TDS Receivable

TDS Receivable, with account type Tax, holds income tax that customers withheld when they paid the company's invoices and deposited with the IRD under the company's PAN. A corporate or government customer paying for a contract or service deducts at the prescribed rate on the taxable value, typically 1.5 percent for a VAT-registered supplier, and pays the rest. The Payment Entry records the short receipt with a deduction row to this account so the invoice clears in full. The balance is a prepayment of the company's own income tax and is claimed on the annual return, so each row needs the customer's withholding certificate or the portal record. Unclaimed amounts here are money left with the IRD.

TDS Receivable = Taxable value x Customer's withholding rate; Rs 32,000 x 1.5% = Rs 480.

1. 01Go to Payments > Payment Entry > New, type Receive, and allocate the invoice for its full Rs 36,160.
2. 02Set Paid Amount to Rs 35,680, the sum actually received.
3. 03Add a row in the Deductions or Loss table: account TDS Receivable, amount Rs 480.
4. 04Submit. The entry above posts and the invoice shows as paid.
5. 05File the customer's withholding certificate with the Payment Entry and claim the ledger total on the income tax return.

Post by Payment Entry deduction when a customer pays less than the invoice because of TDS. Match the customer's IRD withholding certificate.

Dr Bank Account Rs 35,680, Dr TDS Receivable Rs 480, Cr Debtors Rs 36,160 if Jivan Dahal withheld 1.5 percent TDS on the Rs 32,000 taxable value.