Jeevarathnam
Sr. Manager Hr/admin
Loginmiraclelogistics
Asso.prof.(commerce & Management) Pg
RAMAKANT R
Accounts Manager
Yamini.d
Sr.accounts Executive
+2 Others

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Hi Team, I m working in software company. Eg: we have ABC Customer(Debtor), and xyz Consultant(Creditor). we are raised sales invoice to ABC for Rs.300000/-. and we will payable to XYZ for rs.300000/-. So issue is our customer(Abc) transfered through bank to our creditor(XYZ) for Rs.270000/- behalf of us after 10% tds deduction. My doubt is (1) is it correct transaction?(2)how can i entered in tally.erp.9?(3) 10% of tds is 30000/- how can i pay to bank and filing and form 16 A generation?(4) our creditor(xyz) asking us tds certificate of 30000/-.
Please give the detailed reply as soon as. I m waiting ......
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Hi
I believe there are some confusions
For example you have any customer ABC then you have to bill for ABC & collect the amount.
If at all You have to pay for XYZ then they have to bill to you and you have to deduct TDS @10% and pay to the supplyer
ABC can't pay to XYZ the amount & at the same time they can't deduct TDS @ 10% and pay to XYZ if at all they have deducted and remitted then you will not be in a position to show in your records.
As ABC remitted TDS to Income Tax department then Form 16 A should be given from ABC to XYZ
Thank you for your reply.
I know this type of transaction is not correct. But right now it happened.
ABC Paid to Xyz for 270000/- and balance 30000/- given to us.
xyz given the bill to us for 300000/-.
xyz asking us tds certificate for 30000/-.
How can i solve it. Please help me.
( what ever our customer give amount to us clear,
and what ever we payable to creditor also clear.
our customer paid to our creditor directly behalf of us.
The problem is Tds certificate.creditor asking us urgent basis)
Thank you,
Yamini
DEAR YAMINI,
THERE IS LIT BIT CONFUSION.
ABC Paid to Xyz for 270000/ THEN WHY RS.30,000 IS RECEIVED BY YOU. WHAT IS YOUR ROLE IN THE TRANSACTION.
IF YOU HAVE RECEIVED THE PAYMENT OF RS.30,000 FROM ABC THEN YOU WILL HAVE TO PAY THE SAME TO XYZ AS ULTIMATELY HE IS BENEFICIARY OF THE MONEY.
JUST YOU PAY RS.30,000 TO XYZ AND FORGET THE MATTER. THE AMOUNT OF RS.30,000 IS NOT FALLING IN TDS BRACKET. YOU CAN SAY CONSULTANCY RECEIVED AND VIZ CONSULTANCY PAID IN YOUR BOOKS OF ACCOUNTS.
ONLY THE ABC WHO PAID YOU RS.30,000 HE SHOULD NOT HAVE DONE THIS TYPE OF TRANSACTION. HE MUST HAVE DEPOSITED THE AMOUNT OF RS.30,000 IN GOVT. TREASURY AND SHOULD HAVE ISSUED THE FORM 16A TO XYZ.
RAMAKANT
Hi Yamini,
There is no confusion absolutely. The transaction is very clear.
ABC is due to you 3 lac. You are due 3 lac to XYZ
As ABC paid directly to XYZ you pass entry in your books debiting XYZ and crediting ABC for having paid on you behalf.
You collect form 16A from ABC.
Remit tds as if you have deducted when paying XYZ and give form 16A to XYZ
Hope it is clear now.
Please feel free to call.
Regards
kpn
9444406519
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 transaction between you and ABC, then

2. What is your relationship with XYZ, creditors, agreed, but what is the nature of transaction between you and XYZ, why you owe XYZ?

3. Why XYZ passed on the TDS money to you what for ?

4. When this transactions happened ?

Ultimately, it appears the TDS thus recovered from XYZ by ABC has not been remitted to IT dept. under 94 J. TDS remittance,If this is already overdue then it has to be remitted to govt. a/c together with interest accrued. The crux of the problem a non-deductee cannot take credit of the so called TDS recovered. Money part is one thing and complying with TDS requirement is another thing. Money part could be easily solved when once if you tell me what you did clearly. I could guess, ABC has no obligation to pay XYZ as there appears no transaction between them excepting that ABC made a payment of Rs.2,70,000 presumably on you 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 legally liable to make payment to XYZ and thus has to a/c for TDS as well.

***You have not indicated what are the entries already passed by you in your books, unless you reveal it is not correct to advise you what should be the entries to correct the so called errors in your books. In other words when you have not stated what are the errors you committed how I can advise about correction entries. Come out clearly
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
ABC is a customer who billed us for Rs. 300000. This party is debtor in our books who remitted Rs. 270000 and balance deducted towards TDS. Credit Rs. 270000 in party a/c and debit to Bank. Credit Rs. 30000 in party a/c and debit to TDS ADVANCE ( under Current Assets) and this amount will be clubbed with Advance Income Tax and will be accounted for at the time to filling ITR. If income tax paid in ITR becomes refundable, same will be refunded by the Govt. Hope This point is clear.

Transaction with XYZ is vice-versa of the above. XYZ is our consultant who submitted bill for Rs. 300000 and after deducting TDS of Rs. 30000(Credit in TDS DEDUCTED A/c under Current Assets), we have made payment of Rs. 270000.. Party is asking for TDS Certificate. Pls note that TDS is to be deposited in Govt Treasury on or before 7th of the following month except for March and quarterly statement is submitted on 15th JJuly(for 1st quarter and similarly for 2nd & 3rd quarter) except for last quarter. After filing of quarterly statement, data is updated on the website and TDS Certificates become ready for download. These certificates are to be issued to the parties.

However, party can also check their Form 26AS to check correct credit of TDS amount after filing of quarterly statement and no need of TDS Certificates.

In fact TDS is advance income tax and to be treated as such.

TDS is to be made on payment or credit which ever is earlier.
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