Tax wiithholding


I have a query for employee withholding tax
when i made a salary for employee exmple:

salary = 100
Debit = 90
Withhoslingtx debit = 10
Total credit = 100

Why withholding tax is showing in credit?

But the withholding ledger is Cr with 10…?? why

The salary is the cost to your business and will debit to an expense account
The tax is the tax you withhold and will appear in a Payroll Liability account eg Tax due, tax withheld as a credit - it is money the business owes someone
The balance goes to the employee’s clearing account as a credit - it also is money the business owes someone

When you pay the employee you will pay it from a bank or cash account and that will clear the Employee Clearing account
When you pay the taxes over to the tax authority, that will clear the tax due/tax withheld account

This is more clearly explained in the Payroll Guides

Thank for your reply
But when i Purchase something and made a purchase invoice

Total Amount is 100

Goods is Dr = 100

party name is Cr = 90

withholding tax Cr= 10

but the withholding tax is showing is Dr in withholding tax ledger.


Azeem Kamran

@Azeem_kamran, you initially asked about employee withholding tax. Now you are asking about withholding tax on purchases. The two have absolutely nothing to do with one another.

The first is a type of payslip deduction item. The second is money you withhold on purchases on submit to the tax authority on behalf of your supplier. For that, read this Guide: