Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Labour Cess entry in books of accounts

Ramit (Accountant) (131 Points)

09 November 2024

If a govt organisation deducts 1% labour Cess
from vendor payment then
In the books of accounts of vendor how will this entry be done?

Reply
Follow
Share

1 Replies

Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (5309 Points)
Replied 09 November 2024

In the books of accounts of the vendor, the entry for labour cess deducted by the government organization would be:

Debit: Debtors (or Receivables) account = XXX (invoice amount) Credit: Sales account = XXX (invoice amount)

Debit: Labour Cess payable account = 1% of XXX (labour cess amount)

Credit: Debtors (or Receivables) account = 1% of XXX (labour cess amount) When the labour cess is paid to the government:

Debit: Bank account = 1% of XXX (labour cess amount) Credit: Labour Cess payable account = 1% of XXX (labour cess amount)

Note: - XXX represents the invoice amount. - Labour Cess payable account is a current liability account. - Debtors (or Receivables) account represents the amount owed to the vendor.

By passing these entries, the vendor accounts for the labour cess deducted by the government organization and pays the cess to the government.

Upgrade to CAclubindia Pro. Subscribe Now!

Join CCI Pro

Recent Topics

More recent discussions | Post

Related Threads

Popular Discussion

Start a New Discussion

CCI Pro

Trending Online Classes

Certification Course on Chat GPT and AI Tools for Professionals

CA Deepak Gupta

Enroll Now

10 December 2024
6 days Certification Course on GST Practical Return Filing Process

CA Pratibha Goyal

Enroll Now

16 December 2024
Basics of UAE Corporate Tax and VAT(With Recording)

CA Mohd Asim

Enroll Now

07 December 2024

view all classess

Subscribe to the latest topics :

Search Forum:

Forum Home

Popular Threads

Recent Posts

Unreplied Threads

Settings