Payment on behalf of customer
Panneerselvam (Accounts Officer) (66 Points)
02 February 2016Panneerselvam (Accounts Officer) (66 Points)
02 February 2016
Ganeshbabu K
(Audit and Tax Advisory)
(48564 Points)
Replied 02 February 2016
Panneerselvam
(Accounts Officer)
(66 Points)
Replied 02 February 2016
This is not our expense. We are getting Commission from supplier. If customer not paid any amount to supplier, we are liable to pay. This is in agreement. So, i need full explanation.
Ganeshbabu K
(Audit and Tax Advisory)
(48564 Points)
Replied 02 February 2016
Panneerselvam
(Accounts Officer)
(66 Points)
Replied 02 February 2016
Ok, can u tell expense head? is it allowable expense by Income Tax?
Shivani Mittal
(Practice)
(425 Points)
Replied 02 February 2016
It will be treated as bad debt.
Hence, Bad Debts ....Dr
To Customer A/c
Regards
CA Shivani Mittal
Sivaramakumar
(GM-ACCOUNTS)
(142 Points)
Replied 05 February 2016
As understood from your query:
since you are not billing your client directly for sale made, you cannot consider it as a baddebts or expenses in your books.
Assuming you work on 10% commission on recovery of sale proceeds you may square off the debt payable by the client against your commission receivable from the supplier.(assuming you account only your commission transactions)