In general, 2 different bookkeeping accounts are needed:
Data : 1.4.xx - You paid $100 plus VAT of $15 for printing. You deducted
tax at source at a rate of 20%.
(115 x 20% = $ 23)
7.5.xx - You transferred a sum of $ 23 to the tax authorities.
Visually, the accounts would look as follows:
Take care as the "Deductions at source from suppliers" account is, in all ways, a personal credit and debit account. The card indicates the amount that the Income Tax is entitled to receive from you for tax you have deducted from suppliers. The balance of the account may be in credit (before you have transferred the deductions on the due date) or it may be at zero (after you have made the payment to the income tax) but it can never show a debit balance.
Data: On 5.4.xx, you issued a tax invoice in the amount of $ 1,000 plus $ 150 value added tax.
The payer deducted 20% ( $ 1,150 x 20% = $ 230). The cash balance was deposited directly into the Western Union Bank.
The Bookkeeping records
Visually, the accounts will look as follows:
Take care as the "Deductions at source by customers" account is in all ways a personal debit and credit account. The account indicates the amount that the Income Tax owes you as a result of the fact that tax was deducted from you at source.
The balance of the "deductions at source by customers" accounts may show zero if no tax was deducted from you, or it may show a debit but the account may never be in credit.
Bank Reconciliation Salaries Tax Deduction at Source Value added tax
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