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Saturday, December 8, 2018

TDS

INTRODUCTION OF TDS

TDS stands for "Tax Deducted at Source"
Its an example of 'Direct tax', that is applied to different types of incomes, therefore it's also an example of income tax.



TDS INCOME EXAMPLES

Interest on securities, Debentures

Interest other than interest on securities


Winnings from Lottery or Crossword Puzzles


Winnings from horse races


Insurance Commission


Commission etc. on the sale of Lottery tickets


Commission, brokerage etc


Rent of Land, Building or Furniture


Rent of Plant, Machinery or Equipment


Fees for professional or technical services


So on...



FEATURES OF TDS

1. TDS is an example of direct tax because it's a type of income tax.

2. Its apply on certain types of incomes with a required minimum amount.

3. It consisted of (Income Tax, Surcharge, Education Cess, Sec. Education Cess).




TDS COMPONENTS

What is TAN?TAN stands for 'Tax Deduction Account Number' and its issue by Income-tax Department to all persons, who deducting tax at source. TAN has to be mentioned in all relevant challans, tax deduction certificates, TDS returns and other notified documents.

Who has to Deduct Tax?
Any person making the payments to third parties as specified in scope and applicability section are required to deduct tax at source.

Who is a Deductee?
As per Income Tax Act, the Tax will be deducted at source based on the prescribed rate on payments made to the third parties, who are Assessees (includes individual & HUF as covered U/S 44AB) carrying on the business of following types.

Such Tax will be deducted at time of payment or credit whichever is earlier.
Individual 
Hindu Undivided Family (HUF) 
Body of Individual 
Association of person 
Co-Operative society 
Local Authority 

Partnership firm 
Domestic company (Indian company) 
Foreign company 
Artificial Judicial Person



HOW TO ENABLE TDS

To Enable TDS in Tally ERP 9, we have to follow these steps.

1. Open an already existing company.

2. Press “F11” key.

3. Select the “Statutory & Taxation” from the “Company feature”



4. Make “yes” to Enable TDS: the following options.


TDS LEDGERS
To implement TDS we need at-least three ledgers for each TDS transaction.

EXPENSE LEDGER
Ledger name: Technical Service Charges A/c
Group name: Indirect Expenses
Is TDS Applicable: Yes
Default nature of payment: Fee for professional or Technical services.


CREDITOR LEDGER
Ledger name: Dream Tech. Solution
Group name: Sundry creditor
Maintain balances bill by bill: No
Is TDS Deductable: Yes
Deductee type: Company-Resident





TAX LEDGER
Ledger name: TDS (Technical service) A/c
Group: Duties & taxes
Type Duty/Tax: TDS
Nature of payment: Fee for professional or Technical services.


HOW TO TDS REPORT

1. Enable TDS feature

2. Click on “Display” Menu
3. Click on “Statutory Info.”

4. Make yes to “Enable Tax Deducted at Source (TDS)” & “Set/Alter TDS Details”




TDS EXERCISE

Company name: ABC Electronics

Inventory Details

Stock items
Brand
Quantity
Stock price
Sales price
Pen drive
Scan disk
400
250
300
Refrigerator
LG
50
20,000
22,000
Radio
Phillips
150
2,500
3,500
DVD Player
Phillips
140
4,000
4,500

Ledger Entries
Opening balance Rs. 7,50,000
Cash in bank Rs. 16,50,000
Machinery Amt. Rs. 75,000

Voucher Entries
1. Purchase goods (15 DVD Player, 40 Radio) by cash with 2% discount.

2. Purchase goods by cash (100 Pen drive) with 5% discount 

3. Paid commission Amount Rs. 7,500 with TDS To Mr. Sunil  

4. Paid Technical service charges Rs. 40,000 with TDS to Dinesh IT solution

5. Sold goods for cash (4 DVD player) with 2% discount.

6. Depreciation 2% on old furniture (Total value amount Rs. 25,000)

7. Withdraw Cash Rs. 7,00,000 from bank to office use.

8. Newspaper expense charges Rs. 500

9. Depreciation 4% on machinery

10. Repair old machinery charges Rs. 7,000

11. Withdraw Cash Rs. 15,000 from bank to personal use.

12. Paid office Rent (Amount Rs. 1,85,000) with TDS to Mr. Amit

1 comment:

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