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                               TDS (Tax Deducted at Source)

TDS is one of the modes of collection of Income Tax. While making certain kinds of payment, the payer deducts Income Tax from the payee and deposits with Income Tax authority. The payer (Deductor), later on issues a certificate to the payee (Deductee), in respect of deduction of TDS and deposit to the government. The TDS certificate is then treated as advance payment of Income Tax by the deductee.

Example-

RRR & company, a CA firm conducted a revenue audit of PNB amounting Rs. 175000. Bill was sent to general audit office of PNB. General audit office after deducting the TDS @ 10 % u/s 194J sent the instruction to a/c department. Pass the journal entries in the book of both parties.

Solution-

In the book of PNB

Audit Expenses A/c                               Dr.                                          175000

To      RRR& Company A/c                                                                                         157500

To     TDS A/c                                                                                                                17500

(Being payment due)

RRR& Company A/c                              Dr.                                           157500

TDS A/c                                                   Dr.                                           17500             

To     Bank A/c                                                                                                             175000

(Being Payment made)

 In the book of RRR& Company

PNB A/c               Dr.                                                                  157500

TDS A/c                Dr.                                                                  17500

To    Audit Service A/c                                                                                175000

(Being Income due)

Bank A/c                Dr.                                                               157500

To     PNB A/c                                                                                              157500

(Being Receipt)

 

TDS in Tally-

Firstly you have to on the features of TDS in statutory features as follows;

Press F11→ GO to Statutory & Taxation→ Turn on the feature of TDS.

                     

Note-

Before entering the TDS transactions in vouchers we have to make setting in masters and create nature of payment in Statutory Info.

                                                                                

                                                

Alert-

All entries are affected by ledgers. So before entering the vouchers we also have to make alteration in ledgers.

                     

 

TDS Ledger Accounts Creation-

Create separate ledger account for each type of TDS under the Group Duties & Taxes.

                      

Party Ledger Accounts Creation-

At Ledger Creation/ Alteration of the Party (from whom TDS is deducted), YES at Is TDS Applicable for the Party from whom TDS is deductible to get TDS Details screen.