TDS

Tax Deducted at Source is income tax that the payer withholds from certain payments and deposits with the IRD in the payee's name, so the IRD collects part of the payee's tax early. Rates depend on the payment: rent 10 percent, contract payments 1.5 percent above Rs 50,000 per invoice, consultancy 1.5 percent for VAT-registered firms or 15 percent otherwise, dividends 5 percent. The payee receives the net and a withholding certificate, and claims the tax against its own return. BRAccount attaches a Tax Withholding Category to the supplier, and the Purchase Invoice computes the deduction and credits TDS Payable. Failing to withhold makes you liable for the tax plus interest, and the expense may be disallowed.

TDS = Payment amount x Category rate; Net paid to supplier = Payment amount - TDS.

1. 01Go to Buying > Supplier, open the landlord and set Tax Withholding Category to Nepal TDS - Rent (Resident).
2. 02Go to Invoicing > Purchase Invoice > New for that supplier and enter rent of Rs 50,000.
3. 03Tick Apply Tax Withholding Amount if it is not already ticked; a TDS row of Rs 5,000 appears.
4. 04Submit. The entry above posts; the supplier is owed Rs 45,000 and the IRD Rs 5,000.
5. 05Pay the landlord Rs 45,000 by Payments > Payment Entry.
6. 06Deposit the Rs 5,000 with the IRD by the 25th of the next Nepali month and give the landlord the certificate.

Assign a Tax Withholding Category to the supplier; the Purchase Invoice then splits the deduction into TDS Payable.

Rent of Rs 50,000 with 10% TDS: pay the landlord Rs 45,000, Rs 5,000 goes to TDS Payable.