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TDS on Interest Paid Towards Overdue Payments [TDS] in Tally.ERP9

As per Section 194A of the Indian Income Tax Act TDS to be deducted on the any payment made as interest towards overdue payments or loans taken from the parties.

Example: On 26-5-2009 ABC Company received a bill from Pheonix Agencies for Rs. 25,00,000 towards Advertising services with a credit period of 20days from the date of receipt of bill. on delay in payment interest @ 12% p.a will be charged.

 

ABC Company made the payment towards the above bill on 1-7-2009 along with the interest of Rs.13019.18

Step 1: In F11: Features (Accounting Features)

  • Enable Activate Interest Calculation to Yes

  • Set use advanced parameters to Yes

Step 2: Alter the Ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Alter > Select Pheonix Agencies

In the Ledger Alteration screen

  • Set the option Activate Interest Calculation to Yes to view Interest Parameters screen

  • In the Interest Parameters screen set the options as shown below

 
[Img-91]

       • Press Enter to accept the ledger alteration

Step 3: Create Duty Ledger

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

  • Enter the Name field enter the Ledger Name e.g. TDS – Interest

  • In the Under field select Duties & Taxes group

  • In the Type of Duty /Tax field select TDS from the Types of Duty/Tax list

  • In the Nature of Payment field select Interest Other Than Interest on Securities

Note: From Rel 4.8 an option to provide Bank Details is provided in the Ledger Master.


[Img-92]

  • Set Inventory values are affected to No

  • Set Activate Interest Calculation to No

  • Press Enter to save

Step 4: Create Expense Ledger

  • In the Name field enter the Ledger Name e.g. Interest Payable

  • In the Under field select Indirect Expenses group

  • Set Inventory values are affected to No

  • Set Activate Interest Calculation to No

  • Set Is TDS Applicable to Yes

  • In the Default Nature of Payment field select Interest Other Than Interest on Securities


[Img-93]

  • Press Enter to save.

Step 5: Record a Journal Voucher (to book the expenses)

Go to Gateway of Tally > Accounting Vouchers > F7: Journal

1. Press F2 and change the date to 26-5-2009

2. In Debit field select Advertisement Expenses from the List of Ledger Accounts

3. Enter 25,00,000 in the Amount field.

4. In the TDS Nature of Payment Details accept the default allocation

5. In the Credit field select Phoenix Agencies and press enter to view TDS Details screen

6. In the TDS Details screen

  • In the Type of Ref field select New Ref

  • In the Name field Tally.ERP 9 displays the reference number e.g. Jurl /10-1

  • In the Nature of Payment field select Payment to Contracts (Advertisements Contracts) from the List of Nature of Payments.

  • In the TDS Duty Ledger field select TDS – Contractors

  • Set Deduct Now field to Yes to deduct the TDS

  
[Img-94]

  1. Press Enter to accept the TDS Details.

  2. Payable Amount as calculated in the TDS Details screen will be defaulted in the Party’s Amount (Credit) field.

  3. In Bill-wise Details screen

  4. Select New Ref as the Type of Ref

  5. In the Name field enter the Bill name as Bill - 025

  6. In the Due Date or Credit Days field enter the 20 days as the credit days

  7. Accept the default amount allocation and Dr/Cr. By default Tally.ERP 9 displays the Bill amount in the amount field as the credit balance.

  8. In the Interest Parameters screen  ensure the options selected are as shown


[Img-95]

  • Select New Ref as the Type of Ref

  • In the Name field enter the Bill name as Bill - 025

  • Accept the default amount allocation and Dr/Cr. By default Tally.ERP 9 displays the Bill amount in the amount field as the credit balance.

  • In Interest parameters screen, enter zero in Rate field

  1. In Credit field select TDS - Contractors ledger TDS amount will be defaulted automatically

  2. Enter Narration, if required.

 
[Img-96]

11. Press Enter to accept.

Step 6: Create Voucher Class for Credit Note Voucher

 Go to Gateway of Tally > Accounts Info. > Voucher Types > Alter > Select Credit Note

  • In the Voucher Type Alteration screen Tab Down to Name of Class field

  • Enter Interest in the Name of Class field and press enter to view the  Voucher Type Class screen

  • In the Voucher Type Class screen

  • Set Use Class for Interest Accounting to Yes


[Img-97]

  • Press Enter to save the Voucher Alteration screen

Note: Voucher class in credit note is created to account the interest payable to the party

Step 7: Record a Credit Note (to accounting interest on over due payment)

Set up:

In F11: Features (Accounting Features)

  • Set Use Debit /Credit Notes to Yes

Go to Gateway of Tally > Accounting Vouchers > Ctrl + F8: Credit Note

  1. In the Change Voucher Type screen, in the Class field select Interest from the Voucher Class List

  2. Press F2 and change the date to 01-7-2009

  3. In the Credit field select Pheonix Agencies from the List of Ledgers to view the Interest Details screen

  4. In the Interest Details screen select Bill – 025 from the List of Interest Bills

 
[Img-98]

  1. In the Credit Amount field Rs. 13019.18 will be displayed automatically.

  2. In the Bill-wise Details screen

  3. In the Type of Ref field select New Ref as the Method of Adjustment

  4. In Name field enter CN/001

  5. Skip Due Date, or Credit Days field

  6. In the Amount field accept the default allocation

  7. In the Interest Parameters screen in rate field define Zero

  1. In the Debit field select Interest Payable ledger to view TDS Details screen

  2. In the TDS Details screen

  3. In Type of Ref field select New Ref as the Method of Adjustment

  4. In the Name field CNote /1-1 will be defaulted as the Reference Number

  5. In the Nature of Payment field select Interest other than Interest on Securities

  6. In the TDS Duty Ledger field select TDS – Interest from the TDS Duty Ledgers list


[Img-99]

  1. Enter Narration, if required

 
[Img-100]

  1. Press Enter to save

Step 8: Record a Journal Voucher (to deduct TDS)

Go to Gateway of Tally > Accounting Vouchers > F7: Journal

  1. Press Alt + S or S: TDS Deduction to view TDS Deductions screen

  2. In the TDS Deductions screen

  3. In the Till Date field 01-7-2009 will be defaulted

  4. In Party field select Pheonix Agencies form the List of Ledgers

  5. In Nature of Payment field select Interest Other than Interest on Securities to deduct TDS Interest


[Img-101]

  1. Accept the TDS Deductions to auto-fill the TDS amount with the respective bill details

  2. In the Bill-wise Details screen, select the bills as shown

 
[Img-102]

  1. Enter Narration, if required.


[Img-103]

  1. Press Enter to save

Step 9: Record a Payment Voucher (payment of bill amount with interest)

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

  1. Press F2 and change the date to 01-12-2009

  2. In the Account field select Canara Bank

  3. Under Particulars select  Pheonix Agencies

  4. Enter Rs. 24,86,717 in the Amount field

  5. In the Bill-wise Details screen select the bills as shown below

 
[Img-104]

  1. Enter Narration, if required

 
[Img-105]

  1.  Press Enter to save

 
 
 
 
Tally.ERP 9 Reference Manual LIBRARY
1.
Installation of Tally.ERP9
2.
Site Licensing of Tally.ERP9
3.
Shortcut Keys in Tally.ERP9
4.
Maintaining Company Data
5.
Creating Masters
5a. Accounts Information [Creating Masters]
5b. Inventory Information [Creating Masters]
6.
Voucher Entry
7.
Reports in Tally.ERP9
8.
Excise for Dealer
9.
Excise for Manufacturer
10.
Reports [ Excise for Manufacturer]
11.
Excise for Importer
12.
Service Tax in Tally.ERP9
13.
Tax Collected at Source (TCS) in Tally.ERP9
14.
Tax Deducted at Source (TDS) in Tally.ERP9
15.
Value Added Tax (VAT) in Tally.ERP9
16.
Central Sales Tax (CST) in Tally.ERP9
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
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