Accounting Payment of Interest and Penalties along with TDS Payment

Example: On 15-01-2014, ABC Company received a bill from Phoenix Agencies for Rs. 6,00,000 towards Advertising services.  ABC Company deducted TDS of Rs. 12,000. The tax amount thus deducted, had to be paid to the government by 17-01-2014.  

On 10-02-2014, ABC Company paid the TDS amount to the government with an interest of Rs. 170, and Penalty of Rs. 100

Step 1: Create Interest Ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create

1. In the Name field enter the Ledger Name e.g. Interest

2. In the Under field select Indirect Expenses group

3. Set Inventory values are affected to No

4. Set Is TDS Applicable? to No

5. Press Enter to save

Step 2: Create Penalty Ledger

Go to Gateway of Tally > Accounts Info. > Ledgers > Create

1. In the Name field enter the Ledger Name e.g. Penalty

2. In the Under field select Indirect Expenses group

3. Set Inventory values are affected to No

4. Set Is TDS Applicable? to No

5. Press Enter to save

 Step 3: Create Journal Voucher

Go to Gateway of Tally > Accounting Vouchers > Press F7:  Journal

1. Press F2 and change the date to 10-02-2014

2. Select Advertisement Expenses in the Debit field

3. Enter 6,00,000 in the Amount field

4. In the TDS Nature of Payment Details screen, accept the default details.

5. Select Phoenix Agencies in the Credit field

6. In TDS Details Screen

   • Select New Ref in Type of Ref  field

   • In the Name field, accept the default TDS reference number – Jrnl /1 1-5

   • In Nature of Payment field select Payment to Contracts (Advertisement Contracts) from the List of Nature of Payment(s)

   • Select TDS – Contractors in the TDS Duty Ledger field

   • Set Deduct Now to Yes to deduct the income tax in the same voucher.

   • The TDS Amount field displays the Tax amount deducted at source

   • The Payable Amount field displays the amount (after TDS) payable to the Party.

7. Payable Amount as calculated in the TDS Details screen will be defaulted in the Party’s Amount (Credit) field.

8. In Bill–wise Details screen,

   • Select New Ref in Type of Ref field

   • In the Name field enter the Bill name 1

   • Skip Due Date or Credit Days field

   • Accept the default amount allocation and Dr/Cr. By default Tally.ERP 9 displays the Bill amount in the amount field as the credit balance.

   • In Type of Ref field, select New Ref and enter bill name 015

   • Skip Due Date or Credit Days field and accept the default amount allocation and Dr/Cr. By default Tally.ERP 9 displays the Tax amount in the amount field as the debit balance.

9. In the Credit field select TDS – Contractors from the List of Ledger Accounts and Rs. 12000 (6,00,000 – 5,88,000) is displayed automatically in the Amount field.

10. Enter Narration, if required

11.  Press Enter to accept

Step 4: Create Payment Voucher

Go to Gateway of Tally > Accounting Vouchers > F5: Payment

1. Press F2 and change date to 31/03/2014

2. Click the button S: Stat

3. In the Statutory Payment screen that appears, select TDS as the Type of Duty

Note: If Interest and Penalty are paid along with the tax amount, the Payment can be done without using S:Stat Payment Button

4. Set Auto Fill Statutory Payment to No

5. In the Account field select Canara Bank

6. Under Particulars, select the ledger TDS on Advt. Expenses

7. Fill in the TDS Details screen as shown below:

8. Press Enter to go to the Payment Voucher

9. Accept the Amount

10. Select the ledger Interest in the Particulars column

11. Select the Payment Type as shown below:

12. Press Enter to go to the Payment Voucher

13. Enter 180 in the Amount field

14. Select the ledger Penalty

15. The List of Payment Types are available. Select Penalty

16. Press Enter to go to the Payment Voucher

17. Enter the Amount as 100

18. Press Enter to go to the Payment Voucher

19. Set Provide Details to Yes  

20. The Payment Details screen appears with the Section No., Nature of Payment, and Deductee Status captured automatically. Press Enter  

11. Enter details in the other fields, as shown below:

12. Press Enter to go to the Payment Voucher

13. Fill in details in the Bank Allocation screen

14. Enter Narration if required

The completed Payment voucher is as below:

14.  Press Enter to accept.

Step 5: Print the TDS Challan

To Print the ITNS 281 Challan,

1. Open the Payment Voucher in alteration mode

2. Press Alt+P or click P: Print

3. In the Voucher Printing screen, set the option Print as TDS Challan to Yes

4. Save the Voucher Printing screen

5. The preview of ITNS 281 Challan is generated. Press F4 to zoom - in

You can see that the tax amount, interest and penalty payment made is captured in the ITNS 281 challan