DIFFERENCE BETWEEN WITHHOLDING TAX AND EXTENDED

WITHHOLDING TAX - 2015

Here I have mentioned some prominent difference between the two:
Withholding Tax:Classic Withholding Tax (All release)
Extended Withholding Tax (from release 4.0B)

Withholding tax is calculated and posted to the appropriate withholding tax accounts at
different stages, depending on the legal requirements in each country. As a rule, withholding
tax is posted at the same time that the payment is posted, in other words the outgoing
payment (Accounts Payable) or incoming payment (Accounts Receivable), is reduced by the
withholding tax amount.
In certain countries, such as Brazil, the Philippines, and Spain, withholding tax can or must
be posted when the invoice is posted. This means that the amount receivable or payable is
reduced by the withholding tax amount.
Extended withholding tax supports both concepts.
The key concept in extended withholding tax is the distinction between withholding tax type
and withholding tax code. While withholding tax types represent basic calculation rules,
specific features of these rules - in particular the percentage rate are represented by the withholding tax code. You can define any number of withholding tax
codes for a given withholding tax type.
If a particular transaction requires more than one kind of withholding tax, this is covered in
the SAP System by defining more than one withholding tax type.
When entering a line item, you can enter withholding tax data for each of these withholding
tax types.

1 COPIED AND COLLATED NOT MY OWN SYED SALEEM

SYED
SALEEM

DIFFERENCE BETWEEN WITHHOLDING TAX AND EXTENDED

WITHHOLDING TAX - 2015

How To Configure Withholding Tax?

Steps for extended withholding tax:
1. Check withholding tax countries
2. Define Ex. Withholding tax types for invoice postings
3. Define Ex. Withholding tax codes
4. Formula for Extended Withholding tax calculation.
5. Assign Extended Withholding tax types to Company code.
6. Activate Extended Withholding tax
8. Create a G/L A/C for Extended Withholding tax
9. Define A/C for Extended Withholding tax (DBWW)
10. Make changes in Vendor master (XK02).
11. Maintain Company Code Settings:
Path: IMG -> Logistic -> General -> Taxes on goods movement -> India -> Maintain
company code settings
12. Activate country version for specific fiscal year position
Path: IMG -> FA -> -> FAGS -> Taxes on sales purchases -> Basic Setting -> India ->
Activate country specific for fiscal year position.

2 COPIED AND COLLATED NOT MY OWN SYED SALEEM

SYED
SALEEM