Tax Deducted At Source (TDS) using Tally.ERP9

TDS means Tax Deducted at Source. The concept of TDS was introduced in the Income Tax Act, 1961, with the objective of deducting the tax on an income, at the source of income. It is one of the methods of collecting Income Tax, which ensures regular flow of revenue to the Government.

TDS Process

1. Deductee (Seller) provides Services and Bill to the Deductor (Buyer).

2. Deductor makes the payment after deducting TDS.

3. Deductor remits the TDS amount into Bank (Treasury).

4. Bank (Treasury) remit the amount to the Government Account.

5. Deductor Issues Form 16A to Deductee for the TDS amount deducted.

6. Deductor Files the e-TDS to NSDL.

7. NSDL uploads the e-TDS information to Income Tax Department.

8. Deductee Files the Return with Form 16A to Income tax Department.

1. Enabling TDS in Tally.ERP9

1. Go to Gateway of Tally > F11: Features > Statutory & Taxation

3. Enable the option Set/alter TDS details ? to display TDS Deductor Details screen as below :

Please enter all details in Company TDS Deductor Details as above.

>>        All the organisation types will appear in the Collector/Deductor Type list for the option Deductor Type

>>        All Surcharges details applicable to TDS will be enable in second option

>>        The Third Option is to enable display of the alternate contact details of TDS

2. Creating TDS Nature of Payment

For payments attracting TDS, the relevant nature of payment is defined by the department with associated tax rate, section, payment code, and threshold limit. Few Examples are given below …

While creating a TDS Nature of Payment, you can press Ctrl+C to select the required nature of payment.

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

2. Press Ctrl+C to view the list of Nature of Payment 

3. Select the required Nature of Payment.

3. TDS on Expenses using Tally.ERP9

You can create an accounting voucher for your business expenses, along with the applicable TDS.

Example :      
On 1.4.2018, SWAYAM EDUCAITON paid NeXT Enterprises Rs.5,00,000 as Rent

Step-1: Creating Expenses Ledger i.e. Rent

1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create
   

2. Select Indirect Expenses as the group name with Inventory values are affected to No
   

3. Enable the option Is TDS Applicable ?  and also   Select the Nature of Payment from the List of Nature of Payments
   

The Ledger Creation screen appears as shown below:

Step-2 : Create Party Ledger i.e. NeXT Enterprises ( Under Sundry Creditor) as below:

>>        Enable the option Is TDS Deductible ? and Select a Deductee Type from the List and also Enable Deduct TDS in Same Voucher , if required

Step-3 : Create TDS Ledger

1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create.
   

2. Enter the Name and Select Duties and Taxes as the group name in the Under field, then Select TDS as the Type of Duty/Tax.

3. Select a Nature of Payment  from the List of Nature of Payments

Step-4 : TDS Transaction ( Accounting for TDS on Expenses)

Note : Out of Rs.5,00,000 towards Rent to NeXT Enterprises, only Rs.4,50,000 is credited to party account and Rs. 50,000 ( i.e. 10% TDS)  is transferred to TDS on Rent automatically and which is payable under Duties & Taxes

4. TDS on Advance Payment against Expenses using Tally.ERP9

You can create an accounting voucher for advance payments made directly or by a third-party, along with the applicable TDS.

Example :
On 01-05-2018, SWAYAM EDUCATION paid an Advance of Rs. 1,00,000 on Rent to NeXT Enterprises as Rent directly.

1. Go to Gateway of Tally > Accounting Voucher > F5: Payment

Payment Voucher appears as shown below :

Note :  When selecting TDS tax ledger, the TDS amount will automatically filled in the Amount field i.e. 10% on Amount paid

5. Recording TDS Payment Transaction to the Government using Tally.ERP9

You can record a payment transaction with inclusion of the necessary TDS to be paid to the government.

Example :
On 1-6-2018, SWAYAM EDUCATION paid TDS deducted in the month of April & May 2018 to the Government directly.

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

2. Click S: Stat Payment.

The Statutory Payment Details screen appears as shown below:

The Payment invoice appears as shown below:

6. TDS Reports using Tally.ERP9

TDS Reports using Tally.ERP9 has been classified as…

A- Form 26Q (TDS)

Form 26Q is the Quarterly return of TDS in respect of all payments other than salaries. 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.

The Form 26Q report in Tally.ERP 9 assists you in generating accurate the returns to be filed.

>>        Go to Gateway of Tally > Display > Reports > Statutory Report > TDS Reports > Form 26Q

It has three main sections:

1. Statistics of Vouchers : The Statistics of Vouchers section of Form 26Q displays the total number of transactions pertaining to a period which are categorised as Included , Excluded and Uncertain Transactions .
   

2. Deduction Details :   The Deduction Details section under the TDS Reports for Form 26Q or 27Q denotes the type of deduction under which each of the Included transaction is grouped
   

3. Payment Details : This section contains details of all TDS payment vouchers of the current period and displays all payment entries recorded for interest, penalty, late fee, and so on. These other payment entries for interest, penalty, and late fee, and so on will be displayed under Other Payments.
   

Payments made to party, petty expenses, or any statutory payments other than that of TDS are not displayed here. 

B- Form 27Q (TDS)

Form 27Q is a Quarterly return for deduction of tax in respect of payments made to non-residents other than salary. The Form 27Q report in Tally.ERP 9 assists you in generating accurate returns to be filed.
The Form 27Q report has three sections: 
1.         Statistics of Voucher , 
2.         Deduction Details , and 
3.         Payment Details 
… like Form 26Q as above.
To generate Form 27Q : Go to Gateway of Tally > Display > Reports > Form 27Q

C- TDS Reconciliation Report

The TDS Reconciliation report displays the all the reconciled TDS payments where we can view the Challan Reconciliation Report and also we Reconcile TDS Payment Challans.

>> Go to Gateway of Tally > Display > Statutory Reports > TDS Reports > Challan Reconciliation.

>> Click F5: Reconcile Challan

>> Press Alt+S to set Challan Date

D- TDS Outstanding Report

The TDS Outstanding report displays all the pending TDS payments. You can view the pending details party-wise, or based on resident or non-resident status as shown below :

>> Go to Gateway of Tally > Display > Statutory Reports > TDS Reports > TDS Outstandings.

E- Ledgers without PAN (TDS)

While filing e-TDS returns, the correct PAN should be defined in the party ledgers configured for TDS deduction. The report Ledgers without PAN is introduced to display the list of all the party ledgers configured for TDS deduction for which PAN is not defined. This report can be configured to view the list of all ledgers for which PAN is defined, and the PAN can be corrected, if required. Additionally, this report provides information on the Deductee Type , Contact Person , and Contact Number defined for the party ledger .

>> Go to Gateway of Tally > Display > Statutory Reports > TDS Reports > Ledgers without PAN