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WHT deducted on accrued salary
04-20-2010, 04:10 AM
Post: #1
WHT deducted on accrued salary
I wanted to know that whether the accounting entry for accrued salary is made for gross amount or net of tax for example If the year end is 30th June and the salaries for the month of June is 100000 WHT is 15000 Salary is paid in the month of July.Should the accounting entry be passed for accrued salary by 100000 or 85000...?

Awaiting for your replies.
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04-20-2010, 02:54 PM
Post: #2
 
You will book salaries with amount of Rs.100,000 and also book WHT with Rs.15,000/-. Hence the general entry will be

Salaries Expense 100,000-------Dr
WHT Payable ----------------------------15,0000---Cr
Accrued Salaries ----------------------- 85,000---Cr

The reason is that WHT deductible on salaries is also your liablity in respect of salaries payable
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04-20-2010, 07:54 PM
Post: #3
 
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by awaisaftab</i>
<br />You will book salaries with amount of Rs.100,000 and also book WHT with Rs.15,000/-. Hence the general entry will be

Salaries Expense 100,000-------Dr
WHT Payable ----------------------------15,0000---Cr
Accrued Salaries ----------------------- 85,000---Cr

The reason is that WHT deductible on salaries is also your liablity in respect of salaries payable
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
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04-20-2010, 08:19 PM
Post: #4
 
Thnx for your guidance..But one thing I wanted to clarify is that according to section 12 of the Income tax Ordinance salary is taxable on receipt basis so when the salary is going to be paid in the next month so according to receipt basis WHT gets due when it is paid so why to create a liability for something which has not accrue.
Don't You think the entry at the year end should be

Salaries exp....Dr...100000
Salaries payable...cr...100000

And when the salary is paid in the july entry is
Salary payable...Dr...100000
Bank........Cr.......85000
WHT payable..Cr......15000

And when the amount is deposited within 15 days as per time allowed the entry is

WHT payable.....Dr.....15000
Bank ........Cr....15000

Please Clarify in the light of above
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