TDS for customer
This article explains the process of calculating TDS on customer payments.
The example assumes a TDS rate of 2% for illustration. Use the rate that applies to your transactions; this example isn't guidance on current tax law.
TDS calculation and tracking of TDS certificate receivable
TDS can be deducted on receiving payment from customer. TDS can be calculated on the following documents:
- General Journal
- Cash Receipt Voucher
- Bank Receipt Voucher
- Cash Receipt Journal
TDS certificate is receivable from customer on receiving the advance payment or issuing sales invoice to customer. TDS Certificate Receivable can be tracked through following documents:
- General Journal
- Cash Receipt Voucher
- Bank Receipt Voucher
- Cash Receipt Journal
- Sales Invoice
Set up a journal line for customer TDS
- [!INCLUDE [open-search](../../includes/open-search.md)] Enter General Journal, Cash Receipt Journal, Bank Receipt Voucher, or Cash Receipt Voucher, and then choose the related link.
- Select Customer in Account Type and select relevant customer code in Account No. field. Select G/L Account or Bank Account in Bal. Account Type and select relevant cash or bank account in Bal. Account No. field.
- Select TDS Certificate Receivable, and then select TDS Section Code on the journal line. The section must be assigned to the customer in TDS Customer Allowed Sections. Check the Location Code and T.A.N. No. for the transaction.
Mark a transaction for certificate tracking
- [!INCLUDE [open-search](../../includes/open-search.md)] Enter General Journal, Cash Receipt Journal, Bank Receipt Voucher, Cash Receipt Voucher, or Sales Invoice, and then choose the related link.
- TDS Certificate Receivable should be marked true on Journal line or Sales Invoice header.
- TDS Certificate Receivable identification flows into Customer Ledger Entry on posting of the document.
Calculate TDS on a customer receipt
In the given scenario, advance payment received from customer for INR 50,000 on which 2% TDS is applicable under TDS Section 194C.
In this case TDS calculation is as following:
Component Value TDS Base Amount 50000 TDS Amount 1000 (50000*2%) GL Entries are as following:
Particulars Amount Customer Account -50000 TDS Receivable Account 1000 Bank Account 49000
Identify the transaction for a receivable certificate
Identify the payment or invoice for which you expect a TDS certificate. Selecting TDS Certificate Receivable on a sales invoice tracks the certificate; it isn't the same as calculating TDS on a receipt journal line.
- [!INCLUDE [open-search](../../includes/open-search.md)] Enter General Journal, Cash Receipt Journal, Bank Receipt Voucher, Cash Receipt Voucher, or Sales Invoice, and then choose the related link.
- TDS Certificate Receivable should be marked true on Journal line or Sales Invoice header.
- TDS Certificate Receivable identification flows into Customer Ledger Entry on posting of the document.