When you deduct TDS from what you pay a vendor, record it on the purchase invoice. SmartLedger works out the TDS from the section you choose, shows the Net Payable to the vendor and books the deduction to TDS Payable.
Before you start
- Turn on TDS for your company. Go to Settings → Taxes → Income TDS Settings, switch the toggle to Enabled and click Save. Until you do, bills show no TDS options.
- Add the vendor's PAN, and optionally set their Default TDS Section, on the vendor record.
Apply TDS to a bill
Create or edit the purchase invoice.
In the bar above the line items, click the chip next to TDS.
Choose Invoice to apply one section and rate to the bill's taxable value, or Line to choose a section for each item.
For Invoice, choose the section in the TDS section row under TOTAL.
If the vendor has a default TDS section, it is already filled in.
For Line, click TDS under each line and choose its section. Choose No TDS for lines without it.
Click Create Invoice or Update Invoice.
Read the totals
Under TOTAL, TDS Deducted shows the amount with its section and rate, and NET PAYABLE shows what you owe the vendor. While you edit, the figure is marked Live Preview. When you save, SmartLedger calculates the final TDS, including annual thresholds, and confirms it in a message such as "TDS withheld ₹… Net payable ₹…".
If no TDS appears, a warning lists the usual reasons: the threshold isn't met, the bill date is outside the rule's period, or there is no taxable value. If the vendor has no PAN, and no GSTIN that carries one, the higher no-PAN rate under section 206AA applies.
Pay the vendor and deposit the TDS
- When you record a payment against the bill, the amount due is the Net Payable, not the full total.
- When you deposit the TDS with the government, edit the bill, click Record Payment (or Record Another Payment) and set Payment Type to TDS Payment. Choose the account you paid from, enter the amount and click Record TDS Payment.
TDS deposits are listed under TDS Payment Timeline on the bill.
Rules to know
- TDS and reverse charge can't be used on the same bill. While Reverse Charge Applicable? is Yes, the TDS chip is locked.
- TDS isn't available when the place of supply is International.
- Once a bill has payments, its TDS setting is locked.
- No TDS is deducted for a vendor marked TDS Exempt.
- If a vendor has a lower deduction certificate, add it under Settings → Taxes → Lower Deduction Certificates. SmartLedger uses its rate when it is lower than the section's.
- The SmartUploads review screen has no TDS option. Approve the upload, then edit the bill to add TDS.
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