TDS Calculation Based on Tax Rule
TDS is calculated based on the tax rule applicable to the bill. The following combinations are available to set up tax rules:
- Tax rule without threshold basis – When no threshold basis is set for a rule, TDS is calculated based on the section code, vendor type, effective period, and tax rate.
- Tax rule with year threshold basis – When year threshold is set for a rule, TDS is calculated based on the section code, vendor type, effective period, tax rate, and threshold basis.
- When the accumulated bill amount is equal to or greater than the year threshold of a rule, TDS is calculated on a bill.
- If TDS calculation is retrospective, TDS is calculated on the entire accumulated bill amount when it exceeds the year threshold amount.
- If TDS calculation is nonretrospective, TDS is calculated on the difference amount of the accumulated bill amount and year threshold amount.
- Tax rule with document threshold basis – When document threshold is set for a rule, TDS is calculated based on the section code, vendor type, effective period, tax rate, and threshold basis.
- When a bill amount is equal to or greater than the document threshold of a rule, TDS is calculated on the bill, and on the subsequent bills. After reaching the document threshold, the SuiteApp does not consider the threshold to calculate TDS on the subsequent bills associated with the rule.
- By default, the tax calculation is set to retrospective when the threshold basis is Document.
- Tax rule with both document and year threshold bases – When both year and document thresholds are set for a rule, TDS is calculated based on the section code, vendor type, effective period, tax rate, and threshold basis.
- If a vendor bill uses a rule for which both document and year thresholds are set, TDS is calculated based on the threshold, which is triggered. TDS calculation depends on the following scenarios:
- If a bill amount reaches the document threshold first, TDS is calculated on the bill based on the document threshold. The SuiteApp calculates TDS on the subsequent bills based on document threshold until the year threshold is reached. After a bill reaches the year threshold, TDS is calculated on the bill and, the subsequent bills based on year threshold.
- For a particular bill, if both document and year thresholds are reached, TDS is calculated based on the year threshold.