Meaning of TDS

The process of TDS deduction and its subsequent reporting through TDS returns involves depositing the deducted amount with the government via a TDS Challan. A client experienced frustration with these TDS processes, as he relied on separate software for filing TDS returns even while using TallyPrime for accounting. Upon my suggestion, he discovered that TallyPrime could directly handle TDS filing, eliminating the need for additional software. This revelation not only resolved his frustration but also led him to exclusively use TallyPrime for his TDS returns, thereby streamlining his entire process.

टीडीएस कटौती और उसके बाद टीडीएस रिटर्न के माध्यम से इसकी रिपोर्टिंग की प्रक्रिया में काटी गई राशि को टीडीएस चालान के माध्यम से सरकार के पास जमा करना शामिल है। एक ग्राहक को इन टीडीएस प्रक्रियाओं से परेशानी हो रही थी, क्योंकि लेखांकन के लिए टैलीप्राइम का उपयोग करने के बावजूद, वह टीडीएस रिटर्न दाखिल करने के लिए अलग सॉफ्टवेयर पर निर्भर था। मेरे सुझाव पर, उसे पता चला कि टैलीप्राइम सीधे टीडीएस फाइलिंग का काम संभाल सकता है, जिससे अतिरिक्त सॉफ्टवेयर की आवश्यकता समाप्त हो जाती है। इस जानकारी से न केवल उसकी परेशानी दूर हुई, बल्कि उसने अपने टीडीएस रिटर्न के लिए केवल टैलीप्राइम का ही उपयोग करना शुरू कर दिया, जिससे उसकी पूरी प्रक्रिया सुव्यवस्थित हो गई।

Key benefits of TDS in TallyPrime

1. Accurate TDS calculation

• The system calculates TDS (Tax Deducted at Source) based on threshold limits and applicable rates.
• A higher TDS rate is applied if PAN (Permanent Account Number) is not available.
• The process aids in ensuring compliance with the Income Tax Act, 2025.

2. Complete TDS automation

• Auto calculation of Tax Deducted at Source (TDS) based on predefined rates.
• Relevant sections include 194C, 194J, 194H, and others; starting Tax Year 2026-27, sections 392 for Salary and 393 for non-salary applicable.
• Eliminates the need for manual calculations, thus reducing errors.

3. TDS payable tracking

• Amount deducted
• Amount deposited
• Pending liabilities

4. User-friendly interface

• Simple navigation is designed for ease of use.
• It caters to both beginners and professionals.

5. Time-saving & error reduction

• Minimizes manual work
• Reduces calculation and filing errors
• Improves overall efficiency

How to activate TDS in TallyPrime?

Step 1: Enable TDS in TallyPrime

• Go to Gateway of Tally
• Press F11 (Features)
• Enable TDS (Tax Deducted at Source) = Yes
• Enter TAN, Deductor Details, and PAN

Step 2: Create masters for TDS

Ledger creation

• Party ledger (Deductee) 
  • Enable TDS → Yes 
  • Select Deductee Type (Individual/Company etc.) 
• Expense ledger (e.g., professional fees) 
  • Set “Is TDS Applicable” → Yes 
  • Select Nature of Payment (e.g., 194J) 

Step 3: Pass TDS accounting entry

Example entry:

If you receive a bill of ₹50,000 as professional fees:

• Debit: Professional Fees ₹40,000 
• Credit: Party ₹55,000 
• Credit: TDS Payable ₹6,000 (TDS on Professional Fee)

Tally automatically calculates TDS based on the section selected.

Step 4: TDS payment (Challan Entry)

• Go to Accounting Vouchers
• Select Payment Voucher
• Choose TDS Nature of Payment
• Select Deductee status
• Select Residential status
• Select cash/bank

Step 5: TDS Challan Reconciliation

Go to the TDS Reports → Challan Reconciliation → Reconcile (Alt + R)

Put TDS Return Period, BSR Code, Challan Number & Challan Date   

Step 6: TDS return filing - Form 26Q / 24Q (onwards TY 2026-27 Form 138, 140)

Generate return file

• Go to Display → Statutory Reports → TDS Reports
• Select Return (Form 138/140)
• Click Export → e-Return
• Generate .txt file