Vendor Master

Behind every purchase is a vendor. The steel distributor who supplies MS sheets, the bearings dealer who ships SKF components, the chemical supplier who delivers cutting fluid, the job worker who handles heat treatment — each one must be recorded in your ERP with the information needed to place orders, verify invoices, deduct TDS, and make payments.

The Vendor Master is the central register of all your suppliers. A well-maintained vendor master is not just an address book — it is the foundation for GST compliance, TDS calculation, payment automation, and vendor performance tracking. Every purchase order, bill, and payment references the vendor record, making it one of the most critical master data entities in the system.

What You Will Learn

• The purpose of the Vendor Master and why it matters
• The difference between individual and business vendor types
• Key fields: GSTIN, PAN, bank details, TDS configuration, and credit terms
• Why maintaining vendor bank details enables bulk payment processing
• Step-by-step: creating a vendor with TDS applicability
• Step-by-step: creating a vendor without TDS

Prerequisites

• Familiarity with the Udyamo ERP Lite interface (covered in Chapter 4)
• Understanding of the purchase cycle (covered in Chapter 25)
• TDS sections must be configured in the system if you plan to enable TDS for vendors (Settings > TDS Sections)

Vendor Types

Udyamo ERP Lite classifies vendors into two types:

Individual — A sole proprietor, freelancer, or independent contractor who supplies goods or services in their personal capacity. Examples: a freelance machinist, an independent transport operator, a consultant providing technical services. An individual vendor's PAN is their personal PAN.

Business — A registered company, partnership firm, LLP, or any entity that operates under a business name. Examples: a steel trading company, an industrial bearings distributor, a chemical manufacturing firm. A business vendor will typically have a GSTIN and a business PAN.

The vendor type affects how TDS is calculated and reported. TDS returns require separate reporting for individual and non-individual deductees, and certain TDS thresholds differ based on the payee type.

Key Vendor Fields

Identification and Contact

Address

Tip: The vendor's state is critical for GST calculation. If the vendor's state matches your organization's state, the bill will attract CGST and SGST. If the states differ, IGST applies. Always record the vendor's state accurately.

Credit and Payment Terms

Credit days drive automatic due date calculation on bills. When you create a bill for a vendor with 30 credit days and a bill date of 15 January, the system sets the due date to 14 February.

TDS Configuration

Common TDS sections for manufacturing businesses:

Required: If you enable TDS for a vendor, you must select a TDS section. The PAN of the vendor must also be on record — TDS at a higher rate (20%) applies when PAN is not available.

Bank Details

These fields are optional but become essential when you use payment batches and bank export (covered in Chapters 29 and 30). The bank export feature generates payment instruction files (NEFT/RTGS/IMPS) for your bank. Without the vendor's bank details in the system, these payments cannot be included in the export file.

Tip: Make it a practice to collect vendor bank details when onboarding a new vendor. Attach a cancelled cheque or bank letter to the vendor record for verification. This avoids delays when you process your first payment batch.

Additional Fields

Step-by-Step: Creating a Vendor with TDS

This example creates a vendor record for a job work contractor who provides machining services. TDS under Section 194C applies.

1. Navigate to Purchases > Vendors and click New Vendor.
2. Enter the vendor name: Precision Machining Works.
3. Set Vendor Type to Business.
4. Enter the GSTIN: 24AABCP1234M1Z5.
5. Enter the PAN: AABCP1234M.
6. Fill in contact details: email, phone, and contact person name.
7. Enter the address, city (Rajkot), state (Gujarat), and pincode.
8. Set Credit Days to 30.
9. In the Payment Terms field, enter: Net 30 days from invoice date.
10. Enable TDS Applicable by checking the box.
11. Select TDS Section: 194C — Payment to Contractors.
12. Enter bank details: bank name, branch, account number, and IFSC code.
13. Click Save.

The vendor is now ready for use. When you create a bill against this vendor, the system will automatically calculate and display the TDS amount based on the Section 194C rate.

Step-by-Step: Creating a Vendor Without TDS

This example creates a vendor record for a steel distributor. No TDS deduction is required on goods purchases below the Section 194Q threshold.

1. Navigate to Purchases > Vendors and click New Vendor.
2. Enter the vendor name: National Steel Distributors.
3. Set Vendor Type to Business.
4. Enter the GSTIN: 27AABCN5678K1Z3.
5. Enter the PAN: AABCN5678K.
6. Fill in contact details.
7. Enter the address, city (Mumbai), state (Maharashtra), and pincode.
8. Set Credit Days to 45.
9. Leave TDS Applicable unchecked.
10. Enter bank details for future payment processing.
11. Click Save.

Tips & Best Practices

Tip: Review your vendor list periodically and mark inactive vendors as Active: No. This keeps your selection lists clean without losing historical purchase and payment data.

Tip: Standardize vendor names. "National Steel Distributors", "National Steel Dist.", and "NSD" are the same vendor but will appear as three separate records if entered inconsistently. Agree on a naming convention before data entry begins.

Warning: Never create duplicate vendor records. If a vendor already exists, update the existing record. Duplicate vendors lead to fragmented purchase history, incorrect aging reports, and TDS calculation errors. Before creating a new vendor, search the existing list.

Tip: If your organization purchases goods worth more than fifty lakh rupees from a single vendor in a financial year, Section 194Q may apply. Review your vendor TDS settings at the start of each financial year.

Quick Reference