AART Accounting Solutions

Top 8 TDS Journal Entries (Basic to Advanced)

📌 For Accountants, Students & Finance Professionals

TDS (Tax Deducted at Source) is a critical component of day-to-day accounting, especially for businesses in India. Mastering the journal entries ensures compliance and accurate reporting.

Here’s a quick guide to the Top 8 most commonly used TDS journal entries, moving from basic to advanced, explained with simple examples:

✅ 1. TDS on Professional Fees (Sec 194J)

➡️ Fees ₹50,000, TDS @10% = ₹5,000

Professional Fees A/c Dr. ₹50,000
To TDS Payable A/c ₹5,000
To Consultant A/c ₹45,000

✅ 2. TDS on Contractor Payment (Sec 194C)

➡️ Contract ₹1,00,000, TDS @1% = ₹1,000

Contract Expense A/c Dr. ₹1,00,000
To TDS Payable A/c ₹1,000
To Contractor A/c ₹99,000

✅ 3. TDS on Rent (Sec 194I)

➡️ Rent ₹80,000, TDS @10% = ₹8,000

Rent A/c Dr. ₹80,000
To TDS Payable A/c ₹8,000
To Landlord A/c ₹72,000

✅ 4. TDS on Commission (Sec 194H)

➡️ Commission ₹30,000, TDS @5% = ₹1,500

Commission Expense A/c Dr. ₹30,000
To TDS Payable A/c ₹1,500
To Agent A/c ₹28,500

✅ 5. TDS on Interest (Sec 194A)

➡️ Interest ₹20,000, TDS @10% = ₹2,000

Interest Expense A/c Dr. ₹20,000
To TDS Payable A/c ₹2,000
To Party A/c ₹18,000

✅ 6. TDS Payment to Government

➡️ TDS deducted ₹5,000 now being deposited

TDS Payable A/c Dr. ₹5,000
To Bank A/c ₹5,000

✅ 7. TDS Receivable (You as Deductee)

➡️ Professional income ₹1,00,000, TDS @10% deducted

Bank A/c Dr. ₹90,000
TDS Receivable A/c Dr. ₹10,000
To Income A/c ₹1,00,000

✅ 8. TDS on Property Purchase (Sec 194IA)

➡️ Property value ₹60,00,000, TDS @1% = ₹60,000

Property A/c Dr. ₹60,00,000
To Seller A/c ₹59,40,000
To TDS Payable A/c ₹60,000

💡 Tip: Always reconcile TDS ledgers monthly and match with Form 26AS/TRACES to avoid compliance issues.

Upcoming GST Portal Restrictions ! You can’t ignore! ⚠️

Businesses, be prepared! Major updates are coming to the GST portal in early 2025, with significant shifts in how you manage your GST compliance. Here’s what you need to know:

🟩 Barring of GST Returns : Starting 2025, GST returns (GSTR-1, GSTR-3B, GSTR-9, etc.) can no longer be filed after three years from their due date. This affects filings under Sections 37, 39, 44, and 52.

🟩 Hard Locking of GST ITC : From January 2025, the GST portal will lock auto-populated tax liabilities in GSTR-3B. Input Tax Credit (ITC) will also be locked in the future, so ensure all data is accurate before submission.

🟦 Archival of GST Data : As per GST portal data policy, data for view of taxpayer to be retained for seven years only. Further, this data archival is going to be a monthly activity.

🟦 E-Invoice Reporting Limit : Soon, taxpayers will face a strict 30-day limit for reporting invoices on the e-invoice IRP portals. This includes all document types requiring an IRN—Invoices, Credit Notes, Debit Notes.

⚡ Action Required: Now is the time to reconcile your records, update routines, and prepare for these big changes!

With the introduction of the new income tax regime, the basic exemption limit has been elevated from Rs.2.5 lakhs to Rs.3 lakhs. This increased exemption limit makes the novel tax regime more appealing. Note that the highest tax rate, i.e., 30%, will be imposed on income exceeding Rs.15 lakhs.