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Tds recoverable A/C entries

Ritesh (CA Final) (326 Points)

01 August 2009

Dear all, please help

When should one book Tds recoverable in his books? Either at the time of booking of Income or at the time of receipt of Income?

Thanks in advance

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15 Replies

(Guest)

1). At the time of recd income though chq or draft :-

Bank A/c - Dr

Tax deducted at source (F.Yr--------) A/c - Dr (Other current assets)

To Party A/c - Cr.

2). At the time of Book the income in the books of accounts:

Party A/c - Dr

To Income A/c - cr

It's basics entry, if service tax is also thr, thn entry include service tax also.

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CA CS Amit Borade (Chief Accountant) (2828 Points)
Replied 01 August 2009

As per my opinion, TDS recoverable should be booked at the time of Receipt of Income.

Because till receipt u dont know how much TDS party has deducted.

(Guest)

Most of the company advice about the TDS deduction, so as per me, you should book TDS at the time of recd payment.

Varun (Student) (82 Points)
Replied 01 August 2009

it is dependent on you that whether you make your books on cash basis or on accrual basis

if you make your books on cash basis then you should book tdson receipt basis

and if you are making accounts on accrual basis then you should book tds at the time when it become your income

pulkit gupta (CA final student) (160 Points)
Replied 01 August 2009

It is passed at the time of receipt of income, as we r not ascertained wether party will deduct TDS or not and if yes, then the exact amount?

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Ashwani Narnoli (.) (1843 Points)
Replied 01 August 2009

Originally posted by :Ritesh
"	The person should book his income either at the time of receipts of income or booking of income whichever is earlier	"

CA Rashmi (final cleared) (680 Points)
Replied 01 August 2009

tds should be booked at the time of receipt or accural whichever is earlier,bcoz d party will hv to deduct tds on such basis only

CA Rashmi (final cleared) (680 Points)
Replied 01 August 2009

tds should be booked at the time of receipt or accural whichever is earlier,bcoz d party will hv to deduct tds on such basis only

amit (Ca final Artical) (33 Points)
Replied 02 August 2009

at the time when you are receiving amount of income then only you will be able to know that how much amount was deducted by the party as tds.

& correct entry of tds recievables must be booked with reciept entry

Ritesh (CA Final) (326 Points)
Replied 02 August 2009

Thanks all for reply

Now suppose a client (who maintains his books on ACCRUAL basis) raises a bill on its customer in F.Y 08-09....Customer is yet to make payment by the end of said F.Y.....In such scenario, how it wud affect B/S For F.Y 08-09......Since client is maintaining books on accrual basis, he wud book his Income in F.Y 08-09, but what about the Tds on said income?

Going further if suppose,Customer maintains books on CASH basis & makes payment in next F.Y 09-10 & deduct Tds also in F.Y 09-10....In such case, customer wud issue Tds certificate in respect of said Tds in F.Y 09-10.....

My further query is when wud Client get Tds credit, whether in F.Y 08-09 or F.Y 09-10...

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Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 03 August 2009

client gets tax credit in f.y. 09-10 as the payment is received in F.Y. 09-10 & party deducted the tax during the f.Y. 09-10 while making the payment.

Dilip (chief Accounts Officer) (79 Points)
Replied 05 August 2009

Originally posted by :Varun
"	it is dependent on you that whether you make your books on cash basis or on accrual basis if you make your books on cash basis then you should book tdson receipt basis and if you are making accounts on accrual basis then you should book tds at the time when it become your income	"

i am very sorry to hear this.

V P Narasimhan (Accounts Manager) (791 Points)
Replied 12 August 2009

Dear Frinds

Its better to pass the entry if the TDS deducted amount known correctly. For example at the time of making adhoc payments TDS deducted and we can pass the entry then & there. Whereas in the absence of dedduction details its better to pass the entry based on TDS Certificate recd at the end of the year. Becoz most of the companies issue TDS Certificate in June/July wherein they use to include TDS remitted in april & May also (based on the provisions they have made for the year end purposes) In fact you would have accounted in the subsquent FY whereas we have to shift the same in order to be in line with the TDS Certificate received on hand.