TDS and TCS are the Indian withholding taxes — deducted at source when you pay a supplier, collected at source when you sell to a customer. The setup reaches beyond this page into the customer and supplier records, so that every transaction knows which rule to apply from the party involved.
Where to find it
Go to Taxes Module > Settings > TDS/TCS Settings.
Supplier Setup (TDS Integration)
| Element | What it does |
|---|
| TDS Applicable | A dropdown on the supplier form selecting the relevant TDS section, defined in your TDS maintenance settings. |
| Effect on payments | Once a TDS code is assigned, the system deducts the specified percentage from payments to that supplier and records the withheld amount in your TDS Payable account. |
Customer Setup (TCS Integration)
| Element | What it does |
|---|
| TCS Applicable | A TCS section assigned on the customer registration form. |
| Effect on receipts | The system adds the tax to the customer's invoice or receipt — the extra amount you collect from them to remit to the government. |
The Workflow Summary
- Define the rule — create the code, section and rate in the TDS/TCS Maintenance tab.
- Link the entity — assign that rule to the supplier for TDS, or the customer for TCS.
- Transaction — when a voucher or invoice is raised for that party, the rate is pulled automatically from their profile.
TDS or TCS
| TDS | TCS |
|---|
| Applies to | Suppliers. | Customers. |
| Direction | Deducted from what you pay. | Added to what you collect. |
| Effect | You pay the supplier less and remit the difference. | You charge the customer more and remit the excess. |
Important Note
Check the amount at entry even though the calculation is automatic. Different transactions with the same party can fall under different sections, and the profile only knows the one rule you linked to it.
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