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https://help.tallysolutions.com/docs/te9rel49/Tax_Deducted_at_Source/TDS_on_Payments_to_NonResidents.htm

TDS on Payments to Non-Residents

 

As per Section 206AA any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (Deductor), Failing which tax shall be deducted at the higher of the following rates, namely:—

  • at the rate specified in the relevant provision of this Act; or

  • at the rate or rates in force; or

  • at the rate of twenty per cent

All deductors are liable to deduct tax at the higher rate (20%) in all transactions not having PAN of the deductees on or after 1st April 2010. Deduction of Tax at higher rate is applicable even for Non-Residents having transactions in India.

Example: ABC Company paid towards Units to an Offshore Funds of Rs. 20,00,000 to Trump Group.

Step 1: Create the Expenses Ledger

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

  • Enter Expenses towards Units 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 Payments in Respect of Units to an Offshore Fund in Default Nature of Payment field

  • Accept to Save.

Step 2: Create Tax Ledger

  • Enter TDS – Payments Offshore Fund Units 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 Payments in Respect of Units to an Offshore Fund

  • Set Inventory values are affected to No

  • Accept to Save

Step 3: Create Party Ledger

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

  1. Enter Trump Group as the Ledger Name.

  2. Select Sundry Creditors from the List of Groups in the Under field

  3. Set Maintain balances bill-by-bill to Yes

  4. Enter the Default Credit Period, if required.

  5. Set Is TDS Deductable to Yes

  6. 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

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

Step 4: Record the Transaction in Journal Voucher

  1. Press F2 and change the date to 05-4-2010

  2. Select Expenses Towards Units in the Debit field

  3. Enter 20,00,000 in the Amount field

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

  5. Select Trump Group in the Credit field

  6. In TDS Details Screen

  7. Select New Ref in Type of Ref  field

  8. In the Name field, accept the default TDS reference number – Jrnl /19-1

  9. In Nature of Payment field select Payments in Respect of Units to an Offshore Fund from the List of nature of Payment(s). On selection of TDS Nature of Payment Tally.ERP 9 displays the warning message stating that TDS is deducted at higher rate i.e. 20%/whichever is applicable if PAN is not furnished.

  • Select TDS – Payments Offshore Fund Units 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.

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

  2. In Bill–wise Details screen

  3. Select New Ref in Type of Ref field

  4. In the Name field enter the Bill name ABC-5685

  5. Skip Due Date or Credit Days field

  6. 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.

  7. In Type of Ref field, select New Ref and enter bill name ABC-5685

  8. 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.

  1. In the Credit field select TDS – Payments Offshore Fund Units from the List of Ledger Accounts and Rs. 4,22,300 (20,00,000 – 15,77,700) is displayed automatically in the amount field.

  2. Enter Narration, if required

  1. Press Enter to save.

 

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