[Solved] TDS Deduction Entry Example with Explanation

 Welcome back to our blog today we are going to solve an example of a TDS deduction entry and answer the question of "TDS deduction entry can be made through".

If you don't know about TDS and how to make a TDS entry in tally, check out our previous post. 

TDS deduction entry can be made through

Now let me answer the question of TDS deduction entry being made through:

 TDS (Tax Deducted at Source) deduction entries can be made through accounting software or manually in accounting journals. In accounting software, you typically navigate to a section related to expenses, payments, or a dedicated TDS module. 

TDS Deduction Entry Example 

TDS deduction entry

• Press Alt+G or navigate to Go To > Accounting Vouchers > F7: Journal.

• Click F7 or press Alt+C to create a new journal entry.

Debit Account:

• Select "Contractor A/c" from the list of accounts.

Credit Account:

• Press F4 to select multiple accounts.

• Choose "TDS Payable A/c" and "Bank A/c" simultaneously.

• Enter "1,000" in the credit field for "TDS Payable A/c".

• Enter "10,000" in the credit field for "Bank A/c".

Nature of Payment (Optional):

• If your Tally version allows specifying the nature of payment, select "TDS Payable A/c" and press F12.

• Choose "Nature of Payment" and select "Contractor" from the list.

6. Save and Close:

• Press Ctrl+A to save the journal entry.

• You can then verify the entry in the voucher listing by navigating to Gateway of Tally > Display > Vouchers > F7: Journal.

Now let's move to our example :

TDS deduction entry example

You need to pay a contractor Rs. 10,000 for services rendered. The TDS rate for this type of service is 10%.

Calculation:

TDS amount = Rs. 10,000 x 10% = Rs. 1,000

TDS deduction entry would look like:

Date	Particulars	Debit (Rs.)	Credit (Rs.)
2023-12-13	Contractor A/c	9,000
	TDS Payable A/c (Nature of Payment: Contractor)		1,000
	To Bank A/c (Payment to Contractor)		10,000

• Debit Contractor A/c:- Shows the net amount paid to the contractor after deducting TDS.

• Credit TDS Payable A/c (Nature of Payment: Contractor): It shows the TDS amount (1000) to be deducted.

• Credit Bank A/c (Payment to Contractor):  total amount paid from the bank account, including the TDS deduction. 

Conclusion

Here in this post, we add all related information about the TDS deduction entry like tds deduction entry can be made, how to record this entry in the tally, and more. So if you are making more TDS entries then you can follow this example.