TDS stands for Tax Deducted at Source. As per the Income Tax Act, specific persons making any specified payment is required to deduct tax at the source if the payment exceeds certain threshold limits. TDS on purchase of goods exceeding Rs. 50 lakhs, has to be deducted under Section 194Q of Income Tax from 1st July 2021. TDS of 0.1% will be deducted by a buyer on purchase of goods, if the buyer has made a turnover of more than Rs. 10 crores in the preceding financial year and if the purchase from a particular seller (resident of India) goes above Rs. 50 lakhs in the current financial year.
To know more on TDS rules Click Here
Prerequisites:
ManageEasy version should be in 6.4.0.1 and TRAC version 72.1.
TDS Process in ManageEasy:
Steps 1: Open ManageEasy-->Enter the Credentials of SUPERUSER-->Click on F3 to modify and enable the option -->Apply TCS on Sales and TDS for purchase in Company Master as shown below.
Step 2: Click Master-->Supplier Master. If the Supplier has PAN Number, then the TDS Rate will be auto calculated at 0.1%. If the Supplier does not have PAN Number, then the TDS Rate will be calculated at 5%. If it is required to calculate TDS from first transaction, enable the configuration Deduct TDS from first transaction itself.
Step 3: Now, when your purchase entry crosses above Rs.50 Lakhs (totally for the current financial year) as shown in the below image, after saving the purchase entry, a message will be shown that TDS should be deducted at 0.1%. This is calculated as the supplier has PAN Number.
Step 4: To Know how the TDS is calculated and in which ledger it is posted, Click Accounts-->AccountsEasy-->Click on Reports-->Daily Reports--Day Book .
Step 5: To check the Balance that has to be paid to the supplier, Click on Transactions-->Bill Wise Payment--and Select the Supplier . The balance amount will show after deducting the TDS amount as shown below.
Step 6: In order to verify that the TDS deducted has been reflected in TDS Ledger, click on Reports--> Ledger Reports--Check for TDS deducted on Goods Purchase 194Q:
Step 8: When you are going to deduct TDS, but the Supplier has charged you TCS in their sales bill, the warning message will be shown as below. In this case, you need to request the supplier to change the invoice without charging TCS .
TDS Process for Customers instead of collecting TCS.
Step 1: Click On Master-->Customer Master-->Enable the configuration of TCS/TDS Applicable whichever is applicable based on the customer turnover. Select TCS, if you will collect TCS from the customer or Select TDS if your customer will deduct TDS on the sale transactions with this customer.
Step 2: Make the Sales Bill Entry for the customer, where in the sales bill screen, it will not show the option to enter TCS if you had selected TDS as the setting in the customer master.
Step 3: To view whether the TCS is collected or not after the receipt entry is made, we can check in Daybook Under Reports-->Daily Reports-->Daybook. You can observe that there is no TCS calculated.
FAQs: Whether TDS on purchase of goods under section 194Q has to be deducted on total invoice value inclusive of Goods & Service Tax (GST)?
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