As per Double Taxation Avoidance Agreement, a flat deduction of TDS without surcharge and education cess in a case of payments to NRI’s towards the services provided under section 195 is supported in Tally.ERP 9.
Example: ABC Company paid royalty of Rs.15,00,000 to Alexon Group.
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
Enter Royalty Expenses as the Ledger Name.
Select the group Indirect Expenses from the List of Groups
Set Inventory values are affected to No
Set Is TDS Applicable to Yes
Select Royalty(F) Agreement Is Made on Or After June 1, 2005 in Default Nature of Payment field
Accept to Save.
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
Enter TDS – Payments to Non-Residents as the Ledger Name.
Select Duties & Taxes from the List of Groups in the Under field.
In Type of Duty /Tax field select TDS from the Types of Duty/Tax list
In Nature of Payment field, select Royalty(F) Agreement Is Made on Or After June 1, 2005
Set Inventory values are affected to No
Accept to Save
In F12: Configure (Ledger Configuration)
Ensure Allow Advanced entries in TDS Masters is set to Yes
Go to Gateway of Tally > Accounts Info. > Ledgers > Create
Enter Alexon Group as the Ledger Name.
Select Sundry Creditors from the List of Groups in the Under field
Set Maintain balances bill-by-bill to Yes
Enter the Default Credit Period, if required.
Set Is TDS Deductable to Yes
In the Deductee Type field, select Company – Non Resident
Set Use Advanced TDS Entries to Yes to view Advanced TDS Entries screen
In Advanced TDS Entries screen
Enable the option Set Zero/Lower Deduction/ DTAA to Yes to view Zero/Lower Deduction details screen
In the Zero/Lower Deduction details screen
select Royalty(F) Agreement Is Made on Or After June 1, 2005
In section Number field select the option DTAA
In the Certificate No./Date enter the certificate number
In the Applicable From and To field enter the period of applicability
In the TDS field 10% will be defaulted automatically.
Note: If the Non-Resident Doesn't have the PAN, then in TDS field specify 20%
Surcharge, Education Cess and Secondary Education Cess fields will be set to 0%
Enter Address, State and PIN Code under Mailing Details
Note: Selecting the Country is mandatory, as the corresponding country code will be captured in the text file for Form 27Q when it is exported from Tally.ERP 9
Under Tax Information, specify PAN /IT No.
Note: As per new provision of tax deduction at source (TDS) under the Income Tax Act 1961 effective from April 1, 2010, TDS at higher of the prescribed rate or 20% will be deducted on all transactions liable to TDS, where the Permanent Account Number (PAN) of the deductee is not available.
The law will also apply to all non-residents in respect of payments / remittances liable to TDS.
Non-residents having transactions in India liable to TDS, are advised to obtain PAN by 31st March 2010 and communicate the same to their deductors before tax is actually deducted on transactions after that date
Press Enter to accept and save
Note: From Rel 4.8 an option to provide Bank Details is provided in the Ledger Master.
Go to Gateway of Tally > Accounting Vouchers > Press F7:Journal
Press F2 and change the date to 25-05-2009
Select Royalty Expenses in the Debit field
Enter 15,00,000 in the Amount field
In the TDS Nature of Payment Details screen, accept the default details.
Select Alexon Group in the Credit field
In TDS Details Screen
Select New Ref in Type of Ref field
In the Name field, accept the default TDS reference number – Jrnl / 9-1
In Nature of Payment field select Royalty(F) Agreement Is Made on Or After June 1, 2005 from the List of nature of Payment(s)
Select TDS – Payments to Non–Residents 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.
Payable Amount as calculated in the TDS Details screen will be defaulted in the Party’s Amount (Credit) field.
In Bill–wise Details screen
Select New Ref in Type of Ref field
In the Name field enter the Bill name ACC/01457
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 ACC/01457
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.
In the Credit field select TDS – Payment to Non–Residents from the List of Ledger Accounts and Rs. 1,50,000 (15,00,000 – 13,50,000) is displayed automatically in the amount field.
Enter Narration, if required
Press Enter to accept and save
'TDS on Payments made to Non Residents' has been shared with
