Maintain withholding tax type, tax code and Recipient type in business partner data and TAN

exemptions details as below.

Under Company code.

Assign Tax Type, Tax code (Both Invoice and Payment) and Rec. Type.

Note: Create business partner master data and save the changes, then go to
change mode and maintaining PAN level TAN based exemption details.
Scenario 1: Vendor with PAN.

Assign PAN as shown below.

Under general data

Maintaining TAN based exemption details as shown below.

 Certificate Number (TDSU/S194Q) should be maintained for 194Q tax
type and tax code (should not maintain any other certificate number).
Exemption rate should be 100%. Maintain Exemption reason as 4Q
which has created based on customizing document. Maintain
Withholding tax type and code which has assigned to supplier master
in above steps.
Only for current FY-
Based on the purchase consideration that has happened from 01.04.2021 till 30.06.2021
Exem Threshold value should be maintained.
For example- if the total purchase value from supplier between 01.04.2021 to 30.06.2021 is
43 Lakhs INR then you will have to maintain exemption amount as 7 Lakhs (5000000 –
4300000) INR in supplier master for that supplier.
So if you post an invoice or advance payment of 3 lakhs on 01.07.2021 for that supplier no
TDS will be computed.
If you post another invoice for 5 lakhs on 02.07.2021 for the same supplier then TDS will be
computed for 1 lakhs as the threshold limit of 50 lakhs will exceed.

Section Exemption Exm. From date To date Reason Tax Tax Threshold Currency
code number % Type code
IN47 TDSU/S194Q 100 01.07.2021 31.03.2022 4Q 4Q 4Q 700000 INR
IN47 TDSU/S194Q 100 01.07.2021 31.03.2022 4Q 5Q 5Q 700000 INR

From next FY onwards threshold should be maintained as 50 Lakhs INR.

Documents should look like below.

Note: While posting the document, it is mandatory to provide section code otherwise
accumulation will not work.

Case 1: Below threshold.

Document with amount 100000.

Below 5000000 threshold Limit. As it is completely inside the threshold TDS amount is 0.

Case 2: Partially exempted and partially outside the exemption.

Document with amount 6000000 so it comes under partially exempted and partially outside the
exemption limit.

6100000(current 6000000 + previous 100000) – 5000000 = 1100000 * 0.1 = 1100.

So TDS amount is 1100

Case 3: Completely Outside threshold limit.

Document posted with 1000000 so TDS is 1000000 * 0.1 = 1000.

Scenario 2: Vendor without PAN.

PAN number can be blanked for 194Q vendor (If PAN number is not available then tax rate would be
5%).
All other steps are same as PAN scenarios.

Note: 1st Create the business partner and save the changes, then go to
change mode and maintain TAN exemptions details as shown above for PAN
scenarios.
Note: Exemption number (TDSU/S194Q) should be maintained in exemption
details, otherwise you cannot save the exemptions details for non-PAN scenarios.