Answer Posted / hamsa
Usually TDS needs to be deducted on services provided and not on the purchases. So, that should be debited to the Expenditure account (i.e Professional Fee, Construction Fee, Salary etc..)
Journal Entry will be:
Expense Account Dr
TDS Payable Account CR
Party Account CR.
While making the payment
Party Account Dr
Cash or Bank Account.
It's better to deduct the TDS while entering the bill instead of deducting at the time of payment to party, becoz there is chance of missing the deduction. As per 40a of the Act, we need to deduct TDS at the time of expense or payment which ever is earlier.
Usually, the booking the expenditure will take place earlier than the payment.. of course in exceptional cases we pay as advance.
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