Accounting Entries for Rent Expense (Accrual+Payment with TDS)

Journal entries for Rent expense

As per the Indian GAAP (Generally Accepted Accounting Principle), here’s how you can record accounting entries for Rent expense with accrual and subsequent payment:

Accrual entry for rent expense (when Rent is Incurred)

When recognizing rent expenses before payment:

Account	Debit (Rs.)	Credit (Rs.)
Rent Expense A/c	10,000
To Rent Payable A/c		10,000

This entry recognizes the expense that the company has incurred but has not yet paid for. It increases the rent expense on the income statement and creates a liability (rent payable) on the balance sheet.

Rent Expenses A/c (To be created as or under Indirect Expenses)

Rent Payable A/c (To be created as current liabilities)

Payment Entry (When paying the rent)

Account	Debit (Rs.)	Credit (Rs.)
Rent Payable A/c	10,000
To Cash / Bank A/c		10,000

Remember, these entries should be made in accordance with the accrual basis of accounting, where expenses are recognized when incurred, regardless of when the cash is paid.

Accounting entries for Rent accrual and payment with TDS

Here are the accounting entries for Rent expense with accrual and payment, considering TDS (Tax Deducted at Source) as per Indian GAAP:

Example:

• Annual rent as per the rental agreement is Rs. 300,000
• Rent paid 10th of every month in advance
• Thus rent of Rs. 25000 for April 2024 is to be due and paid on the 10th of April 2024
• TDS on rent Under section 194I: 10%

Journal entry to record accrual of monthly rent

This entry records the rent expense and creates a corresponding liability for Rent Payable. It also recognizes the TDS liability that needs to be deposited to the government.

Date: 10th April 2024 (or any date before actual payment date in April 2024)

Account	Debit (Rs.)	Credit (Rs.)
Rent Expense A/c	25,000
To Rent Payable A/c		22500
To TDS on Rent – Payable A/c		2500

Recommended Read: TDS on Rent – Section 194I

Payment Entry (Rent is Paid)

This entry debits the Rent Payable account and credits the Bank account for the actual net payment made (rent minus TDS).

Date: Assume the rent is paid on the due date (10-04-2024).

TDS Deposit Entry

Accounting entry when TDS on rent is Deposited to the Government. This entry records the actual deposit of the deducted TDS to the government’s account.

You can deposit the TDS on the government site. TDS can be deposited on or before the due date through the specified tax challan.

Account	Debit (Rs.)	Credit (Rs.)
TDS on Rent – Payable A/c	2500
To Bank A/c		2500

Recommended Read:

• TDS Payment due date and challan
• TDS Return filing due date FY 2024-25