In this article
Overview
Tax Deducted at Source (TDS) is a tax mechanism under the Indian Income Tax Act where the payer deducts tax at the time of making certain payments to vendors or contractors. TDS is distinct from TCS (Tax Collected at Source), which is collected from customers on sales.
The LS Central India localization declares a dependency on the India TDS module (app ID eae5779e-7797-4c4c-977e-7516652b7a65, version 28.0.0.0) from Business Central. This module provides the core TDS framework and configuration pages.
When TDS applies at the POS
TDS at the POS applies in scenarios where the store acts as a payer for services rendered by vendors or contractors, such as:
- Contractor payments processed through the POS (for example, on-site service providers).
- Vendor payments that fall under TDS-applicable categories as defined in the Income Tax Act (for example, Section 194C for contractors, Section 194J for professional services).
TDS does not apply to standard retail sales to end customers. Standard customer-facing tax on sales is handled by GST and, where applicable, TCS.
Configuration
TDS configuration is managed entirely within the India TDS module in Business Central. The primary configuration steps are:
- Configure TDS Nature of Deduction codes for the applicable payment categories.
- Set up TDS Rates for each nature of deduction and assessee type.
- Assign the TAN No. (Tax Deduction Account Number) to the company.
- Configure vendors with the applicable TDS Nature of Deduction and concessional codes where relevant.
For detailed TDS setup instructions, refer to the Business Central India TDS documentation on Microsoft Learn.