Jv on 30-06-09

[aliali]

JV on 30-06-09
what will be correct entry on june 30?

1) salary exp(DR) 25000
salary payable.CR 24900
I tax payable.CR 100
(salary for the month of june,accrual book)

or
2.1) salary exp.DR 25000
salary payable.CR 25000
(accrual book)
2.2) salary payableDR 25000
I tax payableCR 100
bank.CR 24900
(payment of salary)

<b>[b]IF same condition apply to party??????</b>

1) material exp,DR 100000
party payable<CR 100000
(material received before 30-06-09)
(probably to pay after 3 month of year closing)

2) material exp,DR 100000
WHT payable.CR 6000
party payable<CR 94000
(material received before 30-06-09)
(probably to pay after 3 month of year closing)

[Farhan2009]

Withholding tax always be payable after the payment to supplier/employee. it means tax payable should be booked/incorporate in book of accouts at he time of payment not at the time of accrual. In your case if you have made payment after June 30, 2009, you should book party at gross amount(tax payable should not be booked).For your reference 153 section available


153. Payments for goods and services.- (1) Every prescribed person making
a payment in full or part including a payment by way of advance to a resident
person or permanent establishment in Pakistan of a non-resident person -
(a) for the sale of goods;
(b) for the rendering of 1[or providing of] 2[ ] services;
(c) on the execution of a contract, other than a contract for the
3[sale] of goods or the rendering of 4[or providing of] 5[ ]
services,
shall, at the time of making the payment, deduct tax from the gross amount
payable at the rate specified in Division III of Part III of the First Schedule

[Omeir]

This way the JV for 30.06 would
Salary exp 1000
Salary payable 1000

what would be the entry post 30.06 at the time of payment?

1) Salary payable 1000
It payabale 100
Bank 900

2) It payable 100
Cash 100

Is this entry correct?

[Farhan2009]

FOr reference please read followinf section

1[158. Time of deduction of tax.- A person required to deduct tax from an
amount paid by the person shall deduct tax -
1 The semicolon substituted by the Finance Act, 2006.
2 Inserted by the Finance Act, 2006.
3 Inserted by the Finance Act, 2006.
4 Substituted by the by the Finance Act, 2006. The substituted proviso read as follows
“Provided that the tax shall not be deducted in case, the balance in the persons’ individual
pension account is invested in an approved income payment plan of a pension fund manager or
paid to a life insurance company for the purchase of an approved annuity plan or is transferred to
another individual pension account of the taxpayer maintained with any other Pension Fund
Manager under Change of Pension Fund Manager option specified in the Voluntary Pension
System Rules, 2005.”
5 Omitted by the Finance Act, 2002. The omitted section 157 read as follows
“157. Petroleum products.- (1) Every person selling petroleum products to a petrol pump
operator shall deduct tax from the amount of commission or discount allowed to the operator at the
rate specified in Division VII of Part III of the First Schedule.
(2) The tax deducted under sub-section (1) shall be a final tax on the income arising from
the sale of petroleum products to which sub-section (1) applies.”
181
(a) in the case of deduction under section 151, at the time the
amount is 2[paid or] credited to the account of recipient 3[,
whichever is earlier]; and
(b) in other cases, at the time the amount is actually paid.]

[faisal_desperado]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Omeir</i>
<br />This way the JV for 30.06 would
Salary exp 1000
Salary payable 1000

what would be the entry post 30.06 at the time of payment?

1) Salary payable 1000
It payabale 100
Bank 900

2) It payable 100
Cash 100

Is this entry correct?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">


Dear Ali,
These entries are correct based on the suggestion of Omeir, i.e. IT is deducted at the time of payment.

However,
Before posting your second entry, you should pass the following compound entries,
1.
Salary Payable -------Debit
Each Individual employee account ----------Credit (Each employee will be credited with his/her gross amount of salary)

2.
Each individual employee account ----------Debit(Indicating actual amount of payment)
IT Related to each employee--------------- Debit(Indicating IT of each employee in her/her account)
IT payable -------------------------Credit (Indicate total WHT payable)
Bank / Cash -----------------------Credit ( payment to employees)

3.<b>Income Tax Payment</b>
IT payable ------------------------Debit
bank/ cash------------------------Credit


Best Regards,

[faisal_desperado]

Same concept, as discussed above, should be applied while deducting taxation u/s 153.

Regards,

[Omeir]

Why do i need to pass the compound entry?

Secondly in a software how to enter the compound entry? In the software i use i have DV, CV and JV, The second entry proposed by you cannot be passed. Please explain

[faisal_desperado]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Omeir</i>
<br />Why do i need to pass the compound entry?

Secondly in a software how to enter the compound entry? In the software i use i have DV, CV and JV, The second entry proposed by you cannot be passed. Please explain
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

Sorry dear,
I had errorenously posted your name instead of the original poster,
Furthermore, neither i talked about the software which you have been using nor any other software, which is used by others,I just addressed to the original poster and suggested him to be in a streamlined,
Furthermore, those limitations, which exist in your software does not necessesarily be the case of other softwares.

Differentiation in opinions with regards to the different people is inevitable, however it does not mean to discourage others.

Best Regards,