Accounting Treatment of TDS in Tally.ERP 9

First of all, I want to tell that in Income tax Law 1961, TDS is the way of collecting tax from assessee. TDS is deducted by the person who pays to other certain amount which is mention in TDS sections. So, learn its accounting procedure or accounting treatment and journal entries in Tally.ERP 9.

There are two way of accounting treatment of TDS in Tally 9 or Tally.ERP 9 . I am writing both the way of accounting treatment and effect of it is same .


Automatic Way

Following are the simple steps for Accounting treatment , Voucher entries and return making of TDS in Tally.ERP 9 .

First Step

First of all go to Tally 9 Gateway Press F11 and go to Statuary & Taxation and Set Enable TDS as YES.



Second Step


i) Then create a Ledger account in the name of TDS Account under the group Duties & Taxes (Under C. liabilities).

ii) Type of Duty or Tax select as TDS

iii) Nature of Payment- for example you can select Payment of rent on buildings

iv) Ignore TDS Exemption limit- YES/ No




Third Step



(i) Then create another ledger account. For example create YZ. Company under the group of S.Creditors (job work).


(ii) Maintain Bill by Bill- YES.


(iii) Is TDS Applicable- write → YES Enter TDS details like Deductee type- whether Individual or Company. Then fill the required items.



Fourth Step


Then create another ledger account of rent account under indirect expenses.


Fifth Step



(i)Enter the transaction in Journal voucher.



Rent A/c. Dr.→ Rs 140000

YZ co. A/c. Cr. → Rs. 118370


TDS A/C Cr. → Rs. 21630




( Tally will select only one transaction TDS amount automatically , if not activate then calculate yourself and write )



Sixth Step


Then Payment entry ( Write same amount of TDS which is calculated by Tally )


TDS A/c Dr. → Rs 21630


To. Bank A/c. Cr. →Rs. 21630


After this you can see the status report in computation of TDS


Gate way of tally >> Display >> Statutory reports >> TDS Report >> Computation





You can also print TDS return directly from TDS reports .




Manual Way



First Step




In Gateway F11 set TDS as No and in XYZ co. TDS applicable- NO.


You enter every transaction in Purchase a/c in Voucher mode not Invoice mode.


Second Step



Calculate the TDS manually suppose it is Rs. 21630 on rent payment of Rs. 140000 (See update amendments of Income Tax Law relating to TDS provisions)


Then after creating normal ledger of party , rent and TDS accounts the following entry will pass


Rent account Dr. → 140000


YZ company Account Cr. → 118370


TDS Account Cr. →21630


( Exempt TDS if payment is not more than 120000 , if more then 10% of payment )


Third Step



At the end of month , Pass the Voucher entry of payment of TDS which is calculated by you in payment voucher .


TDS Account Dr. →21630


Bank Account Cr. →21630