SAP Withholding Tax

1) Sections /Rules
Ex: 194C Contractors.
194I Rent Withholding tax keys: Each section in SAP
194J Professional/Technical we call as withholding tax key. In this example
194A Interest income we have 4 withholding tax keys are there.

2) Beneficiary (Receiver)
Ex: Corporate
Individual with PAN Receiver Type: In this example, we have 3
Individual without PAN recipient types are there.

3) TDS deduction
At the time of invoice or WHT Types: In this example, we have to maintain
Payment 2 withholding tax types.

4) TDS Rate or % WHT Codes

5) Responsible place to deduct TDS Section Code;
6) TDS Challanas a) Challana forms b) No. range for chalana forms
7) Quarterly Returns a) Quarterly return forms b) No. range for forms
8) Annual Returns a) Annual return forms b) No. range for forms

Configuration Steps:

1) Define Business place

 2) Define section code
3) Assign factory calendar to business place
4) Assign factory calendar to section code
5) Define withholding tax type invoice posting.
6) Define withholding tax type for payment posting.
7) Define withholding tax code.
8) Define formula for calculating withholding tax
9) Define Recipient type.
10) Maintain tax due date
11) Assign withholding tax type to company code
12) Activate extended withholding tax
13) Define accounts for withholding tax type paid over.
14) Maintain number groups for business place.
15)

Withholding Tax Types:

W/tax base manual: If we activate this, you can maintain base amount manually at the time
transaction.

Manual W/tax amount: System allows to enter manual withholding tax amount during the document
entry for this withholding tax type.

Commercial round off: With holding tax amount is rounded to commercial round. Ex: 5.5 OR 6.4 = 6

Post W/tax amount: if you activate this, withholding tax amount is calculated and posted.

Accumulation type: If you withholding tax amount is active, then works as below:

Accumulated base amount = 1300

Accumulated withholding tax amount = 70

Withholding tax rate = 10%

Document to be posted: Withholding tax base amount = 700

Calculation: Total base = 1300 + 700 = 20000

10% of 2000 = 200
Withholding tax already posted : 90
200 -90 = 110
Withholding tax of 110 is posted in the current document.

Self withholding tax: It is not required in vendor cases. Some times it is required when customer
cases.

Central Invoice proportionate:

Official tax keys:

Each section we create as one with holding tax key.

Receiver type:

This is to identify the receiver. Based on the receiver you going to deduct tax percentage.

Withholding tax types:

TDS incurred in two places.

1) Payment time
2) Invoice time

At the time of payment time, we define one withholding tax type and at the time of invoice time
we define another withholding tax type.

Withholding tax code:

Withholding tax code is having withholding tax percentage. Withholding tax code represents the
combination of withholding tax keys+withholding tax type.