TDS on every vendor payment is checked for the right section and rate

Before each payment run, the AI checks the TDS on every vendor invoice in SAP against what was bought and who the vendor is. Your tax team approves each correction.

Used day to day by
  • Tax team
  • Payables team

How it runs with AI

Before each payment run, the AI reads every invoice in it, works out what was bought, and checks the TDS section and rate against the vendor's PAN, the year's total paid and any lower deduction certificate. Invoices with the wrong TDS are held with the reason and the right section. The tax team approves each change before the run goes out.

How it is done today

Each invoice is posted in SAP with the TDS code saved on the vendor master, often set once when the vendor was created. The tax team checks a sample before each payment run. A wrong code repeats on every invoice from that vendor until an auditor finds it, and the company then owes the shortfall with interest.

Step by step

Where the work happens, what the AI does, and where it hands over to a person.

  1. Step 1, AI

    Reads each invoice in the payment run to see what was bought

    Needs to know: Service categories

    In SAP S/4HANA

  2. Step 2, AI

    Checks the TDS section and rate on every invoice in the run

    Needs to know: TDS rule table, Yearly totals by vendor, Lower deduction certificates

    In SAP S/4HANA

    Exception to step 2

    Marks unclear cases, such as IT support, for the tax team to decide

  3. Step 3, AI

    Holds the invoice and proposes the right section and rate

    Needs to know: Past tax team decisions

    In SAP S/4HANA

  4. Step 4, Person

    Approves each change before the run goes out

    In SAP S/4HANA

What stays with a person

  • Approves each change before the run goes out

How the check works

The AI reads what was bought from each invoice and matches it to a TDS category in a rule table your tax team owns. It then checks the vendor’s PAN and type, the total paid to that vendor so far this year against the limits in the table, and any lower deduction certificate. Services that could fit two categories go to the tax team, and their decision is saved against that vendor. Your tax team updates the table before the next payment run whenever a rate or a limit changes.

Apps in this example

  • SAP S/4HANA

The same flow works with the apps you use.

This fits you if

  • You pay more than 1,000 vendor invoices a month across entities or plants
  • The TDS code on each invoice comes from the vendor master in SAP
  • Your tax team checks a sample of invoices before each payment run
  • Auditors have found short deductions in past years

What to watch for

  • Some services sit between two sections, such as IT support that could be technical or professional fees. The AI marks these as unclear, the tax team decides, and the decision is saved against that vendor
  • Changing a tax code and releasing a payment stay with your tax and payables teams. The AI holds the invoice and explains why
  • Lower deduction certificates carry a limit and an end date. The AI tracks the amount used against both and applies the normal rate once either runs out

Read more

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