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TDS Tax deducted at source in Tally ERP9

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What is TDS?

TDS or Tax Deducted at Source, is a means of indirect tax collection by Indian authorities according to the Income Tax Act, 1961. TDS is managed by the Central Board of Direct taxes.In this guide lets learn how to set-up TDS in Tally ERP9.

When and how to deduct TDS?

Income and expenditure such as salary, lotteries, interests from banks, payment of commissions, rent payment, payments to freelancers, etc. fall under the ambit of TDS. When making payments under these segments, a percentage of the overall payment is withheld by the source that is making the payments.

Deductor

The source, which can be a person or an organization, is known as the Deductor.

Deductee

The person whose payment is getting deducted is called the Deductee. For instance,John smith LLP paid  Audit fee to Vikas Gupta,

  • Deductor is John Smith LLP.
  • Deductee: Vikas Guptha.

To Know more about Tax deducted at source You can visit this link.

Example Transaction for TDS in Tally ERP9 used in this Guide.

On 01-02-2016 John Smith LLP Paid to Mr. Vikas Gupta  ACA, Rs 50000 as Audit fee ,TDS deducted @ 10%  Rs 5000/-

We are going to implement TDS in Tally ERP9 based on above Expense  transaction.

If You Don’t like to read, You like see how TDS is implemented,we have a video tutorial.

Or Continue to read.

How to activate TDS in Tally ERP9?

Step1

Go to Gateway of Tally > F11: Features > Statutory and Taxation

Enable following options by typing ‘Yes’

Enable Tax deducted at source ( TDS) ?

Set/alter TDS details?

TDS activation screen in Tally ERP9

You will get a new screen where you can enter Company TDS Deductor details. Enter all those details as in the below image.

Details of deductor, the person who deduct TDS

In side Deductor details there is an option set/alter details of person responsible ? set this Yes, you will have a new screen where the details of person responsible details. Enter responsible person name.

Details of Person responsible for TDS and his details

Enter and save all three screens. Now we have activated TDS in Tally ERP9.

Step2

Creating TDS nature of payment.

Before creating TDS nature of payment, you should know there are some transactions specified under Income Tax rules attract TDS. Here is a list transaction and its payment code.

SectionNature of PaymentPayment Code
SectionNature of PaymentPayment Code
192 Payment to Govt. Employees other than Union Government Employees 92A
192 Payment of Employees other than Govt. Employee 92B
193 Interest on Securities 193
194 Divident 194
194A Interest other than interest on securities 94A
194B Winnings from lotteries and crossword puzzles 94B
194BB Winnings from horse race 4BB
194C Payment of contractors and sub-contractors 94C
194D Insurance Commission 94D
194E Payments to non-resident Sportsmen/Sport Associations 94E
194EE Payments in respect of Deposits under National Savings Schemes 4EE
194F Payments on account of Re-purchase of Units by Mutual Funds or UTI 94F
194G Commission, prize etc., on sale of Lottery tickets 94G
194H Commission or Brokerage 94H
194I Rent 94I
194J Fees for Professional or Technical Services 94J
194K Income payable to a resident assessee in respect of Units of a specified Mutual Fund or of the units of the UTI 94K
194LA Payment of Compensation on acquisition of certain immovable property 4LA
194LB Income by way of Interest from Infrastructure Debt fund 4LB
194LC Income by way of interest from Indian company engaged in certain business 4LC
195 Other sums payable to a non-resident 195
196A Income in respect of units of Non-Residents 96A
196B Payments in respect of Units to an Offshore Fund 96B
196C Income from foreign Currency Bonds or shares of Indian Company payable to Non-Resident 96C
196D Income of foreign institutional investors from securities 96D

For more authority report and TDS rate chart visit income tax official website

To create TDS nature of payments,

Go to Gateway of Tally > Accounts Info. > Statutory Info. > TDS Nature of Pymts Create

Lets create ‘Fees for Professional or Technical Services’ as Audit fee paid is a professional fees.

The screen look like this and fill all the details within.

TDS nature of payment creation screen

  • Name: The name of nature of payment, here our example ‘Fees for Professional or Technical Services.
  • Section: Enter Section under income tax for the nature of payments pick from the table given above.
  • Payment Code: This is the payment code in which payment is to be made, this information also available in the Table given above. Here its is 94J
  • Rate : Rate of TDS as per Income tax rule , here a link for that
  • Threshold Limit: This is the limit at which the deduction is exempted as per rule, this information also available in the link given above. In our case it 30000.

Press enter and save the screen

Step 3

Create an Expense ledger with TDS applicability.

In our case Audit fee is the expense ledger.

Gateway of Tally >Accounts info>Ledger>Create

Give all the details, Like name, under- indirect expense and most importantly under statutory information  choose,

  • Is TDS Applicable? :Applicable
  • Nature of Payment: Choose the TDS nature of payment we have created above, Fees for Professional or Technical Services.

TDS expense ledger with TDS Applicable

Press enter and save or use Ctrl + A.

Step4

Creating Party Ledger with TDS deductability.

 

Go to Gateway of Tally>Accounts info>Ledger>Create.

Fill the details as usual,

Under statutory Information

Is TDS Deductable?  Yes

Deductee Type : Choose whichever is applicable from the list, in our case lets choose ‘Individual-Resident’.

Deduct TDS in the same voucher : Yes

Under Mailing Details:  fill all details and especially

Provide bank details: Yes and fill sub screen.

Under Tax Registration Details.

PAN: NJDPG5464K

Provide PAN Details: Yes

The screen will look like this.

creating party Ledger with TDS deductable option

Press Enter and save.

Step5

Creating TDS Ledger in Tally ERP9

Go to Gateway of Tally>Accounts info>Ledger>Create

Enter the TDS Ledger details as in below.

Name: TDS on Professional Fee

Under: Duties & Taxes.

Types of duty/tax: TDS

Nature of payment : TDS Nature of payment we have created above ‘Fees for Professional or Technical Services’.

The screen will look like this , important fields are marked.

TDS Ledger creation

Save the screen.

Step 6

TDS on Transaction in Tally ERP9.

In our case Audit fee payment is the transaction that attract TDS,Let’s make a bank payment to Vikas Gupta.

Go to Gateway of Tally>Accounting Voucher>Journal.

Debit the expense ledger with Total amount, then credit Party amount after deducting TDS and TDS ledger with TDS Amount.

See the Journal Voucher Screen shot below.

TDS Jornal Entry

Press enter and save the screen.

Step7

TDS Payment in Tally ERP9

TDS should be paid on or before the 7th of Nex month. So in our example pay it on or before 7th march 2016.

Gateway of Tally>Accounting Voucher>F5 Payment

In Payment voucher there is a button on the right button panel called ‘Stat Payment’.

Stat Payment Button

On clicking Stat Payment ,You will get a new screen,where  you can select pending TDS details.

Stat Payment voucher filled all TDS payment details

Select All details and press enter.The final payment screen will be as follows.

Payment Voucher with TDS Details completed

Enter bank allocation details and save the screen.

On printing TDS Payment voucher, you will get Offline bank Payment ITNS 281 Challan.

TDS Payment challan ITNS 281 Printed from Tally ERP9

TDS Reports

There are Two main reports in TDS Report section

  1. Form 26 Q : As per the Income Tax Act, 1961, every corporate and government entity responsible for deduction of tax at source should furnish TDS returns containing details of deductee(s) and challan details relating to deposit of tax with the Income Tax Department. Form 26Q is the Quarterly return of TDS in respect of all payments other than salaries.  This is applicable for Resident and the due date for Government entities is July 31st, October 31st, January 31st, and May 15th; for non-government entities the due dates for filing returns are July 15th, October 15th, January 15th, and May 15th.

Form26 Q can be accessed from

Gateway of Tally > Display > Reports > Statutory Reports > TDS Reports > Form 26Q.

  1. Form 27 Q : Form 27Q is a Quarterly return for deduction of tax in respect of payments made to non-residents other than salary.

Form 27 Q can be accessed in Tally ERP9

Gateway of Tally > Display > Reports > Statutory Reports > TDS Reports > Form 27Q.

Hope You got Clear Idea on implementing TDS in Tally ERP9.

 

 

 

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