Hi,
I am using Money 2004 with Small Business. In India, whenever an invoice is
paid, a certain percentage of the invoice value is deducted by the person
making payment as "Tax Deducted at Source" (TDS, also known as witholding
tax) For example I raised an invoice for professional services to ABC Co.
for Rs. 1000. When ABC pays me, it deducts 5% (i.e. Rs. 50) from the bill
towards TDS, and pays me a net amount of Rs. 950, along with a certificate
for the tax deducted of Rs. 50. ABC then pays the Rs. 50 to the Government
within 7 days of deduction. At the end of the year, suppose the total tax
payable by me comes to Rs. 2000, I shall claim a credit for the Rs. 50
already deducted by ABC and pay only Rs 1950. The basic accounting entries
for this would be
Bank a/c Dr. 950
TDS a/c Dr. 50
ABC a/c Cr. 1000
How does one give effect to this kind of a transaction in Money? Also if I
am the person making the payment, how do I properly account for the tax
deducted by me and subsequently paid to the Government?
Thanks in advance.
Marzban