WITH HOLDING TAX

TDS: Tax deducted at source on Vendors/ Contractors/Local and professional charges

TCS: Tax collected at source –on Customers/ scrap sale /waste sale
TDS is part of CIN (Country India Version)

TDS two types

1)Classic with holding Tax
2)Extended withholding tax
1) Book Invoice / Advance Payment - Deduction of TDS (TCode : FB60 / MIRO)
 Where TDS is deducted at the time of Advance Payment
Vendor A/c Dr
To Outgoing Bank A/c
To TDS Payable A/c (Basic + SC +ECess + HECess)
 Where TDS is deducted at the time of Invoice Booking
Expense A/c Dr
To Vendor A/c
To TDS Payable A/c (Basic + SC +ECess + HECess)
2)Create Bank Challan (IT section wise) for TDS amount remittance (TCode :
J1INCHLN)
TDS Payable (Basic + SC +ECess + HECess) Dr
To Outgoing Bank A/c
3)Update Bank Details with physical challan number from bank (TCode :
J1INBANK)
 Bank Challan will be updated in the SAP with the Bank Receipt Number.
No accounting entry.
4)Generation of TDS certificate based on TAN (TCode : J1INCERT)
TDS certificates are issued to vendors monthly/yearly. No accounting entry.
5)Generation of e-file for quarterly TDS return (TCode : J1INQEFILE)

 Form 16 is the TDS certificate which an individual submits and Form 26Q is the TDS
certificate which a company submits to the tax authorities
 TDS is to be deducted at the time of invoice posting or advance payment posting
whichever is earlier
 To create only one code for invoice postings and one code for advance postings
(Max codes can be created 99)
 If the contractor does not have taxable income he for lower rate of deduction or
NIL rate of deduction . Company has to deduct at lower rate or Nil rate –
Exemption certificate will be given by Income Tax Dept for each year.
 In the bill amount includes material cost and conversion charges – (composite
contacts) To deduct TDS only conversion charges.
 TDS deducted should be deposited within 7 days from the month end incase ofyear
end credits TDS to deposit within 2 months from the year end.
 If 7th day comes on public holiday –choice to make the payment day before or
after.
 Issue TDS certificate in form 16A to the contractor –It can be a monthly certificate
or consolidated certificate for the whole year.
 File quarterly return in form 26Q
 Permanent Account Number (PAN) will be allotted at company code level where
as Tax Deduction at Source (TDS No./TAN can be obtained at company code
level/Business area level/Business places level.

 Section code captures TAN number. Plant is assigned to a business place and

business place is mapped with section code, whenever transaction is posted
software picks the business place from plant involved in the transaction and hence
fetches the TAN number as well.
 TDS Querterly Returns:

1st Q-Apr to June- Due date-15th of July

2nd Q- July to Sept- Due Date- 15 Th of Oct
3rd Q- Oct to Dec- Due Date- 15th of Jan
4th Q- Jan to Mar- Due Date 15 Th June

 Quartly Returns:
24Q for salaries
27Q for other than salaries
 

1)Check withholding tax countries

Path :SPRO-Financial Accounting –Financial accounting global settings-

Withholding tax-Extended withholding tax-basic settings-Check withholding
taxcountries
2)Define withholding tax keys

3 Define Reasons for Exemption

IMG ⇒Financial accounting ⇒Financial Accounting Global Settings ⇒Withholding

Tax ⇒Extended Withholding Tax ⇒Basic Settings ⇒Define Reasons for Exemption
Here we define reasons for exemption from withholding tax. This indicator can be entered in
the vendor master record or in the company code Withholding Tax master record
information.

4)Define Business places (section code )

Define business place

Table/view : J_1BBRANCV

 Create a business place for each tax deduction account number (TAN) that your
company has. In the address data (which is printed on the vendor withholding tax
certificates) maintain the tax office’s address

5)Assign factory calendars to section code (Business places)

Assign section code to business place (Tr code is SM30)
Table /View : V_seccode

Select maintain

6)Define withholding tax type for Invoice posing:

Path: Up to Extended with holding tax the path is same –Calculation –With
holding tax type –Define with holding tax type for invoice posing
6)Define withholding tax for payment posing
Why to select central invoice proportionate for advance payments
2.266%
1. Advance payment F-48 20.11.2021
Party special GL (A) Dr 100000
To Bank 97734
To TDS (To deposit before 07.12.2021) 2266

2. Purchase invoice posting fb60 14.12.2021

Conversion charges Dr 300000

To party 293202
To TDS (to Deposit before 07.1.2022) 6798

3. Transfer of advance from special GL to normal by clearing special GL –f-54

14.12.2021

Party Dr 97734
TDS Dr 2266 auto debit
To Party special GL (A) 100000

TDS payable on 07.12.2021 2266

TDS payable on 07.01.2022 4532
(6798-2266)

7)Define withholding tax codes

Path :Up to extend with holding tax the pat is same –Calculation  With hold
tax codes  Define with holding tax codes
8)Check recipient type

Path :Up to extended with hold tax the path is same –Basic settings –
Checkrecipient types

The type of recipient categorizes the vendor, which is necessary for printing the withholding
tax form.

9)Maintain tax due dates

Path :Up to extend with holding tax the path is same –Basic settings –India 
Maintain tax due dates
777 Means, If you have to remit the tax seven days from the month end, enter 777.Otherwise,
enter the number of days after which you have to remit the tax to the tax office.
777( 3 time return due date upto 31 march)

10)Assign withhold tax types to company code

Path :Up to Extend with holding tax the path is same –company code 
Assign with holding tax types to company code.

11)Activate extended withholding tax :

12)Combined with holding tax code

Path: up to Extend with holding tax the path is same –Calculation –India –
surcharges –Maintain surcharge rates (Surcharges combined with basic
withholding tax codes)

13)Assignment of accounts for Automatic postings:

Path :Up to Extended with holding tax the path is same –Posting –Accounts
forwithholding tax –Define accounts for withholding tax to paid over

FS00- Tds on contractor Gl Create

When we make TDS payment –we have to prepare two challans
1 for Companies
2 for Individuals
14)Path :Up to Extended with holding tax the path is same –Posting –India –
Remittance challans –Document types –Specify document type (Accounts
Payable

 Maintain number groups:

 Assign number ranges to Number groups: ( Tr code is J1INO)

Maintain number ranges:(Tr code is J1INUMBER)

The purpose of this activity is to maintain the number ranges that the system is to use to number the
remittance Challans while posting the TDS Challan.

Select maintain groups button

Select group without tax having 08 check box
From the menu select Interval  Maintain
  Assign remittance challan number group to Business place
Tr code is (SM30)

Give the Table /View : J_1IEWTNUMGR

 Assign remittance challan number group to section code :(SM30)

Table /view : J_1IEWTNUMGR_1

15)Maintain number groups and SAP script forms

Path :Up to Extend with holding tax the path is same –Postings –India –
Withholding tax certificates for Vendors and Customers –Maintain number
groups as SAP script forms

The purpose of this activity is to specify which SAP script forms will be used to use to
print the withholdingtax certificates
Table Name J_1IEWT_CERT_N
16)Assign number ranges to number groups

17)Maintain number ranges(for withholding tax certificate)

Select maintain groups button

Select group without text having 09 check box

18)Assign withholding tax code in Vendor master

Path :Accounting –Financial accounting –Accounts payable –Master records-

Maintain centrally –change (Tr code is XK02)

END USER AREA

Conversion charges posting (Fb60)

19)Create remittance challan

Path :Accounting –Financial accounting –Accounts payable –With holding tax –India
–Extended with holding tax –Remittance of withholding tax-Createremittance challan
(Tr code is J1INCHLN)
Create Bank Challan (IT section wise) for TDS amount remittance (TCode :
J1INCHLN)
TDS Payable (Basic + SC +ECess + HECess) Dr
To Outgoing Bank A/c

document numbers from 1 to 999999999

Section Code: For example: 194I
Receipient Types: Its may be either company (CO) or Individual etc.
Bank Account: Give your Bank GL A/c number AND F8 EXECUTE
AFTER PAYMENT
You will get another document number here. For Example: 100000012 i.e. Remittance challan
number.

20)Enter Bank challan

Path: Same path ( Tr code is J1INBANK)

Update Bank Details with physical challan number from bank (TCode :
J1INBANK)
 Bank Challan will be updated in the SAP with the Bank Receipt Number.
No accounting entry.

Challan Clearing Number: In our example: 100000. Oterwise press F4. You will all types of
challan
Bank Challan: Give your bank challan number. For ex. 1111
Bank Key: House Bank key
Execute the data. Now you will get the message: Bank Challan has been updated for the
Document: 100000.

21)Print TDS Certificate

Generation of TDS certificate based on TAN (TCode : J1INCERT)

TDS certificates are issued to vendors monthly/yearly. No accounting entry.
22)Quarterly return
( Tr code J1INQEFILE)

Path :System –Service –Table maintenance –Extended table maintenance (Tr

code is SM30)
Table /View J_1IEWT_ACKN

Post Implementation Guidelines

1. The business place and section code has to be entered while posting invoice. Without this, the
entire certificate printing program will fail
2. In case of invoice, make sure that the WHT base amount for payment tax code need to be
manually entered as ‘Zero’. If missed out, WHT will get deducted on both invoice and payment