Simple Steps in understanding GST & TDS in Compiere ERP

- tpblogadm

GST is the biggest tax-related reform in the country bringing uniformity in the taxation structure and eliminating the cascading of taxes that were levied in the past. The GST Council meets from time to revise the GST rates for various products. Several states and industries recommend a reduction in GST tax rate for various items which are discussed in these meetings

The government has a 4-tier tax structure for all goods and services under the slabs- 5%, 12%, 18%, and 28%.

For Services like Consultancy Charges, audits, HR Advisory, Taxation, the Tax Deducted at Source as per Indian Income Tax Act 1961 will also be applicable

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Tax Deducted at Source (TDS) is a system introduced by Income Tax Department, where the person responsible for making specified payments such as salary, commission, professional fees, interest, rent, etc. is liable to deduct a certain percentage of tax before making payment in full to the receiver of the payment.

Instead of receiving tax on your income from you at a later date, the govt wants the payers to deduct tax beforehand and deposit it with the govt

1. Create TDS & CGST & SGST ( 10% & 18%) - Summary
2. Note in TDS & GST Combination the rate defined @ Summary Level has to be GST Rate only)
3. Tax Category to be selected as GST - TDS – RCM
4. Summary Level check box to be checked
5. Rate to be given as 18 (only the GST Rates to be mentioned)
6. A Valid from Date to be given & saved
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7. TDS @ 10% (For TDS - 10% & CGST/SGST 18%) to be created as normal tax (TDS should be the starting word & no other words like GST/RCM to appear) 8. Tax Category to be selected as GST - TDS – RCM 9. A Valid from Date to be given 10. Parent Tax to be TDS & CGST & SGST ( 10% & 18%) - Summary 11. Rate to be given as 10% 12. The accounting ledgers to be mapped to correct Account element 13. Only the TDS section payable amount to be mapped in Tax Due, Tax liability & Tax credit ledgers 14. Click on the zoom button 15. It will take to the search key window 16. Remove the Organisation mapped in Combination tab 17. In the search key, if the account code is known, then it can be given and entry button pressed to get the account code 18. if account code not known, then in the name tab mention %TDS 19. This will throw all the TDS related taxes and from them the correct tax can be selected 20. Then once again the select has to be clicked in order to map the Organisation correctly by double clicking 21. After mapping the Parent Tax, this has be made inactive

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22. CGST - 9% (for TDS 94 J) - CHE to be created as normal tax 23. CGST should be the starting word & no other words like GST/RCM to appear) 24. Tax Category to be selected as GST - TDS - RCM 25. A Valid from Date to be given 26. Parent Tax to be TDS & CGST & SGST ( 10% & 18%) - Summary 27. Rate to be given as 9 28. The accounting ledgers to be mapped to correct Account element 29. After mapping the Parent Tax, this has be made inactive

Steps_in_understanding_GST_TDS_in_Compiere_ERP_4
30. Only the CGST section payable amount to be mapped in Tax liability & Tax credit ledgers 31. Click on the zoom button 32. It will take to the search key window 33. Remove the Organisation mapped in Combination tab 34. In the search key, if the account code is known, then it can be given and entry button pressed to get the account code 35. if account code not known, then in the name tab mention %CGST 36. This will throw all the CGST related taxes and from them the correct tax can be selected 37. Then once again the select has to be clicked in order to map the Organisation correctly by double clicking

Steps_in_understanding_GST_TDS_in_Compiere_ERP_5
38. SGST - 9% (for TDS 94 J) - CHE to be created as normal tax 39. Tax Category to be selected as GST - TDS - RCM 40. A Valid from Date to be given 41. SGST should be the starting word & no other words like GST/RCM to appear) 42. Parent Tax to be TDS & CGST & SGST ( 10% & 18%) - Summary 43. Rate to be given as 9 44. The accounting ledgers to be mapped to correct Account element 45. After mapping the Parent Tax, this has be made inactive 46. Only the SGST section payable amount to be mapped in Tax liability & Tax credit ledgers 47. Click on the zoom button 48. It will take to the search key window 49. Remove the Organisation mapped in Combination tab 50. In the search key, if the account code is known, then it can be given and entry button pressed to get the account code 51. if account code not known, then in the name tab mention %SGST 52. This will throw all the SGST related taxes and from them the correct tax can be selected 53. Then once again the select has to be clicked in order to map the Organisation correctly by double clicking

Instead of receiving tax on your income from you at a later date, the govt wants the payers to deduct tax beforehand and deposit it with the govt

  1. Step 1: Create TDS & CGST & SGST ( 10% & 18%) - Summary

  2. Step 2: Note in TDS & GST Combination the rate defined @ Summary Level has to be GST Rate only)

  3. Step 3: Tax Category to be selected as GST - TDS – RCM

Accounting entry for Services with GST & TDS

Example 1: Audit Professional providing GST related consultancy service based out of Chennai. This service has a GST Rate of 18% TDS Deduction of 10% under Section 194 J of Income Tax Act, 1961 for INR 100000

Particular Debit Credit
Consultancy Charges Acc 1,00,000  
CGST Acc – 9% 9,000  
SGST Acc – 9% 9,000  
To TDS – 94 J   10,000
To Party   1,08,000
Total 1,18,000 1,18,000

Note: If the vendor is based in Tamil Nadu & Client also in Tamil Nadu, then only CGST & SGST are applicable. If vendor is based out of Tamil Nadu, then IGST is applicable

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