Tax Withholding Category

A Tax Withholding Category holds one TDS rate, the account it posts to and an optional threshold. TDS (tax deducted at source) is income tax you withhold from a supplier's payment and deposit with the IRD on the supplier's behalf. The demo list: Rent (Resident) 10%, Contract Payment 1.5% only above Rs 50,000 per invoice, Consultancy 1.5% VAT registered or 15% unregistered, Freight 1.5% or 2.5%, Dividend 5%, Interest to Natural Person 6%, Ride Sharing 1%, Insurance Agent 20%, Windfall Gain 25%. On a Purchase Invoice the category adds a deduction row that reduces what you owe the supplier and credits TDS Payable - YFF. The withheld amount goes to the IRD with the monthly TDS return.

TDS = Taxable amount x rate / 100, only if the invoice exceeds the threshold; Rs 80,000 contract x 1.5% = Rs 1,200

1. 01Go to Taxes > Tax Withholding Category and open Nepal TDS - Contract Payment.
2. 02Check the rate 1.5%, the single invoice threshold Rs 50,000 and account TDS Payable - YFF.
3. 03Go to Buying > Supplier, open the contractor and set Tax Withholding Category.
4. 04Go to Buying > Purchase Invoice > New for that supplier and enter the Rs 80,000 bill.
5. 05Tick Apply Tax Withholding Amount; a TDS row of Rs 1,200 appears as a deduction.
6. 06Submit. The entry below posts and the supplier is owed Rs 78,800.
7. 07Pay TDS Payable to the IRD by Journal Entry or Payment Entry and file the monthly return.

Set it on the Supplier or the Purchase Invoice; pay the withheld amount to IRD and file the monthly TDS return.

Contract Payment 1.5% above Rs 50,000, Rent (Resident) 10%, Consultancy 1.5% if VAT registered or 15% if not: Rs 1,00,000 rent withholds Rs 10,000.