What happens to TDS Which is Deducted?
We can reduce it from our Income Tax Liability
So TDS is like Advance Income Tax
Note
For Individuals, Income Tax Rate is as per Income Tax Slab Rate. Cess 4% is appliable for Financial Year 2018-19
There is Rebate of 2500 also if Income between 250000-350000
For Individuals, Income Tax Slab Rate Is applicable
| INCOME | TAX |
| UPTO 250000 | Nil |
| 250000-500000 | 5% of Income Greater than 250000 |
| 500000-1000000 | 20% of Income Greater than 500000+12500 |
| >1000000 | 30% of Income Greater than 1000000+112500 |
Example 1
Suppose a Contractor provides Construction Services of 10 lacs to Government Department
Govt Paid him whole 10 lacs(No TDS Deducted
Expenses of Construction are 400000
What is tax payable
View answer
Example 2
Suppose a Contractor provides Construction Services of 10 lacs to Government Department
Govt Deducted 1% TDS and paid him 990000
Expenses of Construction are 400000
What is tax payable
View answer
Example 3
Suppose a Contractor provides Construction Services of 10 lacs to Government Department
Govt Deducted 1% TDS and paid him 990000
Expenses of Construction are 600000
What is tax payable
View answer
Example 4
Suppose a Contractor provides Construction Services of 10 lacs to Government Department
Govt Deducted 1% TDS and paid him 990000
Expenses of Construction are 800000
What is tax payable
View answer
Assignments
Pass Entries of Case 1 to Case 4 at the end of the year
Case 1
View answer
DRAWINGS A/C DR 515
INCOME TAX REFUND DUE DR 39485
TO TDS RECEIVABLE 40000
BANK A/C DR 39485
TO INCOME TAX DUE 39485
Case 2
View answer
INCOME TAX REFUND DUE DR 40000
TO TDS RECEIVABLE 40000
BANK A/C DR 40000
TO INCOME TAX REFUND DUE 40000
Case 3
View answer
DRAWINGS 52015
TO TDS RECEIVABLE 40000
TO INCOME TAX REFUND DUE 12015
BANK A/C DR
TO INCOME TAX REFUND DUE
For Individuals, Tax is a personal liability, hence we put in Drawings)