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TDS India/User Documentation

Contents

Introduction

Source of Information - http://www.incometaxindia.gov.in/, https://www.tin-nsdl.com/ http://www.saraltds.com

Tax Deducted at Source (TDS) is a means of collecting income tax in India, under the Indian Income Tax Act, 1961. Any payment covered under these provisions shall be paid after deducting prescribed percentage. It is managed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service (IRS). It has a great importance while conducting tax audits. Assesse is also required to file quarterly return to CBDT. Returns states the TDS deducted & paid to Income Tax Department, Government of India during the Quarter to which it relates.

Installation

This module requires India Professional Pack to be installed.

Dataset Application

This module provides some commonly used Nature of Payment types in the form of reference data.
This reference data can be applied either at client level or at organization level as explained here : India TDS.

Content of the module

Once installed this module creates a new folder named "TDS" under India Localization menu.

To check the contents of the TDS sub-menu go to Financial Management -> India Localization ->TDS.

TDSINTRO.jpg


TDS Setup

This window is used for setting up for making TDS (which is already deducted from various vendors) payment to Income Tax Department, Government of India.

Ward/Circle Number

Ward/Circle Number is a predefined set of jurisdiction codes which are put forth by the government to make TDS payments.

It consists of Area Code, Assessing Officer Code (AO Code), Range Code etc. as per the area in the state.

Nature of Payment

There are different rates of TDS depending on the nature of services, as declared in the Indian Income Tax Act, 1961. These rates are subject to change as per the amendment in the Act.

TDS Dataset provides some of the common Nature of Payments used. Additionally new nature of payment types can be added as required.

This window helps the user to set up relevant Nature of Payment types applicable to the organization.

TDS Challan

This window allows the user to capture all the information required for filling in "TDS Challan" form.

As per Government of India, TDS Challan 281 is the form used to deposit Tax Deducted at Source/Tax Collected at Source (TDS/TCS) for Company and/or Non-Company.

Tax payers must fill up the TDS Challan 281 and should carry it along with the check or cash to be deposited at the Banks.

Configuration

TDS Setup

To setup TDS, perform the following steps:

Multiple records for different Business Partners can be created so that TDS applies to those Business Partners.

Setup2.png

G/L Items Setup

Along with business partners, we require g/l items which will be used for processing payments through TDS Challan. We can enter the g/l items (one required for each nature of payment).

Ward/Circle Number

Ward/Circle Number is a pre-defined set of jurisdiction codes which are put forth by the government to make the TDS payments.

In other words, it is a collection of all the areas in the states which are grouped together under and Area Code.
A Commissioner/Officer is appointed for a particular area code which falls under his jurisdiction. The TDS payee/payer reports to the Commissioner/Officer of his respective area code.

Ward2.png

To set up Ward/Circle Number, please follow these steps:

Multiple records can be entered one after the other as per the pre-defined jurisdictions.

Ward3.png

Nature of Payment

Government of India has declared different Nature of Payment Types along with their Code and Section such as "Payment of contractors and sub-contractors".
TDS Dataset provides some of the most commonly used ones.

This screen helps the user to set up relevant Nature of Payment types applicable to the organization.

NatureOfPayment1.png

To create Nature of payments follow these steps:

Payment Parameters

Some Nature of Payments have different threshold limits for different transactions or threshold limits for the total of the transactions within a given financial year.

PaymentParameters1.png

This tab allows the user to set up these additional parameters by filling in below listed data:

Note : As of now these parameters are not considered for tax calculations.

Usability

Purchase Invoice

Create a Purchase Invoice.

This purchase invoice should have:

Purchaseorder.png

Book the Purchase Invoice after it is created.

In our example the total amount to pay to the supplier is 8.100,00 as the TDS amount to pay to the government is 900,00.

TDS amount gets automatically deducted from the invoice line depending upon type of TDS rate structure defined for the product.

In cases where the business partner does not have a PAN number, it would be taken form the business partner tax category, and 20% TDS would be deducted in above case.

TDS Challan

TDSchallan1.png

To create TDS Challan please follow these steps.

After the record is saved, click on "Create Challan Detail records" button on the upper right side of the window.

Once the button is clicked the Challan details list is generated as shown below.

TDSchallan2.png

Those details are also shown in the "TDS Challan Detail" tab.

TDSchallan3.png

TDS Payment

  1. Every month depending on the transactions made a TDS Challan form needs to be created and submitted for each Nature of Payment. (Nature of Payment for which purchase Invoices are created).
  2. Enter the appropriate details for Type of deductee, type of payment, nature of payment, payment method etc. Note: once the record is saved document number gets automatically populated.
  3. Click on Create Challan Detail Records button to add lines to the Challan. This pop up would show lines associated to nature of payment selected in the header.
  4. Select the lines that needs to be processed along with the tax amount.
  5. In case any penalty or interest needs to be paid along with the Challan, manually enter that amount.
  6. Click Payment Out for TDS Challan to process the payment record. Here the payment would be created based on business partner selected in TDS Setup screen and G/l Items configured.

TDSchallan1.png

TDS Filing

Print out of ITNS 281 challan can be printed and submitted to the bank directly from the TDS Challan window.

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