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Journal Entries $type=three$count=6$author=hide$comment=hide$label=hide$date=hide$show=home$s=0

Balance Sheet $type=three$count=6$author=hide$comment=hide$label=hide$date=hide$show=home$s=0

Journal Entries of TDS

TDS means tax deducted at source. If tax is deducted from assessee's income and deposited in the Govt. account, its journal entries will be in the books of company. For example ABC company used the service of MR. N person. Now, ABC company will pay the amount of MR. N person. If TDS will apply as per income

tax law, ABC will deduct TDS and net amount will pay to Mr. N person. At that time following journal entries will be passed in books of ABC company and Mr. N Person.

In the Books of ABC Company

1. When company pays the money and deduct the TDS. 

Indirect Expense Account Debit

Mr. N Person Account Credit

TDS of Mr. N Person Account Credit 

Explanation of Above Entry with Example   : Suppose, ABC  have to pay Rs. 1,00,000 pay rent to Mr. A person. Suppose,   it TDS is Rs. 5000. Now, the net liability of Mr. N person will be of Rs. 95000. and TDS liability will be Rs. 5000 because both amount is payable to different persons. So, Mr. N person account will be credited with Rs. 95000 and TDS account will be credited with Rs. 5000. Because total Rent is the indirect expense, so Rs. 1,00,000 will be debited. Company will follow the law and total amount will be divided between assessee and govt.

Rent  Account Debit  1,00,000

Mr. N Person Account Credit 95000

TDS Credit 5000

Before Actual Payment to Creditor for expense and TDS, both will be shown in the liability side.

Liability Side of Balance Sheet 

Mr. N Person Account (Creditor for Rent ) = Rs. 95000

TDS = Rs. 5000

2. When Payment is done to Creditor for our expense and TDS, then following entry will be passed. 

Mr. N Person   Account Debit  95,000

TDS  Account Debit  5000

Bank Account Credit 1,00,000

In the Books of Mr. N Person  (Assessee) 

1. When his earning from Rent is due.

ABC Company Account Dr. 95000

TDS   Dr. 5000

Rent Account Cr. 100000

2. When Assessee Gets net amount of his rent

Bank Account Dr. 950000

ABC Company Account  Cr. 95000

3. When Govt. Refunds the TDS to Assessee

When Mr. N Person fills his regular income tax return and he refunds some of his TDS. Suppose, it is the Rs. 1500

Bank Account Dr.  1500

Refund of TDS Cr. 1500

{ Important Note : Payment of income tax is the personal liability of any person. So, we do not record the income tax of an individual assessee. But when TDS is deducted it just like drawing of person. So, it will be debited. When we get the refund of TDS, it is just like increase of capital because rent was our earning. If we deduct TDS, it means, it is decrease of our earning and capital. Refund is just like increase of our earning and capital. }

Related : How to File eTDS Return


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  1. thank u so much

  2. Please help me with this
    TDS received Dr 3000
    To XYZ Cr 3000

  3. my company not dedcuted tds in first month second month they were dedcted 3 months tds on 3 rd month what is the tally entry

  4. hello
    if i paid int on tds and penalty as well how can i treat it in books

  5. paid interest of rs. 10000 (TDS @30%) on a deposit taken by company. what would be the journal entry?

  6. In the above situation assume that ABC Ltd. Has already a debit balance Rs.100000 to the person to whom it pay the rent, and while passing entry for rent the account will be credited for Rs.95000(net of TDS).then the debit balance become Rs.5000(TDS amount), but actually there is no such liability for credit because we pay TDS behalf of the same person. How to deal with the situation.

  7. Bank deducted TDS Its Also Showing in 26AS. Amount is not Received in bank which amount has deducted TDS. How can I enter in Tally

  8. Dear sir
    Pls clear to me TDS refund

  9. sir
    how can i pass jv entry in my -fdr received interest- without changing fdr balance

  10. sir hum job work ke gst bill ki entry purchase voucher me karte h to us par tds kese deduct kare uske liye kya jounel entry hogi please help me.....
    subhash prajapat

  11. Explain with example always understanding thank u

  12. nice information thanks for this article

  13. In 26AS there is tds on dividend income then what will be the accounting entry?
    Tds Dr dividend income cr
    Is it like this?

  14. very nice explanation and clear notes
    thank you sir

  15. thankyou very much sir...

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Accounting Education: Journal Entries of TDS
Journal Entries of TDS
Accounting Education
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