Reversal of Excess TDS Deducted

In case of partial cancellation of transaction (s), the expenses and excess TDS deducted needs to be reversed. In Tally.ERP 9, such reversal of expenses and TDS is possible only when the cancellation of transaction is made before the payment of TDS to the Government.

In Tally.ERP 9, reversal of expenses can be accounted using Debit Note and reversal of TDS deducted can be accounted using Credit Note.

Example: On 17-10-2009 ABC Company received bill from Pheonix Agencies for Rs. 75,000 towards Advertising expenses.

On 21-10-2009 ABC Company cancelled the advertisement services to the extent of Rs.25,000 and Expenses and TDS deducted are reversed.

Step 1: Book the Expenses in Journal Voucher

To Create the Journal Voucher,

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

1. Press F2 and change the date to 17-10-2009

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

3. Enter 75,000 in the Amount field.

4. In Credit field select Phoenix Agencies and press enter to view TDS Details screen

5. In TDS Details screen

• Type of Ref: Select New Ref from the Method of Adjustment. New Ref is selected for new financial transactions.

• Name: Accept the default reference number displayed (example: Jrnl / 16-1)

• Nature of Payment: Select Payments to Contractors (advertisement Contractors) from the List of Nature of Pymt(s).

• TDS Duty Ledger: Select TDS – Contractors from the list of TDS Duty Ledgers.

Note: List of TDS Duty Ledgers displays, ledgers created with specific nature of payment as well as the ledger created with the option Any.

• Assessable Amount: Tally.ERP 9 defaults the amount specified against the expenses ledger and skips the field.

• Deduct Now: User can set this field to Yes.

• TDS Amount: This field displays the Tax amount deducted at source

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

6. Press Enter to accept the TDS Details.

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 -0178

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 -0178

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. 1500 [Bill amount (75,000) – Pending Amount (73,500)] is displayed automatically.

11. Enter Narration, if required.

12. Press Enter to accept and save.

Step 2: Reverse the Expenses (Debit Note)

To Create the Debit Note

Go to Gateway of Tally > Accounting Vouchers > Ctrl+F9: Debit Note

1. Press Alt + I for Account Invoice mode.

2. Press F2 and change the date to 21-10-2009.

3. In Party’s A/c Name field select Pheonix Agencies from the List of Ledger Accounts.

4. Under Particulars select Advertisement Expenses.

5. Enter Rs. 25,000 in the Amount field.

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

7. In TDS Details screen

8. In Type of Ref select Agst Ref

9. In Name field, select Jurl/16-1 to adjust the reversal of expenses

10. In Nature of Payment field select Payments to Contractors (advertisement Contractors)

11. Based on the Tax Reference Number selected, Tally.ERP 9 defaults TDS Duty Ledger.

12. In Assessable Value field Rs. 25000 will be displayed indicating that Rs.25000 is reversed against the expenses booked on 17-10-2009

Note: Observe TDS Amount is not displayed as we are not reversing TDS in Debit Note

8. In Bill–wise Details screen

9. Select Agst Ref as the Type of Ref.

10. In the Name field select Bill-0178 dated 17-10-2009 from the Pending Bills to reverse the expenses.

11. Skip the Due Date or Credit Days field.

12. Accept the default amount allocation and Dr/Cr.

11. Enter Narration, if required.

12.  Press Enter to accept and save.

Step 3: Reverse the excess TDS Deducted (Credit Note)

To Create the Credit Note

Go to Gateway of Tally > Accounting Vouchers > Ctrl+F8: Credit Note

1. Press Alt + I for Account Invoice mode.

2. Press F2 and change the date to 21-10-2009.

3. In Party’s A/c Name field select Pheonix Agencies from the List of Ledger Accounts.

4. Under Particulars select TDS - Contractor and press enter to view TDS Details screen

5. In TDS Details screen

6. In Type of Ref select Agst Ref

7. In Name field, select Jurl/16-1 to adjust the reversal of TDS

8. Based on the Tax Reference Number selected, Tally.ERP 9 defaults Nature of Payment and TDS Amount

6. In Bill–wise Details screen

7. Select Agst Ref as the Type of Ref.

8. In the Name field select Bill-0178 dated 17-10-2009 from the Pending Bills to reverse TDS.

9. Skip the Due Date or Credit Days field.

10. Accept the default amount allocation and Dr/Cr.

7. Enter Narration, if required

8. Press Enter to accept and save.