Entries & tds detail

This query is : Resolved

Tarun (Querist)
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03 September 2016 sir,

we sold goods to party with 1 year warranty, some quantity returned and we repair it and again return to party in this case what entry we passed in the book of seller and buyer

and tell me something about TDS And Service Tax on Telecom & Hotel Industry

ACA Anurag

ACA Anurag (Expert)
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04 September 2016 Dear Tarun, Kindly take professional advise on it

Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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21 July 2024 Sure, here's how you can handle the entries for goods sold with warranty and returned for repair, along with an overview of TDS and Service Tax implications in the Telecom and Hotel industry:

### Entries for Goods Sold with Warranty:

1. **When goods are sold to the party:**
- Debit: Accounts Receivable (Party's name)
- Credit: Sales Revenue (Value of goods sold)
- Credit: Warranty Provision (Estimated warranty expense)

```
Accounts Receivable A/c Dr.
To Sales Revenue A/c
To Warranty Provision A/c
(Being goods sold with warranty)
```

2. **When goods are returned under warranty:**
- Debit: Sales Returns and Allowances (Value of returned goods)
- Credit: Accounts Receivable (Party's name)
- Credit: Inventory (If the goods are repairable and returned to stock)

```
Sales Returns and Allowances A/c Dr.
To Accounts Receivable A/c
To Inventory A/c
(Being goods returned under warranty)
```

3. **When repaired goods are returned to the party:**
- Debit: Accounts Receivable (Party's name)
- Credit: Inventory (Cost of repairs)
- Credit: Warranty Provision (Adjustment for actual warranty expense)

```
Accounts Receivable A/c Dr.
To Inventory A/c
To Warranty Provision A/c
(Being repaired goods returned to the party)
```

### TDS (Tax Deducted at Source) and Service Tax:

#### Telecom Industry:
- **TDS:** Generally, TDS is applicable on payments made to vendors or contractors exceeding a specified threshold. For telecom companies, payments like rent, professional fees, etc., may attract TDS as per the Income Tax Act.
- **Service Tax:** Service Tax (now replaced by GST) was applicable on services provided by telecom operators. Services such as voice calls, SMS, internet services, etc., were subject to Service Tax based on the rates specified by the government.

#### Hotel Industry:
- **TDS:** Similar to telecom, TDS applies to payments made to vendors or contractors above a specified threshold. Payments like rent, professional fees, etc., are subject to TDS.
- **Service Tax:** Service Tax was applicable on services provided by hotels, including accommodation charges, food and beverage services, banquet services, etc. The rates varied depending on the type of service provided.

### Important Notes:
- **GST:** Service Tax has been replaced by Goods and Services Tax (GST) in India. Depending on your location and turnover, GST may now be applicable instead of Service Tax.
- **Compliance:** It's crucial to comply with TDS provisions by deducting tax at the correct rates and depositing it with the government within the stipulated time frame.
- **Accounting:** Ensure proper accounting of TDS deductions and payments, along with accurate calculation and reporting of GST liabilities if applicable.

For specific details related to TDS and GST under current regulations, it's advisable to consult with a qualified tax professional or accountant who can provide guidance tailored to your business activities and compliance requirements.

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