TDS on Advance Payments to Party & Adjustment of Advances towards the Bill @ Tally.ERP9

Query

Is it possible to account Advance payments to party and deduct TDS on such advances? How to adjust the advances paid to the party towards the Bill?

Example: On 15-04-2010, ABC Company made an advance payment of Rs.50,000 to Pheonix Agencies towards Advertisement Expenses. While making payment tax was deducted form the Source. Advances were adjusted towards the bill of Rs.2,00,000 dated 26-04-2010.

Solution

Tally.ERP 9 allows accounting advance payments to party and deduct TDS on the advances and later adjust the advance paid towards the Bill.

Follow the given procedure to account advances and adjust the advances towards the Bill

Step 1: Record a Payment Voucher (to account advances)

To create a Payment Voucher

Go to Gateway of Tally > Accounting Vouchers > F5: Payment.

Set up

In F12: configure (Payment Configuration)

• Ensure Use Single Entry mode for Pymt/Rcpt/Contra is set to Yes

1. In Account field select the Bank Ledger. E.g. Canara Bank

2. Under Particulars select the party ledger Pheonix Agencies. In Amount field enter the amount paid as advance and press enter to view Bill-wise Details screen

3. In Bill-wise Details screen

• In Type of Ref field select the reference as Advance
• In Name field enter the bill name as Adv-201
• Amount will be displayed automatically

4. Accept the Bill-wise Details screen

5. Under Particulars select tax ledger, TDS - Contractor and press enter to view TDS Details screen

TDS Details screen appears as shown

6. Press Enter to accept the TDS Details. Tax deducted will be displayed with negative sign.

The completed Payment Voucher is displayed as shown

7. Press Enter to save.

Step 2: Record a Journal Voucher (to account the bill & adjust the advances)

To account the bill received and adjustment of advances paid

Go to Gateway of Tally > Accounting Vouchers > F7: Journal

1. In Debit field select the expenses ledger - Advertisement Expenses. In Debit amount field enter the total bill amount of Rs. 2,00,000

2. In Credit field select the Party Ledger - Pheonix Agencies. Press Enter to view TDS Details screen

3. In TDS Details screen

• In Type of Ref field select Agst Ref
• In Name field select Pymt/1-2 from the Pending Tax Bills. On selection of Tax bill Nature of Payment, TDS Duty Ledger, Assessable Amount and Payable Amount will be defaulted automatically and application will not allow altering the details.

• In Type of Ref field select New Ref.
• In Name field Tax Bill reference will be defaulted automatically
• In Nature of Payment select Payment to Contractors (Advertisement Contractors)
• In TDS Duty Ledger field select TDS – Contractors and set Deduct Now to Yes.

The completed TDS Details screen is displayed as shown

Observe, the advance of Rs. 50,000 is adjusted towards the bill and TDS is calculated only on the balance amount of Rs. 1,50,000.

4. In Bill-wise Details screen select the bill reference as shown

• In Type of Ref select Agst Ref, in Name field select the bill Adv-201 dated 15-4-2010 form the pending bills and in Amount field mention the amount adjusted as Rs. 50,000.
• In Type of Ref select New Ref, in Name field enter the bill name as PA/152/10-11 and in amount filed mention the amount pending for payment
• In Type of Ref select New Ref, in Name field enter the bill name as PA/152/10-11 and in amount filed tax deducted will be defaulted.

5. In Credit field select the TDS ledger TDS- Contractor. Tax deducted - Rs. 3,000 (on 1,50,000) will be defaulted automatically.

The completed journal voucher is displayed as shown