TDS Assignment

 

Simple Application of TDS

Eg:on 1-4-2024 paid rent 300000 to owner after deducting tds @10%

Now create ledger:

Press ctrl + I for tax analysis

Now go in to the payment voucher and paid amount to the owner on 1-4-2024

Now paid tds to govt on 2-4-2024 and print challan

 

TDS on Cash Transaction

Eg.on 2-4-2024 paid professional fee 100000/- to abc enterprises after deducting TDS

Advance to Party

New Era Edu paid ₹ 75000 as advance for advertisement expenses to Sujata stationery. Entire contract has been signed for ₹160000. On 1st August, 2020 ₹75,000 is paid by cheque of SBI, remaining amount paid after completion of the work. Bill issued on 31st August,2020.

 

To pass the required entries we need to create the below mentioned ledgers:

Ø  Party ledger: Sujata stationery

Ø  Expenses ledger: advertisement expenses

Ø  TDS Ledger: TDS on advertisement expenses

 

 

In this entry we have paid advance amount to Sujata stationery, Tax has been immediately deducted on the same voucher. Normal percentage of tax is 1% on such payment for individual/HUF, but here we have seen tax has been deducted as 20%. As per IT, if PAN is not available for a deductee tax deduction percentage will be 20%. After selecting nature of payment save the voucher.

 

Issued invoice to party:

 

Now the next entry will be made for invoice generation. Total value for invoice was ₹1,60,000 (as per example), ₹75,000 was paid in advance so remaining amount will be (1,60,000-75,000)or ₹ 85,000. Taxwas already deducted on ₹ 75,000 so next tax deduction will be made only on ₹85,000. This tax value will be 85,000*20%= ₹17000 (As PAN is not available)

After passing this transaction we will check every report of this entry in current financial year.

 

From 26Q

We have not entered PAN for the party "Sujata stationeries', as it was not provided. So tally has considered the entry as mismatch.

 

Payment of Commission

Company paid commission of ₹2800 to Raj Associates [ASDPA2569K] on 01.09.2020. To pass the entry for the same we need to create the following ledgers as shown below:

On the above entry commission is allowed for ₹2800 where no tax has been deducted. Exemption limit for the same expense has been allowed up to ₹15000. So entire amount is payable to party.

 

After Passing this entry check Form 26Q

On 2.09.2020 Company paid another commission of ₹13500 to Raj associates. Now the aggregate of commission paid to the same party exceeds ₹ 15000 (13500+2800). Hence tax is to be deduced on the total amount of commission paid to the party i.e. ₹16,300.

At the time of saving the entry this message will appear, we need to press Y to pass the next entry

Now we need to pay the deducted TDS to Government

 

Treatment of TDS and GST:

New Era Edu made a contract for rent of ₹ 3,20,000 per month plus 18% GST with AD SONS REALITY PVT LTD (09AAQCA7182A1ZJ) on 1$ Sept. Pass the due entry for the same. TDS is Deductible on service value only. For the above transaction we have to pass the following entries:

Office Rent A/c	Dr. 320000
Input CGST A/c	Dr.19800
Input SGST A/c	Dr.19800

 

To AD Mall A/c	237000
To TDS on Rent A/c	22000

 

Before passing the same entry in Tally we need to create the required ledger & enable GST:

Expense Ledger: Office Rent

Party LEDGER:AD SONS REALITY PVT LTD

Entry for building Rent

Entry for TDS deduction

GOTàF7àCRTL +F7

TDS Payment with Interest

 

Liability to deduct tax at source Liability to deduct tax is always on the payer. Hence the accountant of the payer should not forget to deduct tax and deposit same to the government.

Consequences:

If tax is not deducted, the expenditure will be disallowed and it will incur a penalty equal to the amount of tax not deducted.

If tax is deducted but not deposited to the government, then the expenditure will remain disallowed till deposition. Interest for non-deduction of tax is 1% per month or part thereof. But if the tax has been deducted but not deposited, rate of interest is 1.5% per month or part of thereof. Non deposition of tax is also result in imprisonment of minimum 3 month and maximum of 7 years.

Individuals and HUF are to deduct tax if the turnover of the business exceeds 2 Crore or if the gross receipt from the profession exceeds 50 lakhs.

In our example we have deducted TDS on 1.9.2020. Due date of deposit of the TDS amount was 7.10.2020. But we failed to deposit the same within the stipulated time. We have deposited the same on 02.11.202 along with the interest.

 

Date of Deduction	TDS Amount	Date of Deposit	Month	Interest Rate	Interest
01.09.2020	₹32,000	02.11.2020	3	1.5%PM	₹ 1,440

 

If there is any delay in depositing the amount of TDS interest shall be charged @ 1.5% per month or part of month from the date on which TDS was deducted till the actual date of payment. Therefore, interest shall be charge from 1.09.2020 to 02.11.2020 i.e. 3 months.

Calculation

No. of month = 3 i.e., Sept-20 to Nov-20,

32000 x 1.5% x 3 (month) = 1,440.00

TDS Payment entry with Interest:GOTàF5àF2(2-11-2025) 

No Deduction of Tax (Form 15G and 15H)

 

If the total income of the payee (Deductee) is less then the exemption limit then he/she can avoid deduction of TDS from his/her payments receivable. Form 15G to the payer (deductor). In case the payee is a senior citizen, he/she should submit 15H instead of 15G. On the basis of 15G/15H, the payer will make the payment without deducting TDS. In turn, the payer should deposit the copy of 15G/15H to the respective TDS circle. This provision is applicable only in case of TDS on interest on securities (sec 193), dividend (sec 194), interest other than interest on securities (Sec 194A), and national saving scheme (sec194EE), Premature EPF withdraw, rental income, Insurance commission.

 

e.g., On 2.11.2020 company paid commission to Mr. Rohit Dinkar (ASDPD1234K) of ₹18000. Mr. Dinkar has a certificate for non-deduction (Zero rate) of income tax on commission or Brokerage.

 

Create following ledger:

1. Commission expense (If Available then no need to create)

2. Mr. Dinkar (Configure the party ledger for zero rate)

3. TDS on Commission (If Available then no need to create)

 Deduction at lower rate (Form 13)

The recipient can apply in from 13 to the assessing officer to get a certificate authorizing the payer to deduct tax at lower rate. Such certificate shall be issued directly to the person responsible for paying income.

e.g., On 02.11.2020 company paid 42000 to Modern Advertising Ltd. (ASDCR4321k) for advertisement.Modern advertising Ltd. has a certificate for deduction of income tax at lower rate @1% on advertisement. Here we need to pass the due entry in specified rate.

 

Create the following ledger:

1. Advertisement expense (If Available then no need to create)

2. Party Ledger (Configure the party ledger for lower rate deduction)

3. TDS on Advertisement expense (If Available then no need to create)

 

 TDS Deduction Below threshold limit

If you are required to deduct TDS below threshold limit then you do this also in tally. In some cases, you need to do so.

 

e.g. On 02-11-20 Company hire another office in Orien Mall Ltd. (ASDCO1224K), Mohaddipur, Gorakhpur on the monthly rent of ₹45000 p.m., & receive 1st month bill.

Here you need to create the following ledger:

1. Office Rent (If Available then no need to create)

2. Orien Mall Ltd. (Configure the party ledger for lower rate deduction)

3. TDS on Rent (If Available then no need to create)

Immovable Property (194IA)

When company purchase any property more then 50 Lakh then its responsibility of the company to deduct TDS and Deposit it to Govt.

 

e.g., Company receives a bill for purchase an Office Building from City Centre Housing Ltd. (ABCCC1234k) for ₹ 60,00,000.

 

Here you need to create the following ledger:

1. Office Building (Fixed Assets)

2. Party Ledger: City Centre Housing Ltd.

3. TDS on Immovable Assets x

 

 

 

Assignment 1

 

Create a company with your name followed by your student code and chapter name with the following

details.

Address: 3rd flour, city exotica, M.J.M. square, Kolkata - 700036

ST. reg. no. AFDCC7654KST001

Financial year: 2016-17

TAN no. ADCC78678H

 

1. Create the following ledger and give opening balance

Share capital- 5400000, furniture & fixture- 2400000, computer- 2000000 and HDFC bank -

1000000

2. On 1/5/2016 company had taken a loan of rupees 100000 from Santana finance Itd. [PAN:AFDCF1627K] interest to be charged @ 12% p.a. and interest to be credited at the end of eachmonth. Outstanding interest to be paid on second of the following month. Pass all the requiredentries for the month of may 2016 and June 2016.

3. Company has paid the deducted TDS to govt. on 2nd day of the following month by cheque of HDFC bank.

4. Process of TDS return for the first quarter.

Assignment 2

 

open the company which you have created on previous year chapter and do the following:

1. On 1/07/2016Company paid Rs. 75000 as advance for advertisement expense to Jain stationary by cheque of HDFC bank Entire contract has been signed for Rs. 125000 and remaining amount paid after completion of the work. Bill issued on 31/7/2016

2. Company paid commission of Rs. 2800 to raj associates [PAN. ASDPA2569K] on 1/8/2016. On 2/8/2016 company paid another commission of Rs. 13500 to raj associates.

3. On 2/8/2016 company paid rent to Mr. deepak kumar [ADFPK8976KST001] amounting to Rs.220000 plus GST by cheque after deducting TDS

4. On 31/8/2016 company paid commission to mr. deepak das [ASDPD1253J] of Rs. 18000. Mr.deepak das has a certificate for non-deduction (zero rate) of income tax on commission or brokerage.

5. On 31/8/2016 company paid 45000 to raj advertising Itd. (ASDCR2314J) for advertisement. Raj advertising Itd. has a certificate for deduction of income tax at lower rate @1%, on advertisement. Here we need to pass the due entry in specified rate.