The client would like to apply TDS on AR transactions.
Proposal summary
This proposal outlines a comprehensive solution for integrating TDS seamlessly into NetSuite environment, ensuring accurate tax deduction, compliance, and efficient financial management. The proposed solution involves leveraging NetSuite’s functionalities along with customization to automate TDS calculation, deduction, and reporting for Account Receivables.
Requirement
Aeries has expressed their desire to implement an automated procedure aimed at generating journals directly from the records of accounts receivable. This signifies their intent to streamline and enhance the efficiency of their financial processes by eliminating manual intervention and allowing for the seamless creation of journal entries based on the information gathered from their accounts receivable data.
Prerequisites
Field Customization
We will create custom fields in the transaction lines of invoice record to trigger the customization process.
- TDS Applicable Type –
This is a custom checkbox created in the transaction item lines used to check whether the TDS to be calculated for the item. - Section Code
This is a custom field created in the transaction item lines used to store the Section code to be applied for the tax rule.
We will be creating custom field in the invoice and bill record to link the Journal Entry.
Deliverables
We will be implementing a customization in the invoice record that will trigger the automatic creation of a journal upon invoice submission. This customization involves performing calculations to determine the tax deduction amount from the source, which will then lead to the generation of a journal entry for the corresponding invoice record. The customization will automatically perform the calculation to establish the precise amount of tax deduction required based on the source. These calculations will be performed seamlessly in the background, ensuring accuracy and consistency in the deduction amount.
Once these calculations are completed, the system will seamlessly create a journal entry that aligns with the specific invoice record. This journal entry will encapsulate all the relevant financial details, reflecting the calculated tax deduction, and serve as an accurate representation of the invoice’s financial impact. By implementing this customization, we aim to enhance the efficiency of our journal creation process while ensuring accuracy in tax deduction calculations.
We will apply a 10% TDS for the gross amount on the invoice and based on this amount the journals will be created. The subsidiary, location, department, and class details within the journal will be filled using the relevant information from the corresponding invoice entry.
Assumptions
- The rate at which the deduction is to be applied is 10% for all invoices.
- The debit account used in the journal is TDS Receivable AY 23-24.
- The journal is created for a single invoice not the line items in the invoice.
- The journal will be crated in the status” Approved for posting”.
- We assume the section code used in the invoice is static “194J Any sum paid by way of Professional Fees/ Technical Fees/ etc.”
- We assume that the number of transaction lines will be relatively small.
- The customization will consider the invoice transactions only.
Risk
- The journal will be generated upon invoice creation. Any modifications made to the details after saving will not be reflected in the journal.
- If the user decides to delete the invoice after its creation, this action will not be reflected in the journal.