Vendor Exemption Rule Settings and Options

When creating a vendor exemption rule, you must set the following:

• Schedule Types – This option lets you select the type of vendor exemption rule you want to create — Amount-based or Period Ranges.

  • Amount-based rule – This type of vendor exemption rule exempts a vendor from TDS up to a specified amount. For vendor bills up to the threshold, the tax rate in the vendor exemption rule applies. If vendor bills exceed the threshold, the TDS rule decides the tax rate, and tax is deducted based on the rule's setup.

  • Period Ranges – This type of vendor exemption rule exempts a vendor from TDS for a specific period or range of dates. For vendor bills within the date range, the tax rate in the vendor exemption rule applies. If payments exceed that period, the TDS rule decides the tax rate, and tax is deducted as per the rule's setup.

• Effective From and Valid Until Dates – This option lets you select a date range for the rule. When you choose a date range, you also need to select a tax rate for vendor bills generated during that time.

  Additionally, note the following requirements:

  • Don't select multiple date ranges to avoid TDS calculation errors.

  • The date range must be within one fiscal year. To avoid issues, you should create a new vendor exemption rule for the next year instead of changing an existing rule mid-year.

  • You can set up a vendor exemption rule for a full year or for less than a year.

• From Amount and To Amount – This option lets you select a threshold amount for the rule. When you set the threshold, you also need to choose a tax rate for payments within that range.

• Section Code – This option lets you select the section code for the vendor exemption rule. There must be a matching TDS rule with the same section code for the exemption to apply.

General Notices