Creating Tax Deduction at Source Rules

The Tax Deduction at Source (TDS) tax rate rule is used to calculate basic TDS on transactions. All TDS tax rules use the default TDS tax types and codes included with the India Localization SuiteTax Engine SuiteApp.

Each TDS tax rule is a unique combination of Section Code, Vendor Type, Effective From date, and Valid Until date. If there are transactions for a TDS rule, you can’t edit any fields except the Valid Until field.

To understand how the TDS calculation methods, see TDS Calculation Methods.

Before you create a TDS tax rule, consider the following:

Select a unique date range for each section code’s tax rules.
Create tax rules for every vendor type.
Create tax rules for resident vendors who don’t have a Permanent Account Number (PAN).

To create a TDS tax rule:

Go to Setup > India Localization > TDS Tax Rate Rules.
Click the Tax Deduction at Source subtab.
Click New Tax Deduction at Source.
Enter a unique name for the TDS tax rule.
In the Section Code field, select the section code for this rule.
In the Vendor Type field, select the vendor type for this rule.
In the Effective From field, enter the start date for the tax rule.
In the Valid Until field, enter the end date for the tax rule.
Enter the tax rate for this rule.
In the Threshold Basis column, set the threshold level only if the section code has a threshold basis:
1. Year – TDS is calculated when the total bill amount reaches or exceeds the yearly threshold. Until then, the SuiteApp uses the document threshold amount to calculate TDS.
  1. Threshold Amount – Enter the yearly threshold amount.
  2. Retrospective – If you check the box, the rule uses retrospective tax calculation. If you clear the box, it uses non-retrospective tax calculation. By default, the box is checked. You can’t use non-retrospective calculation if both year and document thresholds apply to the rule.
2. Document – TDS is calculated when a bill amount is equal to or greater than the document threshold. By default, retrospective calculation is set when you use a document threshold basis.
  1. Threshold Amount – Enter the document threshold amount.
Click Save.

To create a TDS tax rule:

Related Topics