Tds

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SUPPOSE A BILL OF RS 1,00,000/- FROM PARY AND TDS TO  BE DEDUCTED AT THE RATE OF 1% AT TIME OF BOOKING 

OF ENTRY.BUT MY ACCOUNTANT HAD MADE PAYMENT TO PARTY RS 100000 AND PASSED THE ENTRY IN BOOKS OF ACCOUNTS IN THAT WAY WHAT TO DO

( 1)PURCHASE A/C DR. 100000

TO PATY 100000

(2)PARTY A/C DR 100000

TO BANK 100000

(3) PARTY A/C DR 1000

   TO TDS ON CONTRAT 1000

DOUBT

(1) TDS DEDUCTION IS ALLOWED TO MY COMPANY UNDER TAX AUDIT?

(2) ENTRIES PASSED ARE CORRECT?

(3) IF TDS IS RECOVERED FROM  PARTY THEN IT IS ALLOWED AS DEDUCTION?

(4) IF TDS IS NOT RECOVERED FROM PARTY THEN  I CLAIM AS BAD DEBT?

Replies (2)
(1) - Yes. (2) - Yes. (3) - Here recovery / not recovery from party doesnot matter. In this case it is the direct liability of the service receiver (I.e. You) to deduct TDS from your service provider at the time of payment or bill credited. Payment to party is different matter. (4) - If the said amount of tds will not recovered from party, may be treated a bad debts after 3 years. But you should prove that you have done ur best efforts to recover that amount.

TDS on purchase bills????????

If it's just a contractual nature of arrangement, benefit would be allowed to you whether u get it recoveredd or not but TDS amount should be 1010/- not 1000/-


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