TDS

 

When and how to deduct TDS?

Income and expenditure such as salary, lotteries, interests from banks, payment of ommissions, 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.

 

Step1

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

Enable following options by typing ‘Yes’

Enable Tax deducted at source ( TDS)  YES

Set/alter TDS details YES

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

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.

Enter and save all three screens. 

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

Section	Nature of Payment	Payment Code
Section	Nature of Payment	Payment 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.

·         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  

·         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.

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.

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.

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.

Press enter and save the screen.

Step7

TDS Payment in Tally ERP9

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

Gateway of Tally>Accounting Voucher>F5 Payment

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

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

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

Enter bank allocation details and save the screen.

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

 

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.

2.                    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.