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Former Member

TDS Tax codes

Hi

Dear friends, please tell me why do we require two type of tax codes in TDS like tax code for invoice posting & tax code for payment. Please explain briefly the scenario for each case.

Regards

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4 Answers

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    Former Member
    Sep 04, 2008 at 06:28 AM

    Hi,

    Regarding TDS you have to understand the basic that when & how the Tax is deducted

    According to Income Tax Act 1961 TDS can be done for the payments made to any vendor if the invoice amount crosses the amount specified in the act

    TDS will come in to picture when an advance payment ( Down payment) is made and @ the time of invoice

    In both the cases we have to deduct the Tax Surcharge & E cess to map this seperately we use seperate tax codes for DP & Invoice

    And if u check in vendor master we can see that each vendor will be linked to both the tax codes so that if we make a DP or settlement to vendor the Tax is deducted

    Hope this will clear your doubts

    Regards

    Arun

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    Former Member
    Sep 04, 2008 at 07:03 AM

    Hi,

    There is rule in India that a company is liable to decuct TDS at the

    • time of Invoice creation

    • Payment is made in either way of down payment or settlement

    In both scenario company is liable to deduct TDS

    Hence for both scenario we have to configure two condition /tax code.

    Regards

    Pari

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    Former Member
    Sep 04, 2008 at 04:34 AM

    Hi babu,

    Normally tax we deducts while doing invoice verfication and some times we will give advance payments for that also we have to deduct some tax(TDS)

    so two types of TDS codes we are creating.

    Any doubt feel free to ask

    Regards

    Surya

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    Former Member
    Sep 04, 2008 at 09:47 AM

    As per the income tax act tds will be deducted at the time of provision(invoice) or payment(down payment) which ever is earlier, for identification of deduction we will create separate tax type and tax code for payment and invoice.

    may be you are aware for one tax type u can assign no of tax codes.

    The withholding tax type controls the essential calculation options for

    extended withholding tax, whilst the withholding tax code only controls

    the percentage rate of the withholding tax.

    You must enter the withholding tax type in the customer/vendor

    withholding tax master data and in the company code master data.

    The system recognizes two categories of withholding tax type depending

    on when the withholding tax amounts are posted:

    o Posting with invoice

    o Posting with payment

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