https://help.tallysolutions.com/docs/te9rel65/Tax_India/tds/changes_in_finance_bill_2_tds.htm

Changes as per Finance Bill No. 2 of 2019-20 (TDS)

You can update the revised TDS rate of 5% for Payment in Respect of Life Insurance Policy , and create new TDS nature of payment for Section 194M . While recording TDS transactions, the TDS amount will be deducted as per the Rate and Threshold/exemption limit defined in the TDS Nature of Payment .

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Payment in Respect of Life Insurance Policy

TDS Nature of Payment for Section 194M

Payment in Respect of Life Insurance Policy

You can update the revised TDS rate of 5%, effective from 1st September 2019 in the TDS Nature of Payment .

1. Go to Gateway of Tally > Accounts Info. > Statutory Info. > TDS Nature of Pymts > Alter .

Note: If you are creating this, press Ctrl+C to view the list of Nature of Payment .

2. Select Payment in Respect of Life Insurance Policy .

3. Click L : Details .

4. Enter the applicability date with the TDS details. If this nature of payment already exists prior to 1st September 2019, provide the details in a separate row, as shown below:

Note: Do not change the TDS details entered until 31st August 2019. Enter the changes applicable from 1st September 2019 in the next row.

The revised TDS rate appears for Payment in Respect of Life Insurance Policy , as shown below:

5. Press Enter to save.

TDS Nature of Payment for Section 194M

A new TDS nature of payment has been introduced under Section 194M . You can now select it from the list of Nature of Payment , and enter the applicable TDS rate and threshold limit.

1. Go to Gateway of Tally > Accounts Info. > Statutory Info. > TDS Nature of Pymts > Create .

2. Press Ctrl+C and select Payment of certain sums by certain individuals or HUF .

3. The Section appears as 194M .

4. Enter the TDS Rate of 5% and Threshold/exemption limit of 50,00,000 .

5. Press Enter to save.

Note: As the Payment code is not defined for this TDS Nature of Payment , the same will not be printed in ITNS Challan 281 .

Scenario : As per section 194M, in case any payments made by an Individual or HUF (Resident) to a contractor or professional service provider crosses the threshold of Rs 50,00,000.00, the deductor must deduct tax at the source and remit the deducted amount to the bank treasury by mentioning the section of the deduction.

Given below are sample transactions to deduct TDS and remit the amount to the bank treasury by printing a TDS Challan (ITNS Challan 281) in Tally.ERP 9.

To book the expense with TDS deduction

1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal .

2. Debit the expense ledger and enter the total expense amount in the Debit column.

3. Credit the party ledger and enter the amount payable to the party after TDS deduction in the Credit column.

4. Credit the TDS duty ledger created for section 194M and enter the TDS amount deducted in the Credit column.

5. Press Enter to save the voucher.

To pay the deducted TDS amount to the department and print ITNS Challan 281

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

2. Click S : Stat Payment .

o Select the option TDS in the Tax Type field.

o Enter the quarter for which the TDS is remitted in the Period From and To fields.

o Enter the date on which TDS was deducted in the Deducted Till Date field.

o Select 194M in the Section field.

o Select Payment of certain sums by certain individuals or HUF in the Nature of Payment field.

o Select Non Company in the Deductee Status field.

o Select Resident in the Residential Status field.

o Select the bank ledger in the Cash/Bank field.

o Accept the screen

3. Under Particulars , TDS duty ledger created for section 194M and the TDS amount appear automatically. Press Enter to accept.

4. Press Enter to save the voucher.

5. Press Page Up to open the voucher in alteration mode.

6. Press Alt+P to print.

7. Press Ctrl+A in the Voucher Printing screen.

The TDS Tax Challan appears as shown:

Note: As the Payment code is not defined for this TDS Nature of Payment , the same will not be printed in ITNS Challan 281 .