Formula designer for TDS calculations

This article provides an example of how Tax Deducted at Source (TDS) is calculated based on the formula defined for each TDS tax code. TDS tax codes are defined in the TDS group that's attached to the transaction. Before designing TDS formulas, complete the basic setup required for TDS as listed in the following steps.

• Set up TDS component groups using the Withholding tax component groups page.
• Set up TDS components and attach TDS component group to the TDS components using the Withholding tax components page.
• Set up TDS tax codes and attach TDS components to the tax codes using the Withholding tax codes page.
• Set up TDS tax groups using the Withholding tax groups page. Then attach the TDS tax codes to the tax group, and define the formula, using the Formula designer page.

Example formula

In this example, the TDS group, Rent, is attached to a purchase invoice that's created for vendor A. The invoice amount is $100,000. Refer to the following table to view the TDS calculation for the invoice.

TDS group	TDS tax codes attached to the TDS group	Value	Taxable basis (Formula designer)	Calculation expression (Formula designer)	Base amount	Calculated TDS amount
Rent	TDS (TDS component-TDS)	10%	Gross amount		100,000	10,000
Surcharge (TDS component-Surcharge)	10%	Excl. gross amount	+TDS	10000	1,000
PE-Cess (TDS component- PE-Cess)	2%	Excl. gross amount	+TDS+Surcharge	11000	220
SHE Cess (TDS component- SHE Cess)	1%	Excl. gross amount	+TDS+Surcharge	11000	110
Total TDS calculated for the invoice	11,330

The voucher entries are created as follows.

Account	Debit	Credit
Rent	100,000
Vendor A		100,000
Vendor A	11,330
TDS payable		10,000
Surcharge payable		1,000
PE-Cess payable		220
SHE Cess payable		110