Tax deducted at source - implementation?

ERPNext Selling/CRM
1

Im evaluating ERPNext for my company’s clients as well as four our own bookkeeping,
Is there an option to have TDS - tax deducted at source - accounted for?

My country has a system where a tax of 10% of the bill is taken by the customer while presenting the cheque
So if this could be accounted somehow, that would be great

Thanks

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2

In my implementation, the tax called Withholding Tax, is booked as a deduction during payment (Payment Entry) to a ‘Withholding Tax’ Account which is an asset for us since it is claimed later to reduce tax liability.

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3

Hi,
Please could you elaborate in detailed steps, from Purchase invoice entry to payment, looking to implement the same.

Thx in advance

Rgds
Nofal

4

There are a question that need to be answered

  • Are the tax withholding an asset for the company ( it means that, whenever you issue an invoice, it will generate 2 accounts payable, 1 for the Invoice amount, another for the Tax to be deducted on Payment), this occurs whenever the Customer need to remit back to you an comprobatory document that him have retained the Tax.

if yes, ERPNEXT doesn’t support it natively, but you can achieve it into the system.

  • On your chart of accounts you will need 2 accounts for TDS, on on the Asset side and another on Liability side.

On the Asset side, probably it will be called something like

  • TDS Tax X on Invoicing

On the Liability side, it will be called

  • TDS Tax X on Payment

Both accounts need to be of type Temporary

Create a Tax Template with your Normal Taxes, and one line for the TDS Tax X on Invoicing, the tax rate should be negative, for it be registered properly in the Charts of Accounts.

Register, your invoice adding the Tax Template created.

Make a Payment Entry against the Invoice.

On the Section of Deductions and Losses, of the Payment, add the

  • TDS Tax X on Invoicing with the respective positive value
  • TDS Tax X on Payment with the respective negative value

Save and Submit the Payment Entry