04 September 2011
This is a long query so please bear with me. We have hired a contractor who looks after the denting painting job for accidental cars. *we raise the bill of the customer and send it to the insurance company for claim. *The thing is the contractor doesnt raise his bill unless all the claims are cleared by the insurance company. For eg: we send 50 bills to the insurance company for claim for the month of april and all these bills cleared by the insurance company in june and then the contractor will raise his bill towards us i.e he will raise the bill in june itself.
We also give some advance to the contractor in between and deduct TDS also.
My query is are we doing the right thing by deducting the TDS on advance.
We dont enter his invoice in our books also. We just post the entry as labour paid ( for the advance given) and deduct TDS on it. Please clarify this.
05 September 2011
u are doing correct by deducting TDS on the advances but u should show it as an advance if u really mean such payment as advance and should book the bill & settle the advance against such bill.
CAclubindia
