Tds to be booked susequent to reversal of a transaction

We are having a contract with a recruitment company. AS per the contract we need to pay to the company a fixed % of employee's salary recuruited through the company. Moreover there is a provision in the contract as per which if the employee leaves our company within 3 months of joining than the recruitment company will pay us back the amount given to it.
Hence the entry made earlier will have to be reversed by us.Moreover the TDS amount which was earlier booked by us while booking the expense has alraedy been paid to the government before reversing the entry.

1.My question is by what amount the party A/c will be debited in the reversal entry?

2. Moreover another expense transaction was made withe party. while booking the expense for the same tds was booked net of TDS paid to the government while booking the first above mentioned transaction.

Eg, Expense A/c Dr. 100
To Party A/c 90
To TDS PAyable A/c 10
(Being expense booked)

TDS PAyable A/c Dr 10
To BAnk A/c 10

Now the expense booked earlier was reversed, as under

PArty A/c Dr 100
To Expense A/c 100

Susequently, another entry was booked with the same party, as under

Expense A/c Dr 200
To PArty A/c 190
To Tds Payable A/c 10
(BEing expense booked....here tds as per rate @ 10% comes out to be Rs. 20, but the same is recorded at Rs. 10,ie, net of tds paid earlier to the government)

As we have debited the party with extra Rs. 10 while reversing the first entry, the net payment made to the party was Rs. 190 - 10 = Rs. 180.

is the accounting treatment of the transaction correct.
Please explain with legal proisions relating to TDS.

whether netting off the TDS while booking the expense itself is correct, or does it have any statutory liability.

 

Replies (2)

since the TDS has been remitted against the party's account, and he would be claiming the TDS so remitted against his account. So adjust the excess TDS payment against his subsequent bills.

it is not correct to allow tds claim to them agaisnt which they are not going to show any income because they pay back you the money and there is no income they have earned . you have to revise the etds return you file every quarter adjusting the figures of amount paid, tds deducted etc, and while paying the bills further use the excess tds paid previously in the next payments you make with same challan details for this it is important that you pay taxes in govt account in each seperate challan and trasaction wise so it will be clear  and easy to reverse the previous etds return and incorporate the same details in next etds return.

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