Setting Up TDS Rates and Thresholds in Tally Prime
Tally Prime simplifies the process of managing Tax Deducted at Source (TDS) by allowing businesses to set up TDS rates and thresholds as per government regulations. This guide provides a step-by-step process to configure TDS rates and thresholds in Tally Prime with a real-world example.
Step-by-Step Guide
Step 1: Enable TDS in Tally Prime
Before setting up TDS rates and thresholds, you need to enable the TDS feature:
Go to Gateway of Tally > F11: Features.
Select Statutory & Taxation.
Set Enable Tax Deducted at Source (TDS) to "Yes".
Set Set/Alter TDS Details to "Yes".
Press Ctrl+A to save the settings.
Step 2: Configure TDS Details
Define the TDS rates and thresholds in Tally Prime:
Go to Gateway of Tally > Accounts Info > Statutory Info.
Select TDS Duty Heads > Create.
Enter the required details, such as:
Duty Head: "TDS on Contractors"
Nature of Payment: "Payment to Contractors"
Applicable Sections: "194C"
Threshold Limit: ₹30,000 for single transactions and ₹1,00,000 for aggregate transactions in a financial year.
TDS Rate: 1% for individuals and 2% for others.
Press Ctrl+A to save the TDS duty head.
Step 3: Link TDS to Ledgers
Link the configured TDS rates to the relevant expense ledgers:
Go to Gateway of Tally > Accounts Info > Ledgers.
Select Alter or Create a ledger, such as "Contractor Payments".
Under Tax Information, select the appropriate TDS duty head, e.g., "TDS on Contractors".
Save the ledger by pressing Ctrl+A.
Step 4: Record Transactions with TDS
When recording payments to contractors or vendors, Tally Prime will automatically calculate TDS based on the configured rates and thresholds:
Go to Gateway of Tally > Vouchers.
Select Payment voucher type.
Enter the details of the transaction:
Party Account: "XYZ Contractor"
Ledger: "Contractor Payments"
Amount: ₹50,000
Tally Prime will automatically deduct TDS at the applicable rate (e.g., 2% of ₹50,000 = ₹1,000).
Save the voucher by pressing Ctrl+A.
Step 5: View TDS Reports
Tally Prime provides comprehensive TDS reports for compliance and filing:
Go to Gateway of Tally > Display More Reports.
Select Statutory Reports > TDS Reports.
View details such as deducted TDS, payable amounts, and filing status.
Example: TDS on Contractor Payments
Let us consider the following scenario:
A contractor, "XYZ Contractor", is paid ₹50,000 for a service.
The applicable TDS rate is 2% as per Section 194C.
When recording the payment, Tally Prime deducts ₹1,000 as TDS, and the net payment to the contractor is ₹49,000. The TDS of ₹1,000 is tracked for remittance to the government.
Conclusion
Setting up TDS rates and thresholds in Tally Prime ensures compliance with tax regulations and simplifies the process of TDS calculation and reporting. By following this guide, you can efficiently manage TDS for your business transactions, reduce manual errors, and maintain accurate financial records.