Urgent reply on rent payment

This query is : Resolved

bipinchandra (Querist)
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26 February 2016 hello sir my query related to accounting taxation issue one of my client is paying rent 100000/- pm
so he deduct tds @10 % on rent and pay st 14.5 % on it
last time he pay =10000014500=114500-10%tds (including st )11450= 103050 net paid
this time owner of property to whom he have to pay rent infirm that he didn't have st number
so payment calculation is 1,00,000-10,000 tds @10 % -adjustment Last time excess payment 13050=76, 950/-net payable is it right way to adjustment what will be effect on tds service tax and accounting entries ?
thank's i hope that i will get correct reply

bipin thakor

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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26 February 2016 If a person is not registered with Service Tax Authorities, they cannot collect service tax. Therefore the payment of Rs.14,500/- in the previous month was in excess.

The entry made in the previous month should be rectified to be as follows:
Rent Dr. 100,000
Rent paid in advance Dr. 14,500
To TDS 11,450
To Bank 103,050

The Service Tax paid should not appear in the books since no service tax was paid to the landlord. Hence the adjustment entry would be : Rent paid in Advance Dr. 14,500
To Service Tax Paid 14,500

When the current month's rent is paid the entry should be:
Rent Dr. 100,000
To Rent Paid in Advance 14,500
To TDS 10,000
To Bank 75,500.

This is the correct treatment and not the entries you have suggessted since it would result in excess payment of Rs.1,450/- to the land lord being TDS on Service Tax wrongly paid.

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