In my region, the withholding Income Tax is applicable while making payments to vendors.
So, whenever a company received a payment from a customer or made a payment to a vendor a certain rate is applicable for deduction of tax. How should this be incorporated in Receipt & Payment?
Customer or Vendor Invoice value 100,000
Rate of Withholding Tax @2% (2,000)
Received / Paid amount 98,000
General Entry in case of Receipt
Bank (Dr) 98,000
Advance Income Tax (Dr) 2,000
Receivable Account (Cr) 100,000
General Entry in case of Payment
Payable Account (Dr)100,000
Income Tax Payable (Cr.) 2,000
Bank (Cr.) 98,000
How can I manage theses transactions in Receipt and Payment