TDS on Work Contracts

Works Contracts, on Which VAT, Service Tax and TDS are applicable can be recorded in Tally.ERP 9. Works Contract transactions can be recorded in Purchase Voucher (Account Invoice Mode)

Example: On 10-10-2009 ABC Company received Bill -0052 from  Shreya Builders & Developers for Rs. 58,384.80 for the given Work Contract.

In the above transaction - Purchase Cost of the Work Contract is Rs.54000, VAT is @ 4%, Service Tax @ 4.12%. On the Total Amount - TDS @ 1% to be Deducted.

Follow the given steps to record the transaction

Step 1: Create Masters

  1. Party Ledger (supplier)

  2. Purchase Ledger

  3. VAT Ledger

  4. Service Tax Ledger

  5. TDS Ledger

Step 2: Record a Purchase Voucher (Book the Work Contract Purchases)

Step 1: Create Masters

1. Party Ledger

2. Purchase Ledger

3. VAT Ledger

4. Service Tax Ledger

5. TDS Ledger

Step 2: Record a Purchase Voucher (Book the Work Contract Purchases)

To create Purchase Voucher

Go to Gateway of Tally > Accounting Vouchers > F9: Purchase

Set Up:

In F12: Configuration

  1. Press Alt + I for Account Invoice mode

  2. Press F2 and change the date to 10-10-2009

  3. In Party’s A/c Name field select Shreya Builders & Developers from the List of Ledger Accounts

  4. Under Particulars select Works Contract Purchase

  5. Enter Rs. 54,000 in the Amount field

  6. In the TDS Nature of Payment Details screen, accept the default details.

  7. Under Particulars select Input VAT @ 4%. VAT amount will be calculated and displayed automatically.

  8. In the TDS Nature of Payment Details screen, accept the default details.

  9. Under Particulars select Input Service Tax- Works Contract  @ 4% and press enter to view Service Tax Bill Details screen.

  10. In Service Tax Bill Details screen - in Service Tax field enter the applicable rate of Service Tax (instead of Default rate of service tax).  

In the present Example we have taken 4.12% as the Rate of Service Tax. Service Tax Bill Details is displayed as shown

  1. Accept the Service Tax Bill Details screen

  2. In the TDS Nature of Payment Details screen, accept the default details.

  3. Under Particulars select TDS- Works Contracts and press enter to view TDS Details screen.

  4. In TDS Details screen

  5. select the Type of Ref as New Ref

  6. In Name field select the default Bill Name - Purc-6/1

  7. In Nature of Payment field select Payment to Sub-Contractors

  8. Assessable Value and TDS Amount will be displayed automatically

Note: TDS will be calculated on the total amount of Rs. 58384.80 (Purchase cost of Works Contract + VAT + Service Tax)

  1. Press enter to accept the TDS Details scree

  2. In the Bill-wise Details enter the details as shown

Completed Purchase Voucher screen is displayed as shown

  1. Press enter to save.

Check the Reports for details on Tax Deducted

  1. TDS Computation for TDS Dedcuted.

  2. Input Serice Tax details after making the payment to the Party and then check Input Credit Form.

  3. VAT Computation for VAT details.