Creating Ledger Account of Party/Deductee

Go to Ledger Creation(Gateway of Tally -> Accounts Info. -> Ledger -> Create). At ledger creation or alteration screen the party/deductee from whom TDS is to be deducted. The following information is to be provided :
Is TDS applicable : Set 'yes' this option.

Is Lower/No Deduction Applicable : If lower deduction is not applicable then set this option to 'no'.

Ignore surcharge : In certain cases, when the limit for TDS is reached, surcharge on TDS is levied. If this option is set as 'yes', surcharge will be deducted without any consideration to the exemption limit. If this option is set as 'no', surcharge will be calculated, only when the exemption limit is crossed.

Creation of TDS Ledger Accounts

First go to Ledger Creation screen(Gateway of Tally -> Accounts Info. -> Ledger -> Create), and enter the following details:

Name : Enter the name of the ledger account to be created i.e. TDS Account.

Under : Ledger should be created under Duties and Taxes.

Type of Duty/Tax : Select TDS from the list given.

Nature of Payment : Select the nature from the given list.

Ignore TDS exemption limit : For certain payments there is a limit, crossing which, TDS will be deducted. If you set the option as 'yes', TDS will be deducted only when the amount of payment exceeds that limit.

Company TDS Deductor Details

The following information has to be entered:

• Tax Assessment Number : Enter 10 digit TAN number of the company.

• Income Tax Circle/Ward(TDS) : Enter the Income Tax Circle/Ward number under which the Company is assessed.

• Deductor Type : Two options are there Government and other. Select the right option.

• Name of the person responsible : Here name of the company official responsible for deposit of TDS is to be given.

• Designation : Give the designation of the person whose name has been displayed in 'Name of the person responsible'.

Activating TDS in Tally

In order to activate TDS in Tally, press F11 from Gateway of Tally. Then press F3 or select Statutory & Taxation option. At the screen two options available - "Enable Tax Deducted at Source(TDS)" and "Set/Alter TDS Details". Set these options as 'yes'.

Tax Deduction at Source(TDS)

TDS is one of the method of collecting Income-Tax under certain circumstances from the assessee. If any specified type of income arises to any person, the Income-Tax Act requires the payer(deductor) of such income to deduct a stipulated percentage of such income at the time of making payment. Only the balance amount is paid to the receiver. The amount deducted as TDS has to be deposited into the Government Treasury, within a specified time.

The TDS is treated as Income Tax payment by the receiver at the time of assessment. A TDS certificate is to be given to the receiver.

Some of the incomes are - salary, interest, dividend, interest on securities, commission and brokerage ,etc

VAT Form and VAT Return

VAT Form
To view the periodical VAT return go to
Gateway of tally -> Display -> Statutory Report -> VAT reports -> VAT Forms. The form for VAT differs according to the state you have selected in the company creation screen.

VAT Return
An assessee falling under the purview of VAT is supposed to file return through Form No. 100. As Tally is VAT complaint it generates the Return based on the transactions entered into. For VAT return form go to
Gateway of tally -> Display -> Statutory Report -> VAT reports -> VAT Forms.