TDS on Reimbursement

Dear Dhruv,

An employee can make direct payment on behalf of the company through his imprest account. On the point when company receives the bill,tds deduction will apply.

for your clarification entries will be

Party                  dr      50000

to Mr. X(imprest)      50000

clearing imprest of mr. X

Mr. X (imprest)   Dr   50000

to cash                        50000

at the time of booking of bill

Professionl charges   Dr     50000

Service tax recovery    Dr      5150

to Party                                    49635

to TDS                                      5515

hope ur doubt will be cleared.

regards,

ratan 

Okay..so what happens to the debit balance remaining in the party account, because you've initially debited to party account 50,000 and then crediting it 49635, the amount remaining 365 ? That's the recoverable amount, net of TDS deduction and service tax due to be paid to him ? 

the balance amount will be recoverable from the party, and the same can be adjusted with next ever bill or asked for the refund of the same.

regards,

ratan

And one more thing , in case of any payment under 194 C or J or other sections (barring 194I), is service tax chargeable on amount inclusive of TDS or exclusive ?

Dear Dhruv,

service tax is chargeable on the gross amount charged ( means amount inclusive of TDS) as shown in the above example.

hope ur doubt will b cleared.

keep smiling....

regards,

ratan

Oh okay..thanks again!