Salaries and Wages
Also called: Payroll, Staff Salary
Gross salaries, wages, allowances and Dashain bonus paid to staff, on the Profit and Loss statement. Employer SSF contribution also goes here.
In detail
Salaries and Wages is the gross pay earned by staff for the month, including allowances and overtime, before any deduction. The month-end Journal Entry debits this ledger for the gross, credits TDS Payable for the income tax withheld under the salary slabs, credits provident fund and Social Security Fund payables if used, and credits the bank or Liability for Employee Benefits - Current for the net. Dashain bonus is posted the same way. The ledger therefore shows the true cost to the company, and the IRD's E-TDS return for salaries must match it. Paying salaries without deducting TDS leaves the company liable for the tax itself, and posting only the net pay understates the cost.
Formula
Net pay = Gross salary - Salary TDS - Employee provident fund and SSF contributions
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Salaries and Wages | Rs 1,50,000 | |
| TDS Payable | Rs 4,000 | |
| Bank Account | Rs 1,46,000 |
How to record it in BRAccount
- 01Prepare the payroll sheet with gross pay, TDS by slab and net pay for each employee.
- 02Go to Invoicing > Journal Entry > New dated the last day of the month.
- 03Debit Salaries and Wages for the gross total, choosing the cost center for each department.
- 04Credit TDS Payable for the tax and the bank account, or the employee liability, for the net.
- 05Attach the payroll sheet and submit. The entry below posts.
- 06Deposit the TDS by the 25th of the next month and file the E-TDS return.
When to use it
Posted by a monthly salary Journal Entry. Withhold employee income tax to TDS Payable and SSF to Liability for Employee Benefits - Current.
Example from the demo books
Dr Salaries and Wages Rs 1,50,000, Cr TDS Payable Rs 4,000, Cr Bank Account Rs 1,46,000 for Shrawan 2083 payroll.