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How to record TDS transactions in Tally Prime?

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TDS is one of the modes of collection of Income Tax. You have to deduct TDS at the time of crediting to the party’s account or at the time of payment, whichever is earlier even though you have to deduct TDS for payment of advance to the party.

Income tax rules requires that TDS to be deducted from the party’s bill at the time of credit to the party or payment, whichever is earlier and deposited to the government accordingly (Income Tax Authority). The payer later on issues a certificate to the payee. (i.e. Deductee), in respect of deduction of TDS and deposit to the government.

The buyers (Corporate and Non- Corporate) make payments (such as Salary, Rent, Interest on securities, Dividends, Insurance Commission, Professional Fees, Commission on Brokerage, Commission on Lottery tickets. etc) to the sellers(Services) and deduct the requisite amount from such payments towards tax.

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 tds e-TDS to NSDL. (National securities deposit limited)
  7. NSDL uploads the e-TDS information to Income Tax Department
  8. Deductee Files the Return with Form 16A to income Tax Department

ASSIGNMENT ON TDS

Audit fees payable to Nagesh Assosiates (Individual / HUF / Resident) – ₹ 3,00,000. Deduct TDS from his amount and pass the necessary entries. Ref no: Nag/01.
TDS Nature of payment: Professional Fees
Section 1974J
Threshold limit : ₹30,000

SOLUTION

SETTING UP FEATURES

  • Press F11 for company features
  • Taxation:
    Enable Tax deduction at source : Yes
    Press enter
    Company TDS Deductor Details
    TAN registration number : Enter the TAN number
    Deductor Type : Company
    Deductor Branch / Division : Rajam
    Set / Alter details of person responsible : yes
    Enter the person responsbile details
    press enter
  • Press CTRL + A to accept the total screen

CREATING TDS NATURE OF PAYMENT

  • Gateway of Tally
    • Accounting Masters
      • Statutory Masters
        • TDS Nature of Payments
  • Name : Professional Fees
  • Section : 1974J
  • Rate of Individual / HUF / Resident :
    With Pan : 10%
  • Threshold limit : 30,000
    Press enter
    Accept _ Yes

CREATING LEDGERS

  • Gateway of Tally
    • Accounting Masters
      • Ledger
  • Name : Audit Fees
    Under : Indirect Expenses
    Is TDS applicable : Applicable
    Press enter
    Nature of Payment : Professional Fees
    Press enter
    Accept _ Yes
  • Name : Nagesh Assosiates
    Under : Sundry Creditors
    Maintain Balances Bill By Bill : Yes
    Is TDS Deductable : Yes
    Deductee Type : Individual / HUF / Resident
    Deduct TDS in Same voucher : Yes
    <Press Enter>
    Select “Professional Fees” from nature of payments list
    press enter
    select “End of list”
    press enter
    enter the mailing details
    Note : entering the PAN Number compulsory.
    Accept_Yes
  • Name : TDS on Audit Fees
    Under : Duties & Taxes
    Type of Duty / Tax : TDS
    Nature of Payment : Professional Fees
    Press enter
    Accept _ Yes

CREATING VOUCHER with TDS details

  • Gateway of Tally
    • Vouchers
      • Press F7 for Journal
  • Dr : Audit Fees A/c – 3,00,000
    Press enter
    Cr : Nagesh Assosiates A/c – <press enter > 2,40,000 (Automatically deducts the amount) <press enter>
    Type of Ref : New Ref
    Name : nag / 01 – Amount : 2,40,000
    Cr : TDS on audit fees A/c : 60,000
    Press enter
    Accept _ Yes
  • Explanation:
    • Audit fees has been debited because of expenses, to increase the expenses it should be debited.
    • Nagesh assosiates has been credited because it is liability. To increase the liability, it should be credited.
    • TDS on Audit fees has been credited because it is tax liability.

REPORTS (TDS Outstandings)

  • Press ALT + G for Go To
  • TDS Outstandings
  • Total pending ₹60,000

DEPOSITING TDS AMOUNT

  • Gateway of Tally
  • Vouchers
  • Press F5 for payment
  • Press CTRL + F for auto fill
  • AUTO FILL:
    Type of Transaction : stat Payment
    Tax Type : TDS
    Period from : enter the period
    Deducted Till Date : Enter the Date
    Section : All Items
    Nature of Payment : Professional Fees
    Deductee Status : Non – Company
    Residential Stauts : Resident
    Cash / Bank : SBI
    press enter
  • Now automatically loads the Particulars
    press enter
    accept_yes

PAYMENT TO THE PARTY

  • Press F5 for payment
  • Account : SBI
  • Particulars : Nagesh Assosiates
  • Amount : 2,40,000
  • Press enter
  • Accept _ Yes

SEE MORE

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