Whenever a Cess is made applicable or Tax rate is changed, the same is affected through finance Bill. Finance Bill will be presented on 28th February and is generally passed and becomes Act around mid May.
Example: In the Finance Bill, rate of income tax on Fees for Professional and Technical services is changed from 5% to 10%. Before the finance bill is passed, the deductor accounted the transactions in April month against professional fees and deducted tax at 5%. Then the finance bill is passed in the month of May and the effective date for the change in rate of income tax on Fees for Professional and Technical services is mentioned as 1st April. In this case deductor has deducted the tax at a lower rate on the transactions booked before the Finance act and is expected to deduct the difference.
Changes in the TDS Percentages are updated in the Deductee Type statutory masters.
In Tally.ERP 9 such difference in Income Tax amount can be deducted for all the transactions booked (at lower rate) before the change in the TDS rates by recording an adjustment entry in Journal Voucher (using TDS Deduction).