## Zoho Inventory Documentation Index

Access the complete documentation index at:
https://www.zoho.com/es-mx/inventory/llms.txt

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

# Tax Deducted at Source

TDS (Tax Deducted at Source) is a mechanism where the tax is withheld at the source. In this mechanism, the payee will deduct tax and then make the rest of the payment to the receiver. You can enable it for customers and vendors in Zoho Inventory. You can also create transactions with TDS for the customers that you’ve enabled TDS for. When TDS is enabled in Zoho Inventory and applied to a transaction, it’ll calculate the tax based on the percentage selected and display the total amount of the transaction accordingly.

### Enable TDS

Before you can create transactions with TDS, you’ll have to first enable TDS and create TDS rates in Zoho Inventory.

To enable TDS:

*   Click the **Gear** icon on the top right corner of your page and select **Taxes**. You will see the Tax Settings page.
*   Check the **Enable TDS** box.
*   Next, select Customers, Vendors, or Customers and Vendors from the **Support TDS For** dropdown. Based on the option you select here, you will be able to [enable TDS in customers, vendors, or both](/es-mx/inventory/help/vat-mx/tds.html#cust-vend) and [apply TDS while creating transactions](/es-mx/inventory/help/vat-mx/tds.html#transactions) for them.

![Enable TDS](/inventory/help/images/es-mx/vat/enable-tds.png)

### Add TDS Rate

Once you’ve enabled TDS in Zoho Inventory, you can add TDS rates. Here’s how:

*   Click the **Gear** icon in the top right corner and select **Taxes**.
*   Go to the **TDS Rates** section.
*   Click the **\+ New TDS Rate** button on the top right corner of the page.
*   Enter the **TDS Name** and **TDS Rate**.
*   Select the **TDS Type** and **TDS Factor** from the respective dropdowns.
*   Select your **Tracking Preferences**, i.e., the accounts under which you wish to track the TDS for sales and purchases.
*   Click **Save**.

![New TDS](/inventory/help/images/es-mx/vat/new-tds.png)

**Pro Tip:** You can also create TDS groups by clicking the **\+ New TDS Group** button on the top right corner of the page and selecting the required TDS rates to group them as one.

### TDS in Customers/Vendors

Once you’ve enabled TDS in settings, you’ll have to enable it for the customers or vendors that you want to create transactions with TDS. Based on the preference you’ve selected while enabling TDS in Tax Settings, the TDS option will be available for customers, vendors, or for both customers and vendors.

To enable it for a customer or a vendor:

*   Go to **Sales** > **Customer** for customers and **Purchases** > **Vendors** for vendors.
*   Create a new contact or edit an existing one.
*   Check the **Enable TDS for this Customer/Vendor** box.
*   Enter or update the other necessary details and click **Save**.

![Customer and Vendors TDS](/inventory/help/images/es-mx/vat/cust-vend.png)

Now when you create transactions for the customer or the vendor for whom TDS is enabled, you’ll be able to associate TDS at the line item level.

### TDS in Transactions

You can associate TDS for each item in a transaction in Zoho Inventory. Here’s how:

*   Go to the module from which you want to create a transaction.
*   Add the items.
*   Select a TDS rate for each item in the TDS column.
*   Click **Save**.

The TDS for all the items will be calculated and displayed in the total section of the transaction.

![TDS in Transactions](/inventory/help/images/es-mx/vat/transaction-tds.png)