Tax Deducted at Source (TDS) Voucher entry in Tally
Expenses Voucher with TDS Deduction in Tally
If TDS is deductible, you should not make a direct Payment voucher for expenses. You may enter, either :
- Journal Voucher (e.g for Interest)
- Purchase Voucher (e.g for Purchase of Service).
TDS deduction entry on in Expenses Journal Voucher in Tally
Create a Journal Voucher to book the expense. We have explained entry of Journal Voucher earlier. Here we describe the points exclusively related to TDS in the voucher entry.
Expense Voucher with TDS
a. Expense Ledger : At 1st Ledger Account entry at main Voucher entry screen, enter the Expenses Ledger Account and the Gross Expense amount, to get the sub screen for TDS Nature entry. The default TDS Nature for the Expense appears, which may be changed by selecting from the list of TDS Nature. You get back to the main voucher entry screen.
TDS Nature Entry in Voucher in Tally
- TDS Nature of Payment for Expense Ledger : At Voucher entry screen, On entry of Expense Ledger Amount, you get the default TDS nature of Payment screen . Select the Nature of Payment from the list (you may change the Amount to enter lower TDS Chargeable Amount if TDS is not chargeable on whole amount). TDS would be computed on the Assessable Value entered. Next you get another entry line for the Balance Amount. For this, at Nature of Payment, select Not Applicable from the list. So, the TDS would not be computed on the balance amount.
b. Party Ledger : At 2nd entry, select the Party Ledger Account to be credited to get the Bill Allocation / TDS Details screen . At Bill Allocation / TDS Details , enter as follows:
- Reference Type : At Type of Ref column, select the Ref Type (Normally New Ref)
- Reference ID : At Name column, the default Ref ID is carried, which you may change
- Nature of Payment : At Nature of Payment , the Nature of Payment selected (at first entry) will be carried
- TDS Ledger : At TDS Ledger, the list of all TDS Ledger Accounts (for which you have set TDS), will appear, from which select the TDS Ledger Account
- Assessable Amount : The Amount for the Expense Ledger Account will be carried, which you may change (if TDS is not chargeable on entire Amount). Enter the Amount on which TDS is to be deducted
- TDS Deductibility : At Deduct Now, set :
- Yes to Deduct TDS in the current voucher
- No. TDS will not be deducted and the screen will be closed
- TDS Amount : If TDS is Deducted, the total TDS Amount including Surcharge / Cess / SE Cess( with detailed breakup) is shown
- Net Payable : At Payable Amount , the Net Amount Payable (Ledger Amount – TDS Deduction) is shown
Bill Allocation / TDS Deduction Entry in TDS Voucher entry in Tally
c. TDS Ledger : At main voucher screen, select the TDS Ledger Account (if TDS is Deducted. The TDS deducted ) as shown at , is carried at the Credit column.
At Main voucher screen , enter Other Ledger Accounts ( if any). Save the Voucher.
TDS Journal Voucher Entry Configuration in Tally
At Journal Voucher entry screen, click F12:Configure to get Voucher Entry Configuration screen, to change the default options, as follows, as required.
TDS Voucher Entry Configuration in Tally
- TDS Deduction on Lower Amount : Sometimes, TDS Expense may include some amount on which TDS is not to be deducted. In such case, you change the Assessable Value. At Allow Alteration of TDS Rates for Lower Amount , set Yes to enable change TDS Rate). This is further explained in next chapter.
- TDS Assessable Amount Alteration : At Allow Alteration of TDS Assessable Amount, set Yes to enable change TDS Assessable Value) and also set Yes at Allow Alteration of TDS Nature of Payment (to enable change of TDS Payment Nature).
TDS Purchase Voucher in Tally
We have seen Journal Voucher entry for booking of expenses, through which TDS is deducted at the time of booking the expenses, before payment is made. In such case, the organization is to deposit TDS within the specified period as per Journal Voucher entry date even if the payment is not made for the expense. However, normally Parties prefer to deduct TDS at the time of payment.
In such case, you have to create a Purchase Voucher for the booking of expenses, instead of Journal Voucher, as explained next.
In Purchase Voucher, though you enter TDS details, the TDS Account is not selected in main voucher. So, TDS is not deducted (though internally computed) and the related TDS nature of
Payment /TDS Ledger Account etc properly linked.
TDS Entry in Purchase Voucher in Tally
Purchase Voucher entry in Accounting Invoice Mode has been explained earlier. Create a Purchase Voucher in Accounting Invoice Mode (Click I:As Invoice button at Purchase Voucher entry). Here, we explain specific points relating to TDS entry.
Purchase Voucher for TDS Deductible Expenses in Tally
TDS Deductible Expenses Ledger entry in Voucher in Tally
AT Purchase Voucher, after entry of Expenses Ledger (for which TDS Feature has been activated), you get the TDS nature of Payment screen . Enter the details.
TDS Nature of Payment entry in Voucher in Tally
Press <enter> again (after the cursor goes into Total Amount field) to get the TDS details entry screen. Enter the details as explained earlier.
TDS details entry in Voucher in Tally
TDS Details entry in Voucher in Tally
Next you get the Bill Allocation screen. Enter the details.
Bill Reference Details entry in Tally
You get back to the main Voucher screen. Enter Narration and save the Voucher.
Purchase Voucher Entry TDS Configuration in Tally
At Purchase Voucher entry screen, click F12:Configure at Purchase Voucher Entry screen to get Purchase Voucher Entry Configuration screen and set No at the following configuration options :
- At Use Common Ledger Accounts, set No (to select Ledger Account for Purchase Accounts)
- At Defaults Ledger Accounts, set No (to assign Bill Reference Number).
TDS Deduction Journal Voucher in Tally
Having created the Purchase Voucher (without deducting TDS), you should next create a Journal Voucher for Entry for TDS Deduction on the Expenses booked.
TDS Deduction Journal Voucher entry in Tally
A Journal Voucher has to be created to account for the TDS Deduction for each such Journal Voucher / Purchase Voucher, in which TDS was not deducted.
At Journal voucher entry, click the S:TDS deduction button to get TDS Details entry screen .
TDS Details entry in Voucher in Tally
At TDS Details entry screen, enter the Date upto which TDS is to be deposited.
Select the Party Ledger. You get TDS Accounts, computation details and amount for each head as per standard Rates .
Save the voucher. This Voucher has the accounting effect of :
- Party A/c (as entered at the header) Dr (amount of TDS Deducted)
- TDS A/c (as entered at Particulars) Cr (amount of TDS Deducted)
Party Payment voucher with TDS Deduction
Now you have to make payment to the Party after deduction of TDS. So, create a payment voucher. Here we discuss exclusively regarding Payment to a Party against outstanding Purchase Bill. This is entered in same way described earlier. There is nothing special related to TDS in such Payment Voucher as all the entries relating to TDS have been already made in Purchase / Journal Vouchers.
Payment Voucher to Party after TDS deduction in Tally
At Particulars column, first select the Party Ledger account to get the Bill Allocation screen with details all open bills of the Party, showing the outstanding balance after deduction of TDS. Select the Bills to be paid. You may change the amount if full payment is not made against the outstanding bill.
Bill Allocation details in Voucher in Tally
You get back to the main voucher entry screen. Select Bank Ledger Account. The net amount payable is carried. Now enter the Narration and save the Voucher.
Forced TDS Deduction in Tally
There is exemption limit for each Type of Expenses. Tally normally assumes the exemption to be for one time Payment. So, when individual expenses are lower (than Exemption Limit) but it is likely that during the entire Financial Year, Tally will normally not deduct the TDS.
It is the liability of the payer to deduct TDS. So, where it is likely that Payment to a specific supplier on account of TFDS Deductible expenses are likely to exceed in a Financial Year, the payer will deduct the TDS in smaller value payments also.
TDS Deductor Ledger Account Set Up in Tally
The TDS Deductor Ledger Account has been explained earlier. At Ledger Account creation screen, under Statutory Information section, at Use Advanced TDS Entries option, set Yes to get Advanced TDS Entries screen
Deductee Ledger Account creation in Tally
Advanced TDS Option set up in Tally
TDS Advanced Options set up in Tally
At Advanced TDS Entries screen, set :
- TDS Deduction : At Ignore Income Tax Exemption limit set Yes, to allow to make TDS Deduction for any amount, and then select the default Nature of Payment from the list
TDS Exemption Limit Ignore set up in Tally
Deduction in same Voucher : At Deduct TDS in same voucher, if applicable, set Yes to make TDS Deduction in the expenses booking voucher (like Purchase / Journal) and then select the default Nature of Payment from the list
TDS Deduction in same Voucher set up in Tally
TDS entry Purchase Voucher in Tally
Purchase Voucher entry with TDS Deduction has been explained earlier. In voucher (Journal or Purchase), where the supplier account for which advanced TDS options have been set as explained above is selected , on entry of Expenses Ledger account, the TDS details screen appear irrespective of the expenses amount entered.
Purchase Voucher with TDS entry in Tally
TDS Details : At TDS Details screen :
- At Type of Ref column, select New Ref
- At Name column, the default Bill Ref is carried (which you may change if desired).
- At Nature of Payment column, the default Payment Type is carried (you select another, as applicable).
- At TDS Amount column, the computed TDS (on the assessable amount as shown) as per applicable TDS Rate for the selected Payment Type, is shown.
TDS Details in Purchase Voucher in Tally
Next you get the Bill Allocation screen, in which the details are carried by default. The expenses & TDS amount are shown separately as Dr & Cr entries respectively.
Bill and TDS Reference details entry in Voucher in Tally
The TDS amount as shown in TDS Details is carried in the main voucher against the TDS Ledger account. Enter Voucher Narration and save the voucher.
This way, you may deduct TDS in all expenses booking vouchers (Purchase / Journal), related to the specified Party