How to book TDS while making receipt/payment | How to withhold tax while creating receipt/payment? | Tax Withheld

In some cases we need to book TDS at the time of making receipt vouchers, for that you need to follow these steps:

1. While create Receipt from Customer transaction, you need to select the invoice against which you are receiving payment.
2. Next to Tax Deducted Account, you need to select Tax Deducted Receivable. This account is created by default and is under head 'Current Assets'.
3. Enter the tax amount deducted by the customer.

Similar steps need to be followed when you are making payment to a supplier and deducting tax. Only the account name changes to 'Tax Deducted Payable'