TDS (Tax Deducted at Source) is the income-tax amount that an employer deducts from the employee’s salary every month and deposits with the Income Tax Department on the employee’s behalf. It forms part of the employee’s annual tax liability for the financial year and must be deducted monthly, based on the estimated income and applicable tax slabs.
In Daai Business Suite, you do not calculate the slab-wise tax inside the system. You decide the annual TDS amount for each financial year (computed externally), enter it on the employee record, and the system splits that annual figure across the months of the financial year as salaries are generated.
How Is TDS Usually Calculated by Employers?
TDS calculation is based on the employee’s total projected taxable income for the financial year, minus applicable exemptions and deductions.
Here’s the general idea of the process you (or your tax consultant) follow before entering the figure into Daai Business Suite:
- Step 1: Estimate Gross Salary for the Year
- Includes Basic, HRA, Special Allowance, Variable Pay, Bonus, perquisites, prior-employer salary (if joined mid-year), etc.
- Step 2: Identify Exemptions and Deductions
- Examples:
- HRA (House Rent Allowance) — partially exempted based on rent paid and city.
- Standard Deduction — as notified for the financial year.
- Professional Tax — fully deductible.
- Section 80C / 80D deductions — PF, LIC, PPF, Mediclaim, etc.
- Prior-employer TDS — TDS already deducted by a previous employer in the same financial year (avoids double-deduction).
- Examples:
- Step 3: Apply Tax Slabs
- Based on the Old or New Tax Regime chosen by the employee.
- Calculate total annual tax liability — this is the figure you enter into Daai Business Suite.
⚠️ Note: This is just a generic overview. The actual annual TDS amount must be calculated outside the system using reliable tax calculators or with a tax expert. Daai Business Suite only accepts the final annual TDS amount for entry — it does not evaluate slabs, regimes, exemptions, or 80C / 80D for you.
How to Update TDS in Daai Business Suite
📍 Screen: HRM → Employee → open the employee row → click Edit in the aside header. (You can also reach the same form via User Management → Users → Edit for accounts that already have
Is Employee = Yes.) Scroll to the Tax Deducted at Source (TDS) section.
Enable TDS
- Set Tax Deducted at Source (TDS): Yes / No — toggle the dropdown to Yes to expose the TDS Details table below.
Enter Annual TDS Per Financial Year
Once TDS is set to Yes, the TDS Details table appears. This is now a multi-row table — one row per financial year — so you can keep historical entries on the same employee record instead of overwriting last year’s figure.
| Field | Description |
|---|---|
| Annual TDS Amount | The total TDS to be deducted from this employee for the selected financial year. Numeric, in ₹. |
| TDS Financial Year | The financial year this row applies to (e.g. 2025-2026). Each financial year can appear only once per employee — pick the FY from the dropdown. |
To add another financial year (or to log prior-employer figures separately), click + Add TDS Details, fill the row, and save. To revise an existing row, click the edit icon, change the amount, then click Update at the top right of the aside.
💡 Why multiple TDS rows? An employee record now retains every annual TDS entry across financial years. This means historic deductions remain auditable, and prior-employer TDS for the current FY can sit alongside the current employer’s planned TDS for the same FY without overwriting the previous figure.
Save the Record
- Click Update (top-right of the aside) to save the changes.
- The system validates that mandatory fields are filled — if TDS is enabled but Annual TDS Amount or Financial Year is missing, the form blocks the save.
Once saved, the system uses the active financial year’s annual TDS amount to compute monthly deductions during salary generation.
📌 How the monthly TDS line is decided
For the financial year that matches the salary month, the system:
- Reads the annual TDS amount entered for that FY.
- Looks up TDS already deducted from that employee in earlier salaries of the same financial year.
- Spreads the remaining balance across the months still left in the financial year, so the monthly TDS line in the payslip stays balanced even after a mid-year revision.
You only enter the annual figure — the monthly split happens automatically when salary is generated.
Example
- Initial Entry:
- Financial Year: 2025–2026
- Annual TDS: ₹9,000
- Salaries Generated April – December 2025:
- ₹750 deducted each month × 9 months = ₹6,750 already deducted.
- In January 2026:
- You revise the annual TDS for FY 2025–2026 to ₹15,000 (based on a fresh tax calculation done manually outside the system).
- What the System Does (Auto-Adjusted):
- Remaining TDS = ₹15,000 − ₹6,750 = ₹8,250
- Months left in FY = 3 (Jan, Feb, Mar)
- Monthly Deduction: ₹8,250 ÷ 3 = ₹2,750 per month
From January to March 2026, the salary slip shows ₹2,750 TDS each month so the FY total lands exactly at the new ₹15,000 figure.
🧾 TDS Challan Auto-Update on Salary Generate
Every salary cycle that involves TDS-enabled employees automatically creates or updates a TDS Challan, grouped by financial year and quarter. There is now one unified challan flow for both salary deductions and vendor expense TDS — the same create-challan service, the same UI, the same status field.
📍 Screen: Finance → TDS Challan — every TDS challan, salary or vendor, surfaces in this single grid.
The Unified Source Column
The TDS Challan grids carry a unified Source column so you can tell at a glance where each row came from:
- Salary · <employee name> — for monthly salary TDS deductions.
- Vendor · <expense number> — for vendor / expense TDS (recorded outside the salary flow).
Challan Status Values
| Status | Meaning |
|---|---|
| Unpaid | Default after the challan is created. No payment has been recorded against it yet. |
| Part Pay | Some — but not all — of the challan amount has been paid. |
| Paid | Fully paid and reconciled. |
| Advanced | The challan has already been filed / paid but reconciliation against the source records is still pending. (Useful when a paid challan’s source is later cancelled — the paid amount is reusable.) |
| Cancelled | Reversed — for example, when the source salary is cancelled or the source expense’s Is TDS is unticked. |
✅ Tips
- Daai Business Suite does not calculate tax slabs / exemptions — it only distributes the annual TDS amount you enter across the months of that financial year.
- Each financial year is one row in the TDS Details table — older rows are kept, not overwritten, so audit history stays intact.
- When you need to record TDS already deducted by a prior employer for the current FY, add it as a separate annual figure or factor it into the current FY’s annual amount before entering.
- During salary generation, if TDS is enabled but no annual amount exists for that FY, salary will not generate and the system shows an error listing the affected employees.
- When salary is generated with TDS, the system creates or updates a TDS Challan and links it to the salary record — visible under Finance → TDS Challan with
Salary · <employee name>as the Source.- Vendor expense TDS lands in the same challan grid with
Vendor · <expense number>as the Source — one place to reconcile both flows.- All TDS-related updates are logged in the employee’s changelog for audit.
⚠️ Important
- Daai Business Suite is a compliance support tool, not a filing tool. The actual challan filing must still be done on the government TDS portal.
- TDS Challans cannot be deleted. To reverse a salary-side challan, cancel the underlying salary; for vendor-side, untick Is TDS on the source expense.
- For employee-side TDS setup walkthrough, see: 🔗 Enable TDS for Employees.
- For the challan reconciliation workflow, see: 🔗 TDS Challans.