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Former Member
Nov 24, 2009 at 05:31 PM

Withholding tax on Invoice amount with retention money


I have to configure withholding tax which can deduct entire tax on the invoice value even if the some of the money is retained for warranty purposes. Please see example:

Machine Repair Dr. 10000

To Vendor account 9000 ( Payable immediately)

To Vendor account 1000 ( retained money payable after a year)

But when I post the document system deducts the tax on 9000 and not on 10000 ( Invoice value). I am using withholding tax type used for invoice. Following entry is passed by the system if TDS rate is 5%

Machine Repair Dr 10000

To vendor account 8550

To vendor account 1000

To TDS payable account 450

Please help me in correcting the above error.