Tax deducted at source | Withholding tax configuration | Odoo15

June 24, 2022

Withholding tax or TDS is a tax that the government requires the payer of a customer invoice to withhold or deduct from the payment and pay the tax to the government. Withholding tax applies to employment income in most jurisdictions.

Tax Deducted at Source

  • TDS stands for Tax Deducted at Source. It introduced the system to collect taxes at the source, where an individual’s income is generated.
  • To minimize taxation by taxing the income (partially or wholly) at the time of generation rather than later, the government uses TDS to collect tax.
  • The TDS applies to a variety of income sources, including salaries, interest, commissions, consulting, professional services, and job-related income.
  • It normally adds taxes to the subtotal to give you the total to pay. In contrast to normal taxes, withholding taxes/TDs deducted from the amount to be paid. So that the customer will pay the tax.

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Tax master

In Odoo, a withholding/TDS tax is defining as creating a negative tax. For a TDS of 10%, we need to create a new tax in the tax master. (accessible through Configuration ‣ Taxes):

In order to make it appear as a TDS on the vendor bill, set a specific tax group TDS on your tax, in the Advanced Options tab.

So, while creating the vendor bill when selecting this, we will consider it a separate group. When having it as a separate group, then only while making the vendor bill be it will consider as a separate group.

Applying TDS taxes on vendor bills

  • In the tax column of vendor bill lines, it should select this TDS tax that was created.
  • Then automatically Odoo itself separates it as a separate tax group.
  • The payable amount will be the TDS amount deducted from the total amount as shown in the below screenshot.

  • As seen in the above screenshot, while making the registered payment against this bill, only the TDS deducted shall pay the amount.
  • It will pass the TDS amount to a separate account which is given while creating the TDS account. So in this easy manner, Odoo TDS Taxation can be done.

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