Tax Deducted at sources in Tally ERP 9.0

                                                         TDS(TAX DEDUCTED AT SOURCE)
 Introduction
TDS means Tax Deducted at Source. The concept of TDS was introduced in the Income Tax Act,
1961, with the objective of deducting the tax on an income, at the source of income. It is one of
the methods of collecting Income Tax, which ensures regular flow of income to the Government.
Example: Universal Infotechis making the payment towards Rent to the owner of the building, it
is required to deduct the tax on the income (i.e. before payment to the owner), at the source of
income.
Scope & Applicability
Scope
Tax deduction at source means the tax required tobe paid by the assessee, is deducted by the
person paying the income to him. Thus, the tax is deducted at the source of income itself. The
income tax act enjoins on the payer of such income to deduct the given percentage of income as
income tax and pay the balance amount to the recipient of such income. The tax so deducted at
source by the payer is to be deposited in the income tax department account. The tax so
deducted from the income of the recipient is deemed payment of income tax by the recipient at
the time of his assessment.
For example: Person responsible for paying any income which is chargeable to tax under the
head 'Salaries' is required to compute the tax liability in respect of such income and deduct tax at
source at the time of payment. If the employee has any other income, he needs to inform the
employer so that employer can take that income into consideration while computing his tax liability
but he will not take into account losses except loss from house property.
Similarly, person responsible for paying any income by way of 'interest on securities' or any other
interests are required to deduct tax at source at the prescribed rates at the time of credit of such
income to the account of the payee or at the time of payment, whichever is earlier.

Applicability
Tax will be deducted at source based on the rate defined in the Act, only on the fulfilment of the
below mentioned conditions.
1. The Assessees (includes individual & HUF as covered U/S 44AB) carrying on business is
deducting the tax at the Time of Payment or Credit, (whichever is earlier) against following type
of Recipient (Deductee)
 Individual
 Hindu undivided Family (HUF)
 Body of Individual (BOI)
 Association of person (AOP)
 Co-Operative society
 Local Authority
 Partnership firm
 Domestic company (Indian company)
 Foreign company
 Artificial Judicial Person
2. The nature of payment belongs to any one of following list
Nature of Payment Nature of Payment
Salaries  Interest on Securities
Dividend  Interest other than securities
Winnings from lottery orcrossword puzzles or
card game or other game
Winnings from horse races
Payment to sub-contractors Insurance commission
Payments to Contractors (Advertisement Contractors)
Payments to Contractors (Other than
Advertisement)
Payment to Non–Resident sportsman or sports
association
Payment in respect of deposits under
NSS
Payment on account of repurchase of units of
MF or UTI
Commission on sale of lottery tickets
Commission or brokerage Rent ofLand, Building or Furniture
Rent of Plant, Machinery or Equipment Fees  for  professional  or  technical  services
Payment of compensation on acquisition of certain immovable property
Payment of Any other income to a nonresident
Income from units to an offshore fund Income  of  foreign  institutional  investors
from securities

TDS Process
 A seller (Deductee) provides services to the buyer (Deductor).
 The buyer deducts the Tax at the time of payment of advances or while accounting the Bills
received.
 The buyer deposits the deducted amount to the designated branches of the authorised
bank
 The buyer issues Form No.16A to the Deductee
 The buyer files annual returns electronically to the Income Tax department.
 The seller files returns, along with Form 16Aclaiming the credit of the Tax deducted at
source.