Income TDS

The Government of India introduced Tax Deducted at Source (TDS) to collect tax at the point where income is generated. Under this system, the customer deducts tax while making a payment and deposits it directly with the government. This ensures regular tax collection and reduces tax evasion.

Zoho ERP allows you to apply TDS to your transactions to help you stay compliant with Income Tax regulations.

Transactions Where You Can Apply TDS

You can apply TDS to the following transactions in Zoho ERP:

• Quotes
• Sales Orders
• Invoices
• Credit Notes
• Recurring Invoices
• Customer Debit Notes
• Payments Received
• Purchase Orders
• Bills
• Recurring Bills
• Vendor Credits
• Bill of Supply
• Vendor Advance

TDS

Tax Deducted at Source (TDS) is a tax that the government collects at the source of income. The deductor deducts tax from the taxable amount before making the payment to the deductee and deposits the deducted amount with the government.

TDS applies to different types of income, such as professional fees, rent, salary, commission, and contract payments.

When Should TDS be Deducted?

The Income Tax Department defines TDS rates based on the nature of the payment.

• The deductor is the person or organisation making the payment and deducting tax.
• The deductee is the person or organisation receiving the payment.

The deductor deducts TDS before making the payment, regardless of whether the payment is made by cash, cheque, or credit. TDS is linked to the PAN of both the deductor and the deductee.

The deductor must deposit the deducted tax with the government and issue a TDS certificate to the deductee.

Apply TDS to Transactions in Zoho ERP

You can apply TDS to transactions in Zoho ERP in two ways:

• At Transaction Level
• At Line Item Level

By default, Zoho ERP applies TDS at the transaction level. You can change this preference if required. Here’s how:

• Go to Settings.
• Under Organisation Settings, select Direct Taxes under Taxes & Compliance.
• Choose the required TDS preference.
• Click Save.

Apply TDS at Transaction Level

To apply TDS at the transaction level:

• Open the transaction where you want to apply TDS.
• In the Total section below the item table, select TDS.
• Choose the applicable TDS rate from the dropdown. Zoho ERP applies TDS to the subtotal.
• If the required TDS rate is not available, select Manage TDS, create a new rate, and apply it.
• Click Save and Send or Save as Draft.

The TDS is now applied at the transaction level.

TDS Override

After applying TDS, you can manually adjust the deducted amount at the transaction level.

To override TDS:

• Open the required transaction.
• Select TDS in the Total section.
• Choose the applicable TDS rate.
• Click the Edit icon next to the TDS amount.
• Enter the revised TDS amount.
• Click Update.
• Click Save and Send or Save as Draft.

TDS Surcharge

A TDS surcharge is an additional charge applied to the TDS amount for payments made to high-income individuals or entities.

To create a TDS surcharge:

• Open the required transaction.
• Select TDS in the Total section.
• Click Manage TDS.
• Click + New TDS Tax dropdown and select + New TDS Surcharge.
• Enter the tax name and rate.
• Click Edit to select the tax payable and receivable accounts.
• Click Save.

You can apply the surcharge directly or group it with another TDS using a TDS group.

TDS Cess

TDS Cess is an additional tax charged on the TDS amount for purposes such as education, health, or infrastructure.

To create a TDS cess:

• Open the required transaction.
• Select TDS in the Total section.
• Click Manage TDS.
• Click + New TDS Tax dropdown and select + New TDS Cess.
• Enter the tax name and rate.
• Select the tax payable and receivable accounts.
• Click Save.

Apply TDS at Line Item Level

Zoho ERP allows you to apply TDS to individual line items by updating your tax preferences.

To apply TDS at the line item level:

• Open the required transaction.
• Click + New.
• Enter the transaction details.
• In the Item Table, select the applicable TDS rate in the TDS column for each line item.
• Click Save and Send or Save as Draft.

Zoho ERP applies TDS at the line item level and calculates any applicable surcharge or cess.

Apply TDS to Vendor Advance

You can apply TDS to advances paid to vendors. Zoho ERP deducts TDS from the advance amount and records the remaining balance paid to the vendor. This helps you stay compliant even when making advance payments.

TDS Withheld

When you apply TDS to a transaction, Zoho ERP withholds the tax amount at the time of sale or payment. You can record this withheld amount when recording the payment for the transaction.