TDS payments are a critical part of all vendor invoices as these are mandated by law. The RazorpayX Vendor Payments portal allows you to calculate your tax payments and automate them for error-free and hassle-free tax payments. But we have added a whole new capability to this feature.
As we expand to cater to merchants from accrual-based accounting (where accounting is done first and then payment is made), the TDS liability needs to be created based on the invoice date or paid date whichever is earlier.
The new feature allows you to auto pay TDS on the invoice raised date instead of the payment date.
Let’s understand with an example
A raises an invoice to B for payment of Rs. 1000. 500 was paid on Jan 1 as an advance payment before getting the invoice. The invoice was booked in accounting on Jan 15 and the final leg of payment was done on Feb 15. Let’s say Vendor A falls under the TDS category of Professional Services with a 10% deduction.
TDS Rate Chart for FY 2022-23/AY 2023-24
TDS Paid on payment date:
- Rs. 50 is deducted on Jan 1 and paid to the government on Feb 4. Rs. 50 is again deducted on Feb 15 and paid to the government on Mar 4.
TDS Paid on the invoice date
- Rs. 50 to be deducted on Jan 1 and paid to the government on Feb 4. Rs. 50 is again deducted on Jan 15 and is also paid to the government on Feb 4.
If paid on the payment date it can attract a penalty of 3% on the payment of Rs. 50 which is done on Mar 4. Hence, companies following accrual-based accounting (the majority of businesses) will benefit from the new feature of Auto TDS.
Benefits of Auto TDS feature
With the new Auto TDS feature, you can
- Now deduct TDS on the invoice -raised- date
- Automate TDS payments for your vendor invoices
- Say goodbye to errors in manual tax calculations
- Save time and effort
So, what are you waiting for? Try the new feature today and start saving time.
RazorpayX was born out of the need to deliver the best business banking experience for merchants. It reimagines how businesses manage money flows and simplifies banking for Founders, CXO’s and Chartered Accountants and finance professionals. It
- Provides end-to-end automation with powerful features
like Automated Accounting, OTP management, Maker-Checker Flows
- Corporate Cards with 20X higher limits
- Automated Vendor Payments
- Payroll – India’s ONLY payroll with Full compliance automation, Employee Insurance management and TDS filing)