10-23-2010, 04:10 PM
what is the method of tax(withholding and income tax) deduction from employee salary. complete procedure reqd. and what will the employer pass journal entries in his books of accounts
10-23-2010, 04:10 PM
10-26-2010, 02:58 PM
Dear,
By saying, "what is the method of tax", do you mean, what is the nature of tax deducted from salary u/s 149 ?
To my firm apprehension, you meant what i assumed; let me clarify that the tax deducted by the employer from the salary of his employee is considered as withholding in nature, since it is withheld.
As far as the general entries are concerned;
You are to make following entries, based on the assumed figures of;
Salary 30,000
Tax deduction 3000
- At the time of recording salary obligation
Salary Expense ----- 30,000 Debit
Salary Payable ----- 30,000 Credit
- At the time of payment of salary
Salary payable -----30,000 Debit
Bank/Cash ----------27,000 Credit
WHT u/s 149 -------- 3,000 Credit
- At the time of payment of tax
WHT u/s 149 -------- 3,000 Debit
Cash/Bank ---------- 3,000 Credit
Let me know, if you need further clarification.
Best Regards,
Faisal.