necessary in this case ?
Since the lottery dealer has bought the car for distribution as prize money, the vaue of car will be booked as expenditure against lottery receipts.
In my opinion, he has to issue TDS certificate to the deductee so as to enable the latter to claim credit in his assessment
Hi Pavan,
Thanks for the Inputs.The scenario is for a hyper market. The TDS is paid by the Company before the prize payment to the winner and its not withheld from the prize money /car. the Prize is booked as the Marketing expenses.
Need help on the Accounting entires :
a) at the time of buying the Car.
b) At the time of TDS payment
c) At the time of Prize payment by the co.
CAclubindia
