Hi Team,
I am working in a software company. For example, we have ABC Customer (Debtor) and XYZ Consultant (Creditor). We have raised a sales invoice to ABC for Rs. 300,000, and we will be paying XYZ Rs. 300,000. The issue is that our customer (ABC) transferred Rs. 270,000 through the bank to our creditor (XYZ) on our behalf after a 10% TDS deduction.
My doubts are:
1. Is this a correct transaction?
2. How can I enter this in Tally.ERP.9?
3. The TDS amount of 10% is Rs. 30,000. How do I pay this to the bank and generate Form 16A for filing?
4. Our creditor (XYZ) is requesting a TDS certificate of Rs. 30,000.
Please provide a detailed reply as soon as possible. I am waiting.
From India, Hyderabad
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5I am working in a software company. For example, we have ABC Customer (Debtor) and XYZ Consultant (Creditor). We have raised a sales invoice to ABC for Rs. 300,000, and we will be paying XYZ Rs. 300,000. The issue is that our customer (ABC) transferred Rs. 270,000 through the bank to our creditor (XYZ) on our behalf after a 10% TDS deduction.
My doubts are:
1. Is this a correct transaction?
2. How can I enter this in Tally.ERP.9?
3. The TDS amount of 10% is Rs. 30,000. How do I pay this to the bank and generate Form 16A for filing?
4. Our creditor (XYZ) is requesting a TDS certificate of Rs. 30,000.
Please provide a detailed reply as soon as possible. I am waiting.
From India, Hyderabad
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Hi,
I believe there are some confusions. For example, if you have any customer ABC, then you have to bill ABC and collect the amount. If you have to pay for XYZ, then they have to bill you, and you have to deduct TDS at 10% and pay the supplier. ABC can't pay XYZ the amount, and at the same time, they can't deduct TDS at 10% and pay XYZ. If they have deducted and remitted, then you will not be in a position to show it in your records. As ABC remitted TDS to the Income Tax department, Form 16A should be given from ABC to XYZ.
From India, Bangalore
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I believe there are some confusions. For example, if you have any customer ABC, then you have to bill ABC and collect the amount. If you have to pay for XYZ, then they have to bill you, and you have to deduct TDS at 10% and pay the supplier. ABC can't pay XYZ the amount, and at the same time, they can't deduct TDS at 10% and pay XYZ. If they have deducted and remitted, then you will not be in a position to show it in your records. As ABC remitted TDS to the Income Tax department, Form 16A should be given from ABC to XYZ.
From India, Bangalore
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Thank you for your reply.
I know this type of transaction is not correct, but right now it happened. ABC paid to XYZ 270,000/-, and a balance of 30,000/- was given to us. XYZ provided a bill to us for 300,000/-. XYZ is asking us for a TDS certificate for 30,000/-. How can I solve it? Please help me.
Whatever amount our customer gives to us is clear, and whatever we owe to the creditor is also clear. Our customer paid our creditor directly on our behalf. The problem lies with the TDS certificate; the creditor is asking for it on an urgent basis.
Thank you, Yamini
From India, Hyderabad
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I know this type of transaction is not correct, but right now it happened. ABC paid to XYZ 270,000/-, and a balance of 30,000/- was given to us. XYZ provided a bill to us for 300,000/-. XYZ is asking us for a TDS certificate for 30,000/-. How can I solve it? Please help me.
Whatever amount our customer gives to us is clear, and whatever we owe to the creditor is also clear. Our customer paid our creditor directly on our behalf. The problem lies with the TDS certificate; the creditor is asking for it on an urgent basis.
Thank you, Yamini
From India, Hyderabad
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Dear Yamini,
There is a little bit of confusion. ABC paid Xyz 270,000 INR. Then why have you received 30,000 INR? What is your role in the transaction? If you have received the payment of 30,000 INR from ABC, then you will have to pay the same to Xyz as ultimately he is the beneficiary of the money.
Just pay 30,000 INR to Xyz and forget the matter. The amount of 30,000 INR does not fall into the TDS bracket. You can record it as consultancy received and consultancy paid in your books of accounts.
Only ABC, who paid you 30,000 INR, should not have conducted this type of transaction. They should have deposited the amount of 30,000 INR in the government treasury and issued Form 16A to Xyz.
Ramakant
From India, Pune
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There is a little bit of confusion. ABC paid Xyz 270,000 INR. Then why have you received 30,000 INR? What is your role in the transaction? If you have received the payment of 30,000 INR from ABC, then you will have to pay the same to Xyz as ultimately he is the beneficiary of the money.
Just pay 30,000 INR to Xyz and forget the matter. The amount of 30,000 INR does not fall into the TDS bracket. You can record it as consultancy received and consultancy paid in your books of accounts.
Only ABC, who paid you 30,000 INR, should not have conducted this type of transaction. They should have deposited the amount of 30,000 INR in the government treasury and issued Form 16A to Xyz.
Ramakant
From India, Pune
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Hi Yamini,
There is no confusion at all. The transaction is very clear. ABC owes you 3 lakh, and you owe 3 lakh to XYZ. As ABC paid directly to XYZ, you should record the entry in your books by debiting XYZ and crediting ABC for the amount paid on your behalf. Remember to collect Form 16A from ABC.
Remit TDS as if you have deducted it when paying XYZ, and provide Form 16A to XYZ. I hope this clarifies the process for you. Please feel free to call if you have any questions.
Regards,
KPN
9444406519
From India, Chennai
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There is no confusion at all. The transaction is very clear. ABC owes you 3 lakh, and you owe 3 lakh to XYZ. As ABC paid directly to XYZ, you should record the entry in your books by debiting XYZ and crediting ABC for the amount paid on your behalf. Remember to collect Form 16A from ABC.
Remit TDS as if you have deducted it when paying XYZ, and provide Form 16A to XYZ. I hope this clarifies the process for you. Please feel free to call if you have any questions.
Regards,
KPN
9444406519
From India, Chennai
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Yamini,
The query raised is in half measure. If you want to have clear guidelines, provide details in full.
1. What is your relationship with ABC, debtors? You mentioned agreed, but what is the nature of the transaction between you and ABC, then?
2. What is your relationship with XYZ, creditors? Agreed, but what is the nature of the transaction between you and XYZ, why you owe XYZ?
3. Why did XYZ pass on the TDS money to you? What for?
4. When did these transactions happen?
Ultimately, it appears the TDS thus recovered from XYZ by ABC has not been remitted to the IT dept. under 94 J. TDS remittance. If this is already overdue, then it has to be remitted to the govt. account together with interest accrued. The crux of the problem is a non-deductee cannot take credit for the so-called TDS recovered. The money part is one thing, and complying with the TDS requirement is another. The money part could be easily solved once you clearly tell me what you did. I could guess that ABC has no obligation to pay XYZ as there appears to be no transaction between them except that ABC made a payment of Rs. 2,70,000 presumably on your instructions, retaining Rs. 30,000 on your behalf which has been passed on to you. Am I correct? Since ABC has no liability per se to pay XYZ, there is no question of XYZ accounting for non-existent TDS in his books. Whereas XYZ should get his TDS Form 16A as his payment received is short by Rs. 30,000, which in effect is TDS. But prima facie, it's YOU who is legally liable to make payment to XYZ and thus has to account for TDS as well.
You have not indicated what entries have already been passed by you in your books. Unless you reveal it, it is not correct to advise you on what the entries should be to correct the so-called errors in your books. In other words, when you have not stated what errors you have committed, how can I advise about correction entries? Come out clearly.
From India, Bangalore
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The query raised is in half measure. If you want to have clear guidelines, provide details in full.
1. What is your relationship with ABC, debtors? You mentioned agreed, but what is the nature of the transaction between you and ABC, then?
2. What is your relationship with XYZ, creditors? Agreed, but what is the nature of the transaction between you and XYZ, why you owe XYZ?
3. Why did XYZ pass on the TDS money to you? What for?
4. When did these transactions happen?
Ultimately, it appears the TDS thus recovered from XYZ by ABC has not been remitted to the IT dept. under 94 J. TDS remittance. If this is already overdue, then it has to be remitted to the govt. account together with interest accrued. The crux of the problem is a non-deductee cannot take credit for the so-called TDS recovered. The money part is one thing, and complying with the TDS requirement is another. The money part could be easily solved once you clearly tell me what you did. I could guess that ABC has no obligation to pay XYZ as there appears to be no transaction between them except that ABC made a payment of Rs. 2,70,000 presumably on your instructions, retaining Rs. 30,000 on your behalf which has been passed on to you. Am I correct? Since ABC has no liability per se to pay XYZ, there is no question of XYZ accounting for non-existent TDS in his books. Whereas XYZ should get his TDS Form 16A as his payment received is short by Rs. 30,000, which in effect is TDS. But prima facie, it's YOU who is legally liable to make payment to XYZ and thus has to account for TDS as well.
You have not indicated what entries have already been passed by you in your books. Unless you reveal it, it is not correct to advise you on what the entries should be to correct the so-called errors in your books. In other words, when you have not stated what errors you have committed, how can I advise about correction entries? Come out clearly.
From India, Bangalore
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Dear KPN No doubt your reply is appreciated. But I feel here are two payment transactions. Then two steps two tds deductions should be there. Ramakant
From India, Pune
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From India, Pune
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ABC is a customer who billed us for Rs. 300,000. This party is a debtor in our books who remitted Rs. 270,000, and the balance was deducted towards TDS. Credit Rs. 270,000 in the party's account and debit to Bank. Credit Rs. 30,000 in the party's account and debit to TDS ADVANCE (under Current Assets). This amount will be clubbed with Advance Income Tax and will be accounted for at the time of filing ITR. If income tax paid in ITR becomes refundable, the same amount will be refunded by the Government. I hope this point is clear.
The transaction with XYZ is the vice-versa of the above. XYZ is our consultant who submitted a bill for Rs. 300,000, and after deducting TDS of Rs. 30,000 (credited in TDS DEDUCTED A/c under Current Assets), we have made a payment of Rs. 270,000. The party is asking for a TDS Certificate. Please note that TDS is to be deposited in the Government Treasury on or before the 7th of the following month, except for March, and a quarterly statement is submitted on July 15th (for the 1st quarter and similarly for the 2nd & 3rd quarter) except for the last quarter. After the filing of the quarterly statement, the data is updated on the website, and TDS Certificates become ready for download. These certificates are to be issued to the parties.
However, the party can also check their Form 26AS to verify the correct credit of the TDS amount after filing the quarterly statement, and there is no need for TDS Certificates.
In fact, TDS is an advance income tax and should be treated as such.
TDS is to be made on payment or credit, whichever is earlier.
From India, Panipat
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The transaction with XYZ is the vice-versa of the above. XYZ is our consultant who submitted a bill for Rs. 300,000, and after deducting TDS of Rs. 30,000 (credited in TDS DEDUCTED A/c under Current Assets), we have made a payment of Rs. 270,000. The party is asking for a TDS Certificate. Please note that TDS is to be deposited in the Government Treasury on or before the 7th of the following month, except for March, and a quarterly statement is submitted on July 15th (for the 1st quarter and similarly for the 2nd & 3rd quarter) except for the last quarter. After the filing of the quarterly statement, the data is updated on the website, and TDS Certificates become ready for download. These certificates are to be issued to the parties.
However, the party can also check their Form 26AS to verify the correct credit of the TDS amount after filing the quarterly statement, and there is no need for TDS Certificates.
In fact, TDS is an advance income tax and should be treated as such.
TDS is to be made on payment or credit, whichever is earlier.
From India, Panipat
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