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FAQ-7 ( TDS ):

How to record Works Contract Transactions in Tally.ERP 9 to Calculate TDS on the net amount of Purchase?

For Example:- ABC Company receives bill form VRG Builders & Developers for works contract given. 

Total Value of the Bill received from VRG Builders & Developers is Rs. 58925/-
Purchase cost of Work contract is Rs.54000/-
Vat @ 5% is Rs. 2700/-
Service Tax @ 4.12% is Rs.2225/-

TDS @ 1% to be Deducted on the above Bill

Steps to record the Works Contract transactions are:

Step 1: Create Ledger Masters

Step 2:  Record Purchase Voucher (Account Invoice Mode)

Step 3: Record a Payment Voucher (payment to party)

Step 4: Check TDS Computation

Step 1: Create Ledger Masters

i. Party Ledger (supplier): Create VRG Builders & Developers ledger > under Sundry Creditors > enable the option Is Service Tax Applicable to Yes > enable the option Is TDS Deductable to Yes > in Deductee Type field select Company - Resident

ii. Purchase Ledger: Create Works Contract Purchases ledger > under Purchase Accounts 

  • Enable the option Is Service Tax Applicable to Yes > in Category Name screen select Works Contract Service 
  • Enable the option  Used in VAT Returns to Yes > select VAT/Tax Class as Purchases @ 5%
  •  Enable the option Is TDS Applicable to Yes > in Nature of Payment field select Payment to Sub-Contractors

iii. VAT Ledger: Create Vat @ 5% ledger > under Duties & Taxes > select VAT in Type of Duty/Tax field > VAT/Tax Class as Input VAT @ 5% > enable the option Is TDS Applicable to Yes > select the Nature of Payment as Payment to Sub-Contractors

iv. Service Tax Ledger: Create Service Tax @ 4.12% ledger > under Duties & Taxes > select Service Tax in Type of Duty/Tax field > Category Name as Works Contract Service > enable the option Is TDS Applicable to Yes > select the Nature of Payment as Payment to Sub-Contractors

v. TDS Ledger: Create TDS Ledger > under Duties & Taxes > select TDS in Type of Duty/Tax field > Nature of Payment as Payment to Sub-Contractors

Step 2:  Record Purchase Voucher (Account Invoice Mode)

Go to Gateway of Tally > Accounting Vouchers > F9: Purchase

Note: In F12: Configuration set the option Allow Alteration of TDS Nature of Payment in Expenses to Yes

  • In the Party A/c Name field select Party Ledger
  • Under Particulars select the Purchase Ledger and specify the amount as 54,000 and press enter to view TDS Nature of Payment Details screen.
  • In TDS Nature of Payment Details by default the Nature of Payment selected in the ledger will be displayed. In Assessable Value field accept the default amount of Rs.54,000

Works Contract Transactions in Tally.ERP 9 to Calculate TDS

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  • Under Particulars select the VAT ledger, VAT amount will be calculated and displayed automatically. Press enter to view TDS Nature of Payment Details screen, accept the default details.
  • Under Particulars select Service Tax Ledger. In the Service Tax Computation screen change the service tax percentage to 4% (as service Tax charged on works contract is 4%). Service tax will be calculated based on the Service Tax Rate defined. In TDS Nature of Payment Details screen, accept the default details.

Works Contract Transactions in Tally.ERP 9 to Calculate TDS

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  • Under Particulars select TDS ledger and press enter to view the TDS Details screen. Observe TDS is calculated on the Total Amount (Work Contract Purchase Value + VAT + Service Tax = 58924.80).

Purchase Entry is displayed as shown

Works Contract Transactions in Tally.ERP 9 to Calculate TDS

   [13-22]

Note: TDS deducted is displayed with Negative Sign.

In Bill-wise Details screen select the reference details as shown

Works Contract Transactions in Tally.ERP 9 to Calculate TDS

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Completed Purchase Voucher is as shown below

Works Contract Transactions in Tally.ERP 9 to Calculate TDS

   [13-24]

Step 3: Record a Payment Entry

Make the payment to the party and the payment voucher will be dispalyed as shown

Works Contract Transactions in Tally.ERP 9 to Calculate TDS

   [13-25]

Step 4: Check TDS Computation

Go to Gateway of Tally > Display > Statutory Reports > TDS Reports > Computation

Works Contract Transactions in Tally.ERP 9 to Calculate TDS

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Similarly you can check Input Credit Form and VAT Computation reports to view the details of Service Tax and VAT

 
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