TDS Payable

TDS, Tax Deducted at Source, is income tax the company must withhold when it pays rent, salaries, consultancy, contracts, interest or dividends, and hand to the IRD. The withheld amount is credited here while the full cost is charged to the expense; the supplier or landlord is paid only the net. A Tax Withholding Category on the supplier, rent 10 percent, VAT-registered consultancy 1.5 percent, contract 1.5 percent above Rs 50,000, makes the Purchase Invoice credit this ledger automatically; payroll entries credit it by Journal Entry. The amount is deposited by the 25th of the next month with the E-TDS return. Paying gross and skipping the deduction makes the company itself liable for the tax.

TDS = Taxable payment x Withholding rate; balance here = TDS withheld - TDS deposited

1. 01Go to Buying > Supplier, open the landlord, and set Tax Withholding Category to Nepal TDS - Rent (Resident).
2. 02Go to Buying > Purchase Invoice > New, choose the landlord, and post Rs 25,000 to Office Rent.
3. 03Submit. The withholding lines below post; Creditors carries only the net Rs 22,500.
4. 04Pay the landlord Rs 22,500 with Create > Payment Entry from the invoice.
5. 05By the 25th of the next month, pay the IRD and post Invoicing > Journal Entry: Dr TDS Payable, Cr Bank.
6. 06File the E-TDS return and issue the TDS certificate to the landlord.

Post by Purchase Invoice or Payment Entry deduction, for example 10 percent on rent or 1.5 percent on service contracts. Deposit by the 25th.

Dr Office Rent Rs 25,000, Cr TDS Payable Rs 2,500, Cr Bank Account Rs 22,500 for Shrawan rent with 10 percent TDS.