TDS Calculation for a Scenario of Per Transaction wise and Cumulative as well in D365 F&O
Deepak Singh
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ReportBusiness Scenario
- AS per Indian Income Tax Act 1961, Section 194C, If payment to contractor exceeds Rs. 30000, then TDS would be deducted. This limit is per invoice basis.
- However, if aggregate of amount paid to contractor exceeds Rs. 100000, then TDS would be deducted on the whole amount that were nontaxed in previous transaction.
| Invoice No | Invoice Amount | TDS@2% |
| Inv-01 | 35,000 | 700 |
| Inv-02 | 22,000 | N.A. |
| Inv-03 | 25,000 | N.A. |
| Inv-04 | 21,000 | 1,360 |
| Total | 1,03,000 |
Here, TDS 1360 is calculated on previously nontaxed transactions i.e (22000+25000+21000) @ 2% = 1360. TDS is calculating because aggregate of all four invoices is exceeding the threshold limit of 100000.
Configuration
1. Click new to create new withholding tax component group
2. Create withholding tax components
3. Create threshold definition
Note: mandatorily Make final level yes to last threshold range like for cumulative 100000 - max and per transaction 30000 - max
4. create withholding tax codes
5. create withholding tax groups
6. Go to withholding tax codes and enable threshold hierarchy
Setup of threshold designer as per scenario:
7 Map TDS group to vendor master and fill PAN number
Result
| Invoice No | Invoice Amount | TDS@2% | Remarks |
| Inv-1 | 35,000 | 700 | Created Invoice journal and posted for Vendor Vendor1, TDS calculated of INR 700 |
| Inv-2 | 22,000 | N.A. | Created Invoice journal and posted for Vendor Vendor1, No TDS calculated |
| Inv-3 | 25,000 | N.A. | Created Invoice journal and posted for Vendor Vendor1, No TDS calculated |
| Inv-4 | 21,000 | 1,360 | Created Invoice journal for Vendor Vendor1 and tax is correctly calculated on (22000+25000+21000) @2% i.e. 1360 |
| Total | 1,03,000 |
Note: previous 3 transaction should be posted only then in 4th transaction TDS calculation will happen on the non taxed invoice
Happy Learning!
Thank You
Comments
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Yes [mention:c2894234d2434fff8667b059c78f140b:e9ed411860ed4f2ba0265705b8793d05], thanks for observing this and letting us know. You are right date range should be for complete financial year but I have taken for 1 month only. Actually I did it just for testing purpose but in real business scenario it would be annual.
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Are you able to show the generation of the cumulative TDS on Inv-4? I am currently configuring this myself, and when it comes to posting the transaction that passes the threshold, TDS is only calculated for that transaction - there is no additional amount posted for the previously recorded transactions.
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