How to set up Tax Engine for TDS calculation
As part of the TDS functionality you will be able to
- Capture TAN,PAN maintenance on the subsidiary and vendor records
- Support TDS and tax on tax calculation and adjustment on the bill generation
- support vendor exemption for TDS
- support tax return reports and tax details saved search
The whole configuration and set up for TDS would involve these four different steps
The main and important step is setting up the TAN,PAN and tax types. Once this is setup we can move to setting up tax rate rules and vendor exemption. Once its done, we will assign section codes to items/accounts
once the items and accounts are tagged , we can move to the creation of vendor bills where the tax calculation is automatically done based on the rules and section codes that are defined in the previous sections.
This is how the TDS is calculated in this Solution
1.Tan/Pan and tax types calculation
On the subsidiary record: If the subsidiary belongs to India, there are additional fields relevant to India. The primary Information required for the TDS reports and Tax calculation is TAN number, PAN number and the Deductor type. There are also fields for additional info lilev Persons designation, address, PIN no, Mobile no etc
Once the subsidiary Information is captured we then move to the vendor records. As part of the vendor records, under financial subtab, provide additional info like Pan availability, Pan number, reference no:, tax identification number and check box for Non resident Indian.
Once the vendor Record and Subsidiary record is setup we will then move to setting up the Tax accounts against tax types
Once you installed the bundle, all the tax types that are required for the calculation of TDS and GST are already set up and no need to create additional tax types. We can just edit tax types and define the tax liability account against each nexus that you operating and add the TDS tax type applicable to your business.
2. Once the tax types is set up, then we will move on to the setting up of tax rate rules and vendor exemptions
Under the Set up>India Tax> TDS tax rate rules are available.
When you move to that page, you need to define the tax rate rules for the tax types. Four different tax types are there to define tax rate rules. Ref fig below
We can create tax rate rules for each section code in different date range, for different vendor types, for vendors having no pan for the same section code etc.
We can create tax rate rules for education cess and secondary education cess
These two are tax on tax that is charged on the top of TDS.(cess are applicable not on the taxable amount: on the TDS value)
It also support for the creation of tax rate rules for different date range
Once the rule for education and secondary education cess is setup we will now move on to surcharge
There are certain rules in taxation where additional surcharge is need to be applicable. Generally these surcharges are based on the threshold like if transaction amount lies between certain amount, there is a fixed rate. Its like slab rate. It also have duration in which it is applicable.
Once the regular rules are set up we can move to vendor exemptions
Vendor exemptions are basically certificates that issued to certain vendors to deduct tax on a different tax rate: basically on lower tax rate
3.In the previous sections we have assigned different tax rules for different section codes. Now we can see how the section codes actually translates into the items as well as accounts.
In the account records there is a field for defining India Tax Section Code
On the chart of accounts Netsuite have added India Tax Section Code field in which you can select particular section code that is applicable to that particular account. so when you select this particular account the section code will be automatically defaulted as part of the bill line in the transactions. So there is no manual entry needed. Based on the accounts and rules defined in the previous steps, tax rate will be calculated.
Similarly in the item record under the accounting subtab there is a field to capture the india section code. Once the section code is captured, the section code will be defaulted on the transaction line and the tax calculation on relevant tax rate rule and tax calculation happen.
4.The last step in Tds calculation is automatic TDS calculation on vendor bill
All the set up is done,we can move to the vendor bill creation. As part of the vendor bill, you can select the information under the expense/item subtab.You can select items and account applicable for the transactions.
You can find the tax details of that particular transaction under the Tax details subtab
For the ease of use and for the reporting purpose ,The solution provide some saved searches. So that it will easy to generate reports and can customize the existing saved searches to extract the the information needed for further analysis
