Dhruv (Chartered Accountant) (308 Points)
15 April 2010Suppose an employee during a field trip/professional assignment pays 50,000 to a contractor on behalf of the company, and is later reimbursed by the company for the same amount. Where exactly does the deduction of tax as source take place ? When the employee pays 50,000 ? In that case should he pay only 45000 (after 10% TDS) and company directly gives Form 16A to the contractor ?
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 15 April 2010
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
Dhruv
(Chartered Accountant)
(308 Points)
Replied 15 April 2010
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 ?
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 15 April 2010
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
Dhruv
(Chartered Accountant)
(308 Points)
Replied 15 April 2010
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 ?
Ratan Deep Saxena
(Asstt Manager (Accounts & Finance))
(2998 Points)
Replied 15 April 2010
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
CAclubindia
