TDS on Expenses (Journal Voucher)


Here, expenses are accounted and tax is deducted at source to arrive at the Net Balance payable to the party.

Example: ABC Company received a bill from Phoenix Agencies for Rs. 5,00,000 towards Advertising Services provided.  


To Create the Journal Voucher,

Go to Gateway of Tally > Accounting Vouchers > F7: Journal

  1. Press F2 and change the date to 05-04-2009

  2. In Debit field select Advertisement Expenses from the List of Ledger Accounts

  3. Enter 5,00,000 in the Amount field.

  4. In the Credit field select Phoenix Agencies and press enter to view TDS Details screen

Fields in TDS Details screen:

Select New Ref from the Method of Adjustment. New Ref is selected for new financial  transactions.

 Tally.ERP 9 displays the reference number, which is a combination of abbreviation of Journal and Voucher Number and number of references used in TDS Details (example: Jrnl / 1-1) which can be changed by the user example. TDS payments are tracked with these Reference Numbers

                Select Payments to Contractors (advertisement Contractors) from the List of Nature of   

Note: The List of Nature of Pymt(s) displays only that Nature of Payment which is specific to the Expenses Ledgers, selected in the transaction.

            Select TDS – Contractors from the list of TDS Duty Ledgers.

Note: List of TDS Duty Ledgers displays, ledgers created with specific nature of payment as well as the ledger created with the option Any.

            Tally.ERP 9 defaults the amount specified against the expenses ledger and skips the field.

User can set this field to Yes or No depending on the tax deduction.

            This field displays the Tax amount deducted at source

            This field displays the amount (after TDS) payable to the Party.


Note:For the Financial Year 2009-10 surcharge or Cess is not applicable for TDS with effective from 1st April, 2009. For tax deduction only the specified TDS rates are considered. For More information in Surcharge and Cess refer the topic - Changes in Finance Act 2009.

  1. Press Enter to accept the TDS Details.

  2. Payable Amount as calculated in the TDS Details screen will be defaulted in the Party’s Amount (Credit) field.

  3. In Bill-wise Details screen

  4. Select New Ref as the Type of Ref

  5. In the Name field enter the Bill name as Bill -001

  6. Skip the Due Date or Credit Days field

  7. Accept the default amount allocation and Dr/Cr. By default Tally.ERP 9 displays the Bill amount in the amount field as the credit balance.

  8. Press Enter, select New Ref as Type of Ref and Enter Bill name as Bill -001

  9. Skip the Due Date or Credit Days field and accept the default amount allocation and Dr/Cr. By default Tally.ERP 9 displays the Tax amount in the amount field as the debit balance.


Note: In the above method of bill allocation, Tax amount is deducted from the Bill amount to arrive at the Pending amount to be paid to the party. This method of bill allocation updates the bill amount along with pending amount to be paid to the party, in the Outstanidings statement, which helps the user to identify the Bill amount in the outstandings statement, when the request comes from the supplier for payment.

  1. In the Credit field select TDS – Contractor from the List of Ledger Accounts.

  2. In the Amount field, Rs. 5000 [Bill amount (500000) – Pending Amount (49500)] is displayed automatically.

  3. Enter Narration, if required.


  1. Press Enter to accept and save.

Note: Journal Voucher is generally used to record transactions on due basis i.e., firstly a due entry in favour of the party is created when the bill is received and then at the time of settlement of the referred bill, a payment entry is passed.