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
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.
CAclubindia
