TDS on Salary Entery in Tally
TDS on Salary Journal Entry In Tally
Tax Deducted at Source:
Tax deducted at Source is income tax deducted by the Employer when paying salary to their employees. The Employer is paying tax to the government on behalf of the employee. Lets understand some basics before learning the TDS on Salary Journal Entry.
Note that this TDS Concept is in the Context of Salary Income.
Further, employee shall need to declare the details of his/her other incomes on annual basis to the employer. Deduction of TDS from Salary happens every month before the salary payments based on the information furnished by employee.
There are The Concept of TDS:
We will try to understand this TDS concept with a scenario. Mr. A works in XYZ Company for a gross monthly salary of Rs.50,000. Assume an income tax rate of 10% is applicable here. So, Mr. A is liable to pay Rs.5,000 to the government as income tax. XYZ Company directly pays Rs.5,000 to the government by way of deducting the same from his salary.
So, the Employer pays tax instead of Mr. A. The salary received by Mr. A is Rs.45,000
TDS on Salary Journal Entry
Every journal entry will have at-least two GL Accounts. There shall be a minimum of one debit and credit account to balance the entry. There are three accounts here – Salary, Salary Payable and TDS Payable.
Lets understand the nature of each GL relating to Salary Journal Entry.
- Salary is a expense account
- Salary Payable is a liability
- TDS payable is the liability to pay to the government/income tax department
What’s the basis for recording the Journal entry?
Golden Rules of accounting is the basis for recording the journal entry. Those rules are for three category of accounts. Refer to the below table for accounting rules.
Salary Expense Entry with TDS component
Entry for Salary Payment
Entry for TDS Payment
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