## Documentation Index

Access the complete documentation index at:
https://www.zoho.com/en-ng/books/help/llms.txt

Use this file to discover all available documentation pages before proceeding.

# Withholding Tax

Withholding tax is a direct tax deducted at source by the payer on specific types of payments. The payer remits the withheld amount to the relevant tax authority on behalf of the payee.

In Zoho Books, you can enable withholding tax, apply it to invoices and bills at the line-item level, and record payments that account for the withheld amount.

## Enable Withholding Tax

Before applying withholding tax to your transactions, you need to enable it.

Here’s how:

*   Go to **Settings**.
*   Select **Withholding Tax** under _Taxes & Compliance_.
*   Navigate to **Withholding Tax Settings**.
*   Enable the **Withholding Tax** toggle.
*   In _Enable Withholding Tax Settings For_, choose **Customers**, **Vendors**, or **Customers and Vendors**.
*   Click **Save**.

Withholding tax will now be enabled for your organisation.

## Create a Withholding Tax Rate

To create a withholding tax rate:

*   Go to **Settings**.
*   Select **Withholding Tax** under _Taxes & Compliance_.
*   Navigate to **Withholding Tax Settings**.
*   Click **\+ New Rate**.
*   In the pop-up, enter the **Withholding Tax Name** and **Withholding Tax Rate**.
*   Select the **Tax Type**.
*   Click **Save**.

![New Withholding Tax](/en-ng/books/help/images/settings/withholding-tax/new-wt.png)

You can now use this withholding tax rate in transactions.

## Enable Withholding Tax for Customers and Vendors

To enable withholding tax for a customer:

*   Go to _Sales_ on the left sidebar and select **Customers**.
*   Create a new customer or edit an existing customer.
*   In the _Other Details_ section, check the **Enable Withholding Tax for this Customer** option.

![Enable Withholding Tax for Customer](/en-ng/books/help/images/settings/withholding-tax/enable-wt-customer.png)

*   Click **Save**.

To enable withholding tax for a vendor:

*   Go to _Purchases_ on the left sidebar and select **Vendors**.
*   Create a new vendor or edit an existing vendor.
*   In the _Other Details_ section, check the **Enable Withholding Tax for this Vendor** option.

![Enable Withholding Tax for Vendor](/en-ng/books/help/images/settings/withholding-tax/enable-wt-vendor.png)

*   Click **Save**.

## Apply Withholding Tax to Invoices

When you create an invoice for a customer with withholding tax enabled, you can apply a withholding tax rate to each line item.

To apply withholding tax to invoices:

*   Go to _Sales_ on the left sidebar and select **Invoices**.
*   Create a new invoice or edit an existing invoice.
*   In the _Items_ table, choose the applicable **Withholding Tax** for each line item in the **TDS** column.

![Apply Withholding Tax to Invoice](/en-ng/books/help/images/settings/withholding-tax/apply-wt-inv.png)

*   Review the _Withholding Tax_ section below the total.
*   Click **Save and Send** or **Save as Draft**.

The invoice will be saved with withholding tax details.

## Apply Withholding Tax to Bills

If you are a withholding agent, you can apply withholding tax to vendor bills.

To apply withholding tax to bills:

*   Go to _Purchases_ on the left sidebar and select **Bills**.
*   Create a new bill or edit an existing bill.
*   In the _Items_ table, choose the applicable **Withholding Tax** for each line item in the **TDS** column.

![Apply Withholding Tax to Bill](/en-ng/books/help/images/settings/withholding-tax/apply-wt-bills.png)

*   Review the _Withholding Tax_ section below the total.
*   Click **Save as Draft** or **Save as Open**.

The bill will be saved with withholding tax details.

**Note:** Applying withholding tax to an invoice or bill does not alter the total transaction amount. The withholding amount is considered when you record payment.

## Record Withholding Tax Payment

After applying withholding tax to invoices or bills, you can record the withheld amount while recording payment.

### Record Invoice Payment with Withholding Tax

*   Go to _Sales_ on the left sidebar and select **Invoices**.
*   Open the invoice for which you want to record payment.
*   Click **Record Payment**.
*   Enter the payment details.
*   Select **Yes** next to _Withholding Tax Deducted?_.
*   Verify the **Withholding Tax Amount** displayed.
*   Click **Save as Paid**.

### Record Bill Payment with Withholding Tax

*   Go to _Purchases_ on the left sidebar and select **Bills**.
*   Open the bill for which you want to record payment.
*   Click **Record Payment**.
*   Enter the payment details.
*   Select **Yes** next to _Withholding Tax Deducted?_.
*   Verify the **Withholding Tax Amount** displayed.
*   Click **Save as Paid**.

### Apply Withholding Tax to Bulk Customer Payments

When a customer pays multiple invoices in one payment, you can apply withholding tax invoice-wise in the same payment.

*   Go to _Sales_ on the left sidebar and select **Payments Received**.
*   Click **\+ New** or edit an existing payment.
*   Enter the required details.
*   Under _Unpaid Invoices_, review withholding tax due in the _Withholding Tax_ column.
*   Click **Add Withholding Tax** to include deductions.
*   Enter payment amounts for the invoices.
*   Click **Save**.

The payment will be recorded with withholding tax applied for the selected invoices.