1. Country-Specific Features
  2. India Help Topics
  3. India Localization SuiteTax Engine
  4. Tax Deduction at Source
  5. Setting Up TDS
  6. Creating Rules for TDS Tax Types
  7. Creating Vendor Exemption Rules

Creating Vendor Exemption Rules

A vendor exemption rule refers to a set of guidelines or conditions that allow certain vendors to be exempt from standard requirements, fees, or regulations within a business, contract, or tax system.

The India Localization SuiteApp lets you create a vendor exemption rule to calculate tax exemption for a vendor. To create the rule, the SuiteApp uses a vendor's Certificate Number and the default vendor exemption tax types and tax codes included with the SuiteApp.

Guidelines for Creating Vendor Exemption Rules

You can create two types of vendor exemption rules — Amount-based and Period Ranges. Each rule applies to a specific vendor, section code, schedule type, and effective period.

Before you create a vendor exemption rule, consider the following.

  • There must be a matching TDS rule with the same section code.

  • Only one vendor exemption rule per fiscal year is allowed for each vendor and section code combination.

  • Rules can be set for a full year or a shorter period.

  • Vendor exemptions for different periods or vendors can share the same TDS rule if the section code is the same.

  • Each vendor exemption rule is only valid for one fiscal year and can't be used across multiple years.

  • Period Ranges rules must be valid for one year or less.

  • You can't create a vendor exemption rule if its duration overlaps multiple TDS rules.

  • You can't create a vendor exemption rule if there are existing bills related to that rule in a closed accounting period.

  • Rules can't span across two different fiscal years.

For more information, see Vendor Exemption Rule Settings and Options.

To create a Vendor Exemption tax rate rule:

  1. Go to Setup > India Localization > TDS Tax Rate Rules.

  2. Click the Vendor Exemption subtab.

  3. Click New Vendor Exemption.

  4. In the Vendor Name field, select the vendor for this rule.

  5. In the Section Code field, select the section code for this rule.

  6. In the Particulars field, select the reason for tax exemption for this vendor.

  7. In the Certificate Number field, enter the TDS certificate number for the vendor.

  8. In the Schedule Type field, select a schedule type for this rule.

    1. If you selected Amount Range, fill out the following fields:

      1. In the Effective From field, enter the start date for the tax rule.

      2. In the Valid Until field, enter the end date for the tax rule.

      3. On the Amount Rate Schedule sublist, in the From Amount and To Amount fields, enter the amount range for this rule.

      4. In the Rate field, enter the tax rate for this rule.

    2. If you selected Period Ranges, in the Period Rate Schedule sublist, fill out the following fields:

      1. In the Effective From field, enter the start date for the rule.

      2. In the Valid Until field, enter the end date for the rule.

      3. In the Rate field, enter the tax rate for this rule.

  9. Click Save.

When you save a rule, a confirmation message appears if there are existing bills with TDS calculated under that rule. The message will ask you to confirm updating those bills to reflect the correct TDS. If the update succeeds, you'll get an email. If it fails, you'll receive an email with error details. Resolve the error, then go to Setup > India Localization > TDS Verify to try updating the bills again.

Warning:

During the update, do not create, edit, or delete any bills related to the selected combination of subsidiary, vendor, section code, and period. Wait until the current update is finished before starting another.

After you create TDS tax rate rules, assign TDS section codes to items and accounts. For more information, see Assigning TDS Section Codes to Items and Accounts.

Related Topics

General Notices