TDS in TallyPrime – An Overview
Tax Deducted at Source (TDS) is a mechanism under the Income Tax Act where tax is deducted at the time of making specified payments, such as professional fees, contract payments, rent, commission, and interest. TDS helps ensure timely tax collection and compliance by deducting tax before the payment is made to the deductee.
TallyPrime helps you manage the complete TDS process, from configuring deductor and deductee details, Nature of Payment, rates, and thresholds to recording transactions and generating statutory reports. Based on the configured details, TallyPrime automatically calculates TDS during applicable transactions, tracks TDS liabilities and payments, provides insights through dedicated TDS reports, and assists in preparing return-related information for filing.
Get Started with TDS
Set up TDS in your company and configure the masters and compliance details required to calculate and record TDS.
Record TDS Transactions
Record TDS deductions as part of your business transactions and manage the applicable TDS requirements. A few scenarios for which you can deduct TDS is listed below:
- Record TDS on Expenses
- Record TDS on Purchases
- Record TDS on Advance Payments
- Record TDS on Interest in TallyPrime
- Record TDS on Transport Expenses
- Record TDS Payment to the Government and Late Fee for TDS Filing in TallyPrime
Handle TDS requirements for specific payment types and provisions:
Depending on the nature of the payment or the deductee, different TDS provisions may apply. TallyPrime provides specific workflows to record TDS for benefits provided to deductees, contractor payments, purchase of goods, payments to non-residents eligible for rate relaxation, and specified persons subject to higher tax rates. Use the relevant procedure based on the applicable section or provision.
- Record TDS on Benefits under Section 194R in TallyPrime
- Record TDS on Contractor Payments under Section 194C
- Record TDS on Purchase of Goods under Section 194Q
- Record TDS under Rule 37BC in TallyPrime
- Configure Specified Person Higher Tax Rate under Section 206AB
Review TDS and Reconcile Challans
Use TDS reports to review deductions, deductee details, and outstanding liabilities, and reconcile challan details after making TDS payments.
Prepare and File TDS Returns
Review TDS transactions included in the return and resolve uncertain transactions from the TDS reports. Prepare the applicable return, and export the return data for validation and filing.
- View, Prepare, and Export Form 26Q
- View, Prepare, and Export Form 27Q
- Validate and File TDS Returns in TallyPrime
With the introduction of the Income Tax Act, 2025, for non-salary returns, Form 140 replaces Form 26Q and Form 144 replaces Form 27Q from 1 April 2026 onwards.
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