In India, some purchases under GST are subject to Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) under the Income Tax Act, not GST law directly.
These taxes are typically applied when making payments to vendors or receiving payments from customers, especially for contracts, professional services, or e-commerce transactions.
TallyPrime allows you to automate and record TDS or TCS on purchases, ensuring accurate accounting and statutory compliance.
1. Real-Life Example: TDS on Purchase of Professional Services in TallyPrime
You purchase consulting services from a vendor worth ₹1,00,000 + 18% GST (₹18,000).
As per Income Tax rules, TDS @10% is applicable on the service value (₹1,00,000), i.e., ₹10,000.
So, you will:
- Deduct TDS ₹10,000 from payment to vendor
- Pay ₹1,08,000 (₹1,00,000 + ₹18,000 GST – ₹10,000 TDS)
2. Step-by-Step: Enable and Configure TDS in TallyPrime
Step 1: Enable TDS
- Go to: F11 > Statutory & Taxation
- Set Enable Tax Deducted at Source (TDS)? to Yes
- Press Enter and accept the screen
Step 2: Create TDS Nature of Payment
- Go to: Gateway of Tally > Accounts Info > Statutory Info > TDS Nature of Payment
- Select: 194J – Fees for Professional or Technical Services
- Set TDS rate: 10%
Step 3: Create Ledgers
1. Consulting Charges (Expense Ledger)
- Under: Indirect Expenses
- GST Applicable: Yes (Set GST Rate 18%)
- TDS Applicable: Yes
- Nature of Payment: 194J
2. Vendor Ledger (ABC Consulting)
- Under: Sundry Creditors
- Maintain balances: Yes
- GST Details: Enter GSTIN
- TDS Deductee Type: Company / Individual / HUF (as per vendor type)
3. TDS Payable Ledger
- Under: Duties & Taxes
- Type of Duty/Tax: TDS
- Nature of Payment: 194J
4. Bank Ledger (e.g., HDFC Bank)
- Under: Bank Accounts
Step 4: Record the Purchase of Service with GST
- Go to: Gateway of Tally > Vouchers > F9 (Purchase)
- Select ABC Consulting
- Ledger: Consulting Charges – ₹1,00,000
- GST auto-calculates – ₹18,000
- Total Invoice Value: ₹1,18,000
Press Ctrl + A to save
Step 5: Record Payment with TDS Deduction
- Go to: F5 (Payment)
- Select Bank (e.g., HDFC Bank)
- Party: ABC Consulting
Enter lines:
- ABC Consulting – Cr ₹1,18,000
- TDS Payable (194J) – Dr ₹10,000
- Bank (HDFC) – Dr ₹1,08,000
Narration: Being payment made after deducting TDS @10% on professional fees.
Press Ctrl + A to save
3. Verify the Entry of TDS on Purchase of Professional Services in TallyPrime
- Go to: Display > Day Book – verify payment
- Check TDS Payable ledger under Duties & Taxes
- TDS report: Gateway of Tally > Display More Reports > Statutory Reports > TDS Reports
4. TCS on Purchase (e-Commerce) under GST in TallyPrime
If you’re a buyer and your supplier collects TCS, e.g., on e-commerce or scrap purchase:
1. Example:
Purchase scrap for ₹1,00,000 + 18% GST = ₹1,18,000
Seller adds TCS @1% on ₹1,00,000 = ₹1,000
Total you pay: ₹1,19,000
5. TCS Entry in Purchase Voucher under GST in TallyPrime
- In the Purchase Voucher:
- Item: Scrap – ₹1,00,000
- GST – ₹18,000
- TCS Ledger – ₹1,000 (Create under Duties & Taxes > TCS)
- Net Amount: ₹1,19,000
This TCS will appear in your TCS Payable ledger and can be used for Form 27EQ filing later.
6. Summary: Account for TDS or TCS on Purchases Under GST in TallyPrime
| Tax Type | When Applied | Ledger Needed |
|---|---|---|
| TDS | On services like rent, professional | TDS Payable (194 series) |
| TCS | On sale of scrap, goods via e-com | TCS Payable (206 series) |
7. Final Words
TallyPrime simplifies TDS and TCS compliance with automated ledger creation, deduction, and reporting.
Whether you’re deducting TDS on services or accounting for TCS collected by vendors, follow this structured approach.
Let me know if you want templates or automation for bulk entries.
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