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Former Member
Jan 08, 2007 at 08:02 AM



Dear All

Withholding tax

The system is deducting tds both at the time of invoice and at the time of payment. There is no correlation between the tds deducted on the invoice and the payment made for the same.

In case there is a situation which involves down payment, then at the time of booking the invoice the down payment should be cleared; which is not happening now.

The clearing of down payment is possible at the time of making the final payment.

The clearing at the time of payment works if change of month is not involved.

If change is month is involved then the following problem would arise:

The tds is required to be paid within 7 days from the end of the month in which it is deducted.

Consider the following example

Down payment Rs10000 in the month of October 06

Tds 2% = 200

By 7th November the tds is paid . So now the tds account is nil

On the 10th November invoice is booked say Rs 30000

Tds deducted is @ 2% = 600

By 7th December the tds is paid . So now the tds account is nil and then subsequently final payment is made. Since Tax codes, both invoice and payment are defined in the Vendor Master; the system deducts tds again at the time of making vendor payment.

So the company is paying Rs 800 As tds before making final payment which itself is Rs 200 more. Then again at the time of final payment TDS is deducted on the balance amount.

Pls give me a solution