Setting up TDS for your company

TDS is set up under Settings → Taxes, in the Direct Taxes group: Income TDS Settings, TDS Sections & Rules and Lower Deduction Certificates. Bills, invoices, vendors and clients show TDS options only after you turn TDS on here.

Turn on TDS and add your deductor details

1. Go to Settings → Taxes. It opens on Income TDS Settings.
2. Switch the toggle at the top right so it shows Enabled.
3. Under Tax Registration, enter your TAN (for example DELA12345E) and PAN (for example ABCDE1234F).
4. Under Entity Details, enter the Legal Name and Deductor Name.
5. Under Responsible Person, enter their Full Name, Designation, Email and Phone Number.
6. Click Save.

Once TDS is enabled, TDS fields appear on vendors and clients, and on purchase invoices, sales invoices, purchase orders and sales orders.

Review TDS sections

TDS Sections & Rules lists the TDS sections SmartLedger sets up for you, such as 194C and 194J. Each row shows the Section Code, Name, Statement Form (26Q, 27Q or 24Q), Status (Active or Inactive) and Type (System or Custom).

• Search by section name, or use the column filters on Status and Statement Form.
• Click a row to see the section's details.
• Click the pencil icon to open Edit TDS Section and change its code, name, statement form, effective date or description. Click Save TDS Section.

Change a section's rates

Each section has one or more rate rules. To see or change them:

1. Click Rules on the section's row.

   The drawer lists each rule with its Rate, PAN Missing rate, Threshold, Basis, Stage, Document Type and From date.

2. Click the pencil icon on a rule to change it, or Add Rule to add one.

3. Fill in the rule and click Save (or Add Rule for a new one).

These fields decide how TDS is worked out:

• Default Rate (%) — the rate used when the vendor or client has a PAN.
• PAN Missing Rate (%) — the rate used when the party has no PAN. Leave it empty to use 20%.
• Threshold Amount (₹) — no TDS is deducted until this amount is reached.
• Threshold Basis — Annual Aggregate adds up the party's amounts under this section for the financial year; Single Transaction looks at one document at a time.
• Deduction Stage — Credit or Payment, On Payment, On Credit or Earlier of Both.
• Document Type — Purchase Invoice or Expense.
• Effective From — the date the rule starts to apply.

To remove a rule, click its delete icon and confirm.

Tips

• If a vendor or client holds a certificate for a lower or nil rate, add it under Lower Deduction Certificates. See Adding a lower deduction certificate.
• A certificate's rate is used only when it is lower than the section's normal rate.

Related articles

• Deducting TDS on a purchase invoice
• Adding a lower deduction certificate
• Editing a vendor