As per Income Tax Act, Surcharge on TDS is applicable for the payment(s) exceeding Rs.10 lakhs (for Individual, HUF and Association of Persons) and Rs 1 Crore (for Companies, Artificial Judicial Person and Partnership Firm). However it is not applicable for Deductee Types such as Co-Operative Society and Local Authority.
In TDS, when the payment exceeds the Surcharge exemption Limit, Surcharge is applicable on the entire amount right from the first transaction and such past transactions will have to be shown in the e-TDS statements. In this scenario it is always suggested that a realistic estimation of total amount, to be made right in the beginning and deductor should deduct TDS without considering the Surcharge Exemption Limit.
To configure party ledger to ignore surcharge exemptions press Alt+S or select S: Ignore Surcharge Exemption and press Enter to view Surcharge Exemption Setup screen.
Example: For Alexon Group realistic estimation has been made. The total payments exceeds the exemption limit and hence want to configure the party ledger to deduct surcharge from first transaction
In Surcharge Exemption Setup screen
Enter the name of the Party Ledger in Name of Ledger field e.g. Alexon Group.
Select Sundry Creditors from the List of Groups in the Under field.
In Deductee Type field select Company - Non Resident from List of Deductee Types
Set the field Ignore Surcharge Exemption to Yes.
Skip PAN /IT No. field.
Press Enter to save.
Note: You can also configure party ledger to ignore surcharge exemption from Gateway of Tally > Accounts Info. > Ledgers > Create/Alter.