Banks charges transaction tax as INR Rs. 5 + GST18% (on Rs. 5) upto transaction <= 1,00,000
and upto Rs. 2,00,000 charges are Rs. 15+GST18% (on Rs. 15)
How can I record and deduct that on Inter account bank transactions ?
Because in this case If i transfer 60,000 to another account, deduction at source is Rs. 60,005.90 and received amount is Rs. 60,000
You cannot deduct these fees as part of the inter account transfer. The inter account transfer only records transfer of your money from one account to another. There is no customer, supplier, payer, or payee involved. So you will need a second transaction.
Use a bank transaction, Spend Money, naming the bank as the payee. Allocate the charge to an expense account like Bank fees. Apply the appropriate tax code.
If you want this all to come out in a single withdrawal from your account, you will not be able to use inter account transfers. Instead, you will need to Spend Money from one account, with two line items for the transferred amount and the fee. Then Receive Money in the other account, with one line item only for the transferred amount.
You will need to use a transaction clearing account.
The Spend Money would be
Transaction Clearing account 60,000
Bank Fees 5.00 Plus tax code GST 18%
The Receive Money would be
Transaction Clearing account 60,000
For the transaction clearing account you can use any account as the amounts will contra / cancel out.
To be completely clear, @vishwadeep_bansal, the details @Brucanna provided are for the method I described in my final paragraph. I should have mentioned use of a transaction clearing account.
If you use the first method I mentioned, you would enter the inter account transfer without any fees. The second, Spend Money, transaction would not use a transaction clearing account, but would post only to Bank fees.
With either method, there are two transactions to enter.
However, as the “deduction at source is Rs. 60,005.90” being a single figure it wouldn’t be appropriate to split it into two transaction, but two lines within one transaction.
I guess your choice of method will depend on how your bank actually shows the transaction on your statement, @vishwadeep_bansal. If, by “deduction at source” you meant the entire transaction shows up as a single Rs. 60,005.90 amount, the transaction clearing account method is better. If it shows as two separate lines on the bank statement, either approach will work well. Financially, they are equivalent.
Thanks Guys, I will try to implement it… Lets see how it goes. Thanks again
I still have a question on using “transaction clearing account”.
Do we need to create a separate account?
As was stated:
However, you may prefer, as a matter of personal preference, to create a separate clearing account on your balance sheet. Since this will always be coming back to zero, it does not matter whether this is an asset or liability account.