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22.     Quick Setup for TDS in Tally.ERP 9

Quick Setup for Tax Deducted at Source in Tally.ERP 9 helps you to configure statutory setup required to maintain the financial records  of TDS.

To configure statutory setup for Tax Deducted at Source

Go to Gateway of Tally > Quick Setup > Tax Deducted at Source.  

Quick Setup screen for Tax Deducted at Source will be displayed as shown

Quick Setup for TDS in Tally.ERP 9

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From this screen you can make required basic configurations like, company TDS details and  masters to account statutory transactions. It also allows aking advance configurationswherever applicable.

Configuration details will be displayed below the setup options once the configuration is done. Otherwise application will display the status as Not Configured for Company Setup and 0 of 0 Configured for other setups (Masters/Advanced setup).

Procedure to Quick Setup for Tax Deducted at Source

1. Company Setup

Company Setup guides you to update relevant TDS details . To know how to update TDS details Click on the link,  C:Company TDS Details Setup screen

C : Company TDS Details

To update Company TDS Details press Alt+C or select the option C: Company TDS Details and press Enter to view Company TDS Deductor Details screen.

In Company TDS Deductor Details screen

1.       Tax Deduction and Collection Account Number: Enter the Tax Deduction and Collection Account Number (TAN) in this field. The Tax Deduction and Collection Account Number (TAN) is a ten-digit alphanumeric number, issued by the Income Tax Department (ITD) to the deductors.

One Tax Deduction and Collection Account Number is adequate for different types of deductions. TAN must be quoted properly on all Challans: Payment for TDS, Returns, All Certificates - Issue in Form No.16/16A and in all documents and other correspondences with Income-tax Department.

Note: The Format of TAN is AAAA*55555A, Where A* is the first character of the name of the Organisation. Example: TAN of ABC Company is KARA07884F

2.             Head Office Tax Deduction and Collection Account Number: In this field enter the head office Tax Deduction and Collection Account Number if any.

3.            PAN /Income Tax No.: In this field enter the company's PAN number.

4.            Income Tax Circle/Ward (TDS): Enter the Income Tax Circle/Ward, in which the deductors are assessed for Income-Tax (TDS) with TAN of each person

5.            Deductor Type: According to the nature of the organisation, select the Deductor Type (Government or Others) from the list

6.            Name of person responsible: Enter the name of the person authorised to file the TDS returns of your company.

7.            Son/Daughter of : In this field enter the name of the parent

Note: If Tally.ERP 9 has a security feature enabled then this field is automatically filled with the user name.

7.            Designation: Enter the designation of the authorised person filing the TDS returns.

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8.            Press Enter to save.

Note: You can also update company TDS deductor details from F11: Features screen. To Enable excise Go to Gateway of Tally > F11: Features > Statutory & Taxation

To know more on updating Company TDS deductor details from F11: Features refer the topic - Enabling TDS in Tally.ERP9

Note: To move from one setup to another setup use Arrow (up and down) Keys.

2. Master Setup

Master Setup guides you to create masters like Expenses ledgers, Party ledgers and  Tax ledgers by enabling relevant TDS options in the masters. For more details on master creation Click on the below links.

X : Expense Ledgers

To create expense ledger press Alt+X or select X: Expense Ledgers and press Enter to view Expense Ledger Setup screen.

In Expense Ledger Setup screen

1.    Enter the name of the expense ledger in Name of Ledger field e.g. Advertisement Expenses.

2.    In Under field select the group Indirect Expenses from the List of Groups.

3.    By default the option Is TDS Applicable will be set to Yes.

4.    In Default Nature of Payment field select Payment to Contractors (Advertisement Contractors) from the List of TDS Nature of Pymt.

Note: All the Payments/Expenses subject to TDS have to be associated with relevant predefined TDS Nature of Payments.

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Note: In Default Nature of Payment field you can select the Option Any, where the you doesn’t want to define the TDS Nature of payment during Ledger creation. This allows you to use an Expense Ledger (as a common ledger) to account multiple TDS Nature of Payments.

5.    Press Enter to save.

Note: You can also create Expense ledgers from Gateway of Tally > Accounts Info. > Ledgers

To know more on creating expense ledger refer the topic - Creating a Expense Ledger.

T : Tax Ledgers

To create tax ledgers press Alt+T or select T: Tax Ledgers and press enter to view Tax Ledger Setup sub-form

In Tax Ledger Setup screen

1.    Enter the name of the Tax Ledger in Name of Ledger field e.g. TDS – Contractors

2.    Select Duties & Taxes from the List of Groups in the Under field.

3.    In Nature of Payment field, Tally.ERP 9 by default displays ANY. Select Payment to Contractors (Advertisement Contractors) from the List of TDS Nature of Payment.

Note: Tally.ERP 9 provides you the flexibility to use a common Duty ledger for different TDS Nature of Payments by selecting the Nature of Payments as Any.

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4.    Press Enter to save.

Note: You can also create tax ledgers from Gateway of Tally > Accounts Info. > Ledgers

To know more on creating tax ledger refer the topic - Creating a Tax Ledger.

A : Party Ledgers

To create party ledger press Alt+A or select A: Party Ledgers and press enter to view Party Ledgers Setup screen

In Party Ledgers Setup screen

1.    Enter the name of the Party Ledger in Name of Ledger field e.g. Pheonix Agencies.

2.    Select Sundry Creditors from the List of Groups in the Under field.

3.    By default the option Is TDS Deductable will be set to Yes.

4.    In Deductee Type field select Association of Persons from

5.    In PAN/IT No. Number field enter the party PAN Number.

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5.    Press Enter to save.

Note: You can also create party ledgers from Gateway of Tally > Accounts Info. > Ledgers

 To know more on creating party ledger refer the topic - Creating a Party Ledger.

 3. Advanced Setup

Advance Setup is an optional (not a must) setup. Advance set up is required, only when you want configure for Lower/Zero deduction, to calculate surcharge or income tax by ignoring the exemption limit and to deduct TDS in the same voucher if applicable.

Advanced Setup guides you to configure for lower/zero Deduction,  calculate surcharge or income tax by ignoring the exemption limit and to deduct TDS in the same voucher if applicable. For more details on advance setup Click on the below links.

Note: To view the advance setup options press Enter from Advanced Setup or press F5 key or click on F5: Show Adv config button in the buttons bar.

L : Configure Lower Rate Deduction (Sec 197)

Assessing Officer shall issue a certificate for deduction of Tax at Lower rate than the relevant rate specified under the section, Where the assessing officer is satisfied that the total income of the recipient (Assessee) justifies the deduction of income tax at any lower rates than the rate specified under the sections specified under the act and has received an application in Form 13from the assessee under sub-section (1) of section 197.

The certificate granted shall be valid for the assessment year specified and is valid only for the person named therein.

In Tally.ERP 9, the user can record and compute TDS on transactions, on which lower rate of deduction is applicable.

To configure party ledger for Lower rate of Deduction press Alt+L or select  L: Configure Lower Rate Deduction (Sec 197) and press Enter to view Lower Rate Deduction (Sec 197) Setup sub-form

Example: ACE Computers has a certificate for deduction of Income tax at Lower rate @ 5%, on Commission or Brokerage.

In Lower Rate Deduction (Sec 197) Setup screen

1.    Enter the name of the Party Ledger in Name of Ledger field e.g. Ace Computers.

2.    Select Sundry Creditors from the List of Groups in the Under field.

3.    In Deductee Type field select Partnership Firm from List of Deductee Types

4.    Enable the field Set Lower Deduction to Yes and press enter to view Lower Deduction Setup screen

5.    In Lower Deduction Setup screen

·         In Nature of Payment field select the nature of payment - Commission or Brokerage for which lower deduction is allowed.

·         Section Number: Tally.ERP 9 displays the Sections, under which an application for lower rate (section 197) or Zero rate (197A) are approved. Select section 197 for lower deduction.

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·         Certificate No./ Date: Enter certificate number under which the lower rate of TDS was allowed and the date of issue.

·         Applicable From: Mention the date (as per the certificate) from when the lower rate is approved.       

·         Applicable To: Mention the date till when the certificate of Lower rate will remain in force.

·         TDS: Mention the Rate of Income Tax allowed - 5%

·         Surcharge, Ed Cess and Sec Ed Cess: In these field Tally.ERP 9 defaults the percentage to Zero.

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·         Press Enter to save Lower Deduction Setup screen

·         In PAN/IT No. field enter party PAN Number

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6.            Press Enter to save.

Note: You can also create Party ledgers and configure for lower rate from Gateway of Tally > Accounts Info. > Ledgers

To know more on configuring party ledger for lower rate refer the topics - Creating Party Ledger- Lower Rate

 Z : Configure Zero Rate Deduction (Sec 197A)

A Deductee (other than Company or Firm) can submit a declaration in Form 15G under sub section (1) of section 197A, for TDS deduction at Zero Rate. Declarations can be given only by those deductees whose income is below the taxable limit and the income falls under section 193, 194, 194A, 194EE and 194K. The certificate granted shall be valid for the assessment year specified and is valid only for the person named therein.

To configure party ledger for zero rate of deduction press Alt+Z or select  Z: Configure Zero Rate Deduction (Sec 197A) and press Enter to view Zero Rate Deduction (Sec 197A) Setup sub-form

Example: Gokul Co-operative Building Society has a certificate for non-deduction (zero rate) of Income tax on Rent.

In Zero Rate Deduction (Sec 197A) Setup screen

1.    Enter the name of the Party Ledger in Name of Ledger field e.g. Gokul Co-operative Building Society.

2.    Select Sundry Creditors from the List of Groups in the Under field.

3.    In Deductee Type field select Co-Operative Society from List of Deductee Types

4.    Enable the field Set Zero Deduction to Yes and press enter to view Zero Deduction Setup screen

5.    In Zero Deduction Setup screen

·         In Nature of Payment field select the nature of payment - Rent of Land, Building Or Furniture for which zero deduction is allowed.

·         Section Number: Tally.ERP 9 displays the Sections, under which an application for lower rate (section 197) or Zero rate (197A) are approved. Select section 197A for zero deduction.

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·         Certificate No./ Date: Enter certificate number under which the lower rate of TDS was allowed and the date of issue.

·         Applicable From: Mention the date (as per the certificate) from when the lower rate is approved.       

·         Applicable To: Mention the date till when the certificate of Lower rate will remain in force.

·         TDS: Mention the Rate of Income Tax allowed - 0%

·         Surcharge, Ed Cess and Sec Ed Cess: In these field Tally.ERP 9 defaults the percentage to Zero.

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·         Press Enter to save Zero Deduction Setup screen.

·         In PAN/IT No. field enter party PAN Number

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6.    Press Enter to save.

Note: You can also create Party ledgers and configure for zero rate from Gateway of Tally > Accounts Info. > Ledgers

To know more on configuring party ledger for zero rate refer the topics - Creating Party Ledger- Zero Rate.

S : Ignore Surcharge Exemption

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

1.    Enter the name of the Party Ledger in Name of Ledger field e.g. Alexon Group.

2.    Select Sundry Creditors from the List of Groups in the Under field.

3.    In Deductee Type field select Company - Non Resident from List of Deductee Types

4.    Set the field Ignore Surcharge Exemption to Yes.

5.    Skip PAN /IT No. field.

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5.    Press Enter to save.

Note: You can also configure party ledger to ignore surcharge exemption from Gateway of Tally > Accounts Info. > Ledgers > Create/Alter.

I : Configure Income Tax Exemption

As per Income tax TDS is Deductable only when the TDS amount exceeds the specified Income Tax Exemption Limit.

When the TDS amount exceeds income tax exemption Limit, TDS will be 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 income tax exemption limit.

To configure party ledger to ignore TDS exemption press Alt+I or select I: Configure Income Tax Exemption and press Enter to view Income Tax Exemption Setup sub-form

Example: For Pheonix Agencies realistic estimation has been made. The total payments exceeds the TDS exemption limit and hence want to configure the party ledger to deduct TDS from first transaction.

In Income Tax Exemption Setup screen

1.    Select Pheonix Agencies and tab down to Ignore Income Tax Exemption field and set the option to Yes and press enter to view Ignore Income Tax Exemption screen

2.    In Ignore Income Tax Exemption screen

·         In Nature of Payment field

o    All Items to Ignore income tax exemption on all the nature of Payments

o    Any specific Nature of Payment (s) e.g. Payment to Contractors (Advertisement Contractors) to ignore income tax exemption only for the selected nature of payment (s).

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·         Press enter to save Ignore Income Tax Exemption screen

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3.            Press enter to save.

Note: You can also configure party ledger to ignore income tax exemption from Gateway of Tally > Accounts Info. > Ledgers > Create/Alter.

A : Configure Auto Deduction in same voucher if applicable

Most of the company's Deduct TDS in the same voucher where the due/payment is booked. In Tally.ERP 9 you can configure the party ledger to deduct TDS in the same voucher where the due/payment is booked without asking for confirmation.
 

To configure party ledger to deduct TDS in same voucher press Alt+A or A: Configure Auto Deduction in same voucher if applicable and press Enter to view Auto Deduction Setupscreen

Example: ABC Company follows the procedure of deducting TDS for all parties when the due/payment entry is recorded.

In Auto Deduction Setup screen

1.    Select ACE Computers and tab down to Set Auto Deduction in same voucher field and set the option to Yes and press enter to view Deduct TDS in Same Voucher If Applicable screen.

2.    In Deduct TDS in Same Voucher If Applicable screen

·         In Nature of Payment field select

o    All Items to deduct TDS on all the nature of Payments if applicable

o    Any specific Nature of Payment (s) e.g. Payment to Contractors (Advertisement Contractors) to deduct TDS only for the selected nature of payment (s).

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·         Press enter to save Deduct TDS in Same Voucher If Applicable screen.

Similarly you can configure all the party ledgers to deduct TDS in the same vouchers if required.

3.            Press Enter to save Auto Deduction Setup screen.

Note: You can also configure party ledger to deduct TDS in the same voucher if applicable from Gateway of Tally > Accounts Info. > Ledgers > Create/Alter.

4. Q : Quit

To quit from Quick Setup- Tax Deducted at Source screen press Alt+Q or select Q: Quit and press enter.

 
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