## Documentation Index

Access the complete documentation index at:
https://www.zoho.com/books/help/llms.txt

Use this file to discover all available documentation pages before proceeding.

# TDS

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Tax Deducted at Source (TDS) is applied to a transaction when you deduct tax from the amount payable to a vendor or receivable from a customer and remit it to the government.

## Configure TDS Settings

To configure TDS settings in your Zoho Books organization:

*   Go to **Settings**.
*   Select **TDS** under _Taxes & Compliance_.
*   In the _TDS_ page, enable the option **Do you want to enable TDS?**.
*   Under **Enable TDS For**, select whether you want to enable TDS for _Customers_, _Vendors_, or _Customers and Vendors_.
*   Under **TDS Accounting Method**, select if TDS should be deducted on cash or accrual basis for sales and purchase transactions.
    *   **Both:** TDS is deducted when the transaction is recorded and when the payment is made or received.
    *   **When the transaction is recorded:** TDS is deducted when the invoice or bill is recorded (accrual basis).
    *   **When payment is received/made:** TDS is deducted when the payment is received or made (cash basis).
*   Under **TDS Override in Transactions**:
    *   Check the **Enable TDS override for sales transactions** option to override the total TDS amount in sales transactions.
    *   Check the **Enable TDS override for purchase transactions** option to override the total TDS amount in purchase transactions.
*   Click **Save**.

![Configure TDS Settings](/books/help/images/settings/tds/configure-tds.png)

**Note:** You can’t disable TDS or change the TDS Accounting Method if existing transactions or payments already have TDS applied.

* * *

## TDS Rates

Once TDS is enabled for your organization, you can add, edit, and delete TDS rates, and group them as needed.

### Add a TDS Rate

Once TDS is enabled for your organization, you can add TDS rates. Here’s how:

*   Go to **Settings**.
*   Select **TDS** under _Taxes & Compliance_.
*   In the _TDS_ pane, select **TDS Rates**.
*   Click **\+ New Rate**.
*   In the _New TDS_ page, enter the **TDS Name** and **TDS Rate (%)**.
*   Under the _Tracking Preference_ section, select the **Account to Track TDS in Sales** and **Account to Track TDS in Purchases**.
*   Click **Save**.

![Add a TDS Rate](/books/help/images/settings/tds/add-tds-rate.png)

The new TDS rate will be available and listed under _Active TDS Rates_.

* * *

### Edit a TDS Rate

To edit an existing TDS rate:

*   Go to **Settings**.
*   Select **TDS** under _Taxes & Compliance_.
*   In the _TDS_ pane, select **TDS Rates**.
*   Hover over the TDS rate you want to edit, click the dropdown next to it, and click the **Edit** icon.

![Edit a TDS Rate](/books/help/images/settings/tds/edit-tds.png)

*   In the _Edit Tax_ pop-up, make the necessary changes.
*   Click **Save**.

The TDS rate will be updated.

* * *

### Delete a TDS Rate

To delete a TDS rate:

*   Go to **Settings**.
*   Select **TDS** under _Taxes & Compliance_.
*   In the _TDS_ pane, select **TDS Rates**.
*   Hover over the TDS rate you want to delete, click the dropdown next to it, and click the **Delete** icon.

![Delete a TDS Rate](/books/help/images/settings/tds/delete-tds.png)

*   Click **OK** in the confirmation pop-up.

The TDS rate will be deleted.

* * *

### Mark a TDS Rate As Inactive

To mark a TDS rate as inactive:

*   Go to **Settings**.
*   Select **TDS** under _Taxes & Compliance_.
*   In the _TDS_ pane, select **TDS Rates**.
*   Hover over the TDS rate you want to mark as inactive, click the dropdown next to it, and click **Mark as Inactive**.

![Mark a TDS Rate As Inactive](/books/help/images/settings/tds/mark-as-inactive.png)

The TDS rate will be marked as inactive.

* * *

### View Associated Records of a TDS Rate

To view the records associated with a TDS rate:

*   Go to **Settings**.
*   Select **TDS** under _Taxes & Compliance_.
*   In the _TDS_ pane, select **TDS Rates**.
*   Hover over the TDS rate for which you want to view associated records, click the dropdown next to it, and click the **View Associated Records** icon.

![View Associated Records of a TDS Rate](/books/help/images/settings/tds/ssociated-tds.png)

You can view the records associated with the TDS rate in the _Associated Records_ pane that opens on the right.

* * *

### Create a TDS Group Tax

You can group multiple TDS rates and apply them as a single TDS in your transactions. Here’s how to create a TDS group tax:

*   Go to **Settings**.
*   Select **TDS** under _Taxes & Compliance_.
*   In the _TDS_ pane, select **TDS Rates**.
*   Click **TDS Group Tax** in the top right corner of the page.
*   Enter the **Tax Group Name** and select the TDS rates to include in this group.
*   Click **Save**.

![Create a TDS Group Tax](/books/help/images/settings/tds/tds-group-tax.png)

**Note:** To edit or delete a TDS group tax, go to _Settings > Taxes & Compliance > TDS > TDS Rates_, hover over the tax group you want to edit or delete, and select **Edit** or **Delete**.

**Note:** If you maintain your TDS rates or TDS group taxes outside Zoho Books, you can [import](https://www.zoho.com/books/help/import-export/import.html) them in bulk instead of creating each one manually. You can also [export](https://www.zoho.com/books/help/import-export/export.html) your existing tax rates or tax groups. To do this, go to _Settings > Taxes & Compliance > TDS > TDS Rates_, click the **More** icon, and select the required option.

* * *

## Enable TDS for Customers/Vendors

To enable TDS for a customer or vendor:

*   Go to **Sales**/**Purchases** on the left sidebar and select **Customers**/**Vendors**.
*   Create or edit a customer/vendor.
*   In the _New Customer_/_Vendor_ page, navigate to the _Other Details_ section and check **Enable TDS for this customer** or **Enable TDS for this vendor**.
*   Enter the other necessary details.
*   Click **Save**.

![Enable TDS for Customers/Vendors](/books/help/images/settings/tds/tds-customer.png)

TDS will be enabled for the customer or vendor.

* * *

## Apply TDS to a Transaction

To apply TDS to a transaction:

*   Go to **Sales** or **Purchases** on the left sidebar and select a module (for example, _Invoices_).
*   Create or edit an invoice.
*   Enter all the necessary details.
*   In the _Item Table_, select the items and select the checkboxes in the **Apply TDS** column for the respective line items.

**Note:** You can apply TDS to a transaction only if TDS is enabled for the customer or vendor.

*   In the _Total_ section, select the **TDS**.

![Apply TDS to a Transaction](/books/help/images/settings/tds/tds-transaction.png)

Once you add a TDS rate to your transaction, you can also update the TDS amount deducted from the taxable amount of your transaction. To do this:

*   Click the **Edit** icon next to the **Total TDS Amount** field.
*   In the _Update TDS Amount_ pop-up that appears, enter the amount you want to override.
*   Click **Update**. The TDS amount to be deducted from the transaction will be updated accordingly.
*   Click **Save**.

* * *

## Record TDS When Recording Payments

If your **TDS Accounting Method** is set to _When payment is received/made_ or _Both_, you can enter the TDS deducted while recording a payment for an invoice or a bill.

### Record TDS from an Invoice Payment

To record the TDS deducted while recording a payment for an invoice:

*   Go to **Sales** on the left sidebar and select **Invoices**.
*   Select the invoice for which you want to record the payment.
*   Click the dropdown next to **Record Payment** and select **Record Payment**.
*   In the page that follows, enter all the necessary details and select **Yes, TDS** next to **Tax deducted?**.
*   Select the **TDS Tax Account** and enter the **Amount Withheld**.
*   Click **Save as Paid**.

![Record TDS from an Invoice Payment](/books/help/images/settings/tds/invoice-payment.png)

The payment will be recorded under _Payments Received_, with the TDS amount withheld from the invoice.

### Record TDS Directly from Payments Received

You can also record TDS while creating a new payment directly from the _Payments Received_ module instead of opening the invoice. Here’s how:

*   Go to **Sales** on the left sidebar and select **Payments Received**.
*   Click **\+ New** in the top right corner.
*   In the _Record Payment_ page, select the **Customer** and fill in the required payment details.
*   Select **Yes, TDS** next to **Tax deducted?**, then select the **TDS Tax Account**.
*   Under the _Unpaid Invoices_ section, enter the withholding tax amount in the **Withholding Tax** field next to the invoice you want to apply it to.
*   Click **Save as Paid**.

![Record TDS Directly from Payments Received](/books/help/images/settings/tds/tds-payment.png)

The payment, along with the TDS withheld, will be recorded under _Payments Received_.

### Record TDS from a Bill Payment

To record the TDS deducted while recording a payment for a bill:

*   Go to **Purchases** on the left sidebar and select **Bills**.
*   Select the bill for which you want to record the payment.
*   Click **Record Payment**.
*   In the page that follows, enter all the necessary details and check the **Deduct TDS** option.
*   Enter the **Amount Withheld** and select the **TDS Account**.
*   Click **Save as Paid**.

![Record TDS from a Bill Payment](/books/help/images/settings/tds/bill-payment.png)

The payment will be recorded under _Payments Made_, with the TDS amount withheld from the bill.

### Record TDS Directly from Payments Made

You can also record TDS while creating a new vendor payment directly from the _Payments Made_ module instead of opening the bill. Here’s how:

*   Go to **Purchases** on the left sidebar and select **Payments Made**.
*   Click **\+ New** in the top right corner.
*   In the _Record Payment_ page, select the **Vendor Name** and fill in the required payment details.
*   Check the **Deduct TDS?** option next to _TDS_.
*   In the table below, enter the TDS amount next to the bill you want to apply it to.
*   Click **Save as Paid**.

![Record TDS Directly from Payments Made](/books/help/images/settings/tds/tds-payments-made.png)

The payment, along with the TDS withheld, will be recorded under _Payments Made_.

**Note:** You can record TDS in a payment only if TDS is enabled for your organization, the selected TDS Accounting Method supports payments, and TDS is enabled for the customer or vendor you’re recording it for.

**Note:** Check the [TDS Payables](/books/help/reports/tax-summary-report.html#tds-payables-summary) and [TDS Receivables](/books/help/reports/tax-summary-report.html#tds-receivables-summary) reports to track the TDS details of your transactions.