Tax Deducted at Source

TDS (Tax Deducted at Source) is a mechanism where the tax is withheld at the source. In this mechanism, the payee will deduct tax and then make the rest of the payment to the receiver. You can enable it for customers and vendors in Zoho Books. You can also create transactions with TDS for the customers that you’ve enabled TDS for. When TDS is enabled in Zoho Books and applied to a transaction, it’ll calculate the tax based on the percentage selected and display the total amount of the transaction accordingly.

Enable TDS

Before you can create transactions with TDS, you’ll have to first enable TDS and create TDS rates in Zoho Books.

To enable TDS:

Enable TDS

Add TDS Rate

Once you’ve enabled TDS in Zoho Books, you can add TDS rates. Here’s how:

New TDS

Pro Tip: You can also create TDS groups by clicking the + New TDS Group button on the top right corner of the page and selecting the required TDS rates to group them as one.

TDS in Customers/Vendors

Once you’ve enabled TDS in settings, you’ll have to enable it for the customers or vendors that you want to create transactions with TDS. Based on the preference you’ve selected while enabling TDS in Tax Settings, the TDS option will be available for customers, vendors, or for both customers and vendors.

To enable it for a customer or a vendor:

Customer and Vendors TDS

Now when you create transactions for the customer or the vendor for whom TDS is enabled, you’ll be able to associate TDS at the line item level.

TDS in Transactions

You can associate TDS for each item in a transaction in Zoho Books. Here’s how:

The TDS for all the items will be calculated and displayed in the total section of the transaction.

TDS in Transactions
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