Reversal of Expenses with TDS (Debit Note)

In case of Cancellation of transaction (s), the expenses and 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 and TDS can be accounted using Debit Note.

Example: ABC Company cancelled the transaction dated 15th May, 2009 for Rs. 2,00,000 (Commission Charges - Bill–570) as Mark IT Solutions failed to reach the sales target set by the company.

Step 1: Record a Journal Voucher

First record a journal Voucher to account the Commission Expenses.

Step 2: Record a debit Note

Set Up:

In F11: Features (Accounting Features)

• Set Use Debit/Credit Notes to Yes

• Set Use Invoice Mode for Debit Notes to Yes

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 20-05-2009.

3. In Party’s A/c Name field select Mark IT Solutions from the List of Ledger Accounts.

4. Under Particulars select Commission Charges.

5. Enter Rs. 2,00,000 in the Amount field.

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

7. Under Particulars select TDS – Commission Or Brokerage.

8. In the TDS Details screen:

9. In Type of Ref select Agst Ref

10. In Name field, Tally.ERP 9 displays the Tax Details, based on the party and the nature of payment selected in the transaction. From Tax Details, select the Tax Reference Number against which the TDS to be reversed.

11. In Nature of Payment field select Commission Or Brokerage

12. Based on the Tax Reference Number selected, Tally.ERP 9 defaults the details in TDS Duty Ledger, Assessable Amount and TDS Amount fields.

9.  TDS Amount as displayed in the TDS Details screen will be defaulted in the Amount field with negative sign.

10. In Bill–wise Details screen

11. Select Agst Ref as the Type of Ref.

12. In the Name field select Bill-570 from the Pending Bills to reverse the expenses.

13. Skip the Due Date or Credit Days field.

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

11. Enter Narration, if required.

12.  Press Enter to accept and save.

Note: Expenses and TDS can be reversed in the same voucher (Debit Note).