Expenses Partly Subject to TDS (Journal Voucher)

In the event, where a part of the expenditure is not subject to TDS and the balance amount is subject to TDS, it is crucial to determine the accurate value of expenses for computation of TDS.

Tally.ERP 9 provides the flexibility to enter information in the same voucher. Consider the following scenario to illustrate the Expenses partly subject to TDS.

Example: ABC Company received a bill from Phoenix Agencies for Rs. 1,12,360 out of Which Rs. 1,00,000 is towards the Advertising Services provided.  

In the above transaction Bill amount includes other expenses of Rs. 12,360 on which TDS is not applicable. Let us understand how to configure Tally.ERP 9 to compute tax only on the Assessable Value (1,00,000).

Set up:

In F12: Configure (Journal Configuration)

• Set Allow Alteration of TDS Nature of Payment in Expenses to Yes

To create Journal Voucher:

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

1. Press F2 and change the date to 08-04-2009.

2. In Debit field select Advertisement Expenses from the List of Ledger Accounts.

3. Enter 1,12,360 in the Amount field and press enter.

4. The Expense Allocation -  TDS Nature of Payment Details screen is displayed.

Note: When Allow Alteration of Nature of Payment in Expenses is set to Yes in F12: Voucher Entry Configuration, Tally.ERP 9 facilitates Assigning/ Altering Nature of Payments and Assessable value of the Expenses during voucher entry.

The TDS Nature of Payment Details screen displays the Nature of Payment and the Assessable Value of the expenditure.

• Press Enter to accept Payment to Contractors (Advertisement Contractors) as Nature of Payment.

• The amount in the Assessable Value is defaulted to Rs. 1,12,360. Enter Rs.1,00,000 in Assessable Value field and press Enter.

Note: Assessable Value is the amount on which the TDS will be computed. In the above transaction the Bill amount of Rs. 1,12,360 includes other expenses of Rs 12,360 on which the Tax cannot be deducted. Thus assessable value is arrived at by deducting Service tax from the Bill amount

Bill amount (1,12,360)–other expenses (12,360) = Assessable Value (1,00,000)

• In the Nature of Payment field select Not Applicable from the List of TDS Nature of Payment (balance amount of Rs 12,360 gets allocated automatically in the Assessable value field)

5. In the Credit field select Phoenix Agencies and press Enter.

6. In TDS Details screen

• In Type of Ref field select New Ref from the Method of Adjustment.

• In Name field accept the default reference number – Jurl / 2-1.

• In Nature of Payment field select Not Applicable from the List of Nature of Pymt(s).  

• In the Assessable Amount field, the amount selected as Not Applicable in the TDS Nature of Payment Details will be dafaulted.

• In Type of Ref field select New Ref from the Method of Adjustment.

• In Name field accept the default reference number – Jurl / 2-2.

• In Nature of Payment field select Payments to Contractors (Advertisement Contractors) from the List of Nature of Pymt(s).

• Select TDS – Contractors in the TDS Duty Ledger field.

• In the Assessable Amount field, the amount as specified in the TDS Nature of Payment Details against the expenses ledger will be defaulted.

• Set Deduct now field to Yes.

• TDS Amount field displays the Tax Deducted at Source.

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

Note: The amount of Rs.12,360, on which TDS is Not Applicable is shown separately and is not considered for TDS calculation.

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:

9. Select New Ref as the Type of Ref

10. In the Name field enter the Bill name as Bill -911

11. Skip the Due Date or Credit Days field

12. 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.

13. Press Enter, select New Ref as Type of Ref and Enter Bill name as Bill -911

14. Skip the 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 - Contractor from the List of Ledger Accounts.

10. In the Amount field, Rs. 1000 [Bill amount (1,12,360) - Pending Amount (1,11,360)] is displayed automatically.

11. Enter Narration, if required.

12. Press Enter to accept and save.