WITH HOLDING TAX (TDS)

WITH HOLDING TAX (TDS

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

Classic with holding Tax	Extended withholding tax
Up to 4.6 C SAP CIN from 4.7 EE on words CIN is part of SAP
SAP was released in India 1995 –SA and CIN
February 1996 Finance Budget Govt. made changes to TDS for the changes in Budget.
SAP releases –Patch (program)
February 1997 finance budget changes
February 1998 Finance budget changes
February 1991 Finance budget changes
	Released extended with holding tax
	Original CIN program modified with the budget changes
	Number changes
	A) Education cess
	B) Higher and Secondary Education cess
	C) Return –Contractors –annual Return –form 26C
	D) Changed to annual return Form 26
	E) Changed to quarterly return –Form 26Q
	F) ETDS
	TDS on contractors/Professional charges /Rent/Interest other than salaries

TDS on contractors (Income Tax Section 194C)

1	Status –Company /Partnership firm	Individual
2.	TDS Rates
	Basic        2% Surcharges 10% on 2% ED  3% on (basic +Surcharges )	10% on 2% contract value in the whole year exceed 10 Lakhs other wise NIL 3% on Basic +Surcharge (Note :contract value in the whole year exceeds 1 core other wise NIL)

1. TDS is to be deducted at the time of invoice posting or advance payment posting whichever is earlier
2. If each contract value is less than 20000 and all contract value in the whole year is less than 50000 –No TDS is to be deducted.
3. To create only one code for invoice postings and one code for advance postings (Max codes can be created 99)
4. 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.
5. In the bill amount includes material cost and conversion charges – (composite contacts) To deduct TDS only conversion charges.
6. TDS deducted should be deposited within 7 days from the month end incase of year end credits TDS to deposit within 2 months from the year end.

If 7^th day comes on public holiday –choice to make the payment day before or after.

7. Issue TDS certificate in form 16A to the contractor –It can be a monthly certificate or consolidated certificate for the whole year.
8. File quarterly return in form 26Q earlier annual return Form 26
9. 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.

Maintain calendar

Path :SPRO-SAP Net weaver –General settings –Maintain calendar

Select public holidays radio button

Select change button

Select create button

Select with fixed date radio button

Select create button

Day                                   :1

Month                               :select 05 May day

Short holiday name       :May day

Long holiday name       :May day

Enter

Ignore the message select Yes button

Ignore the message press enter

Select back arrow

Select holiday calendar radio button

Select change button

Select create button

Calendar ID                    :A1      (AML HYD Factory Holiday calendar)

Select assign holiday button

Select May day check box

Select assign public holiday button

Save

Ignore the message press enter

Select back arrow two times

Select factory calendar radio button

Select change button

Select create button

Factory calendar ID                   :A2

Description                                  :AML HYD Factory calendar

Holiday calendar ID                   :A1

Work days select Monday to Saturday check boxes

Save

Ignore the message press enter

Check withholding tax countries

Path :SPRO-Financial Accounting –Financial accounting global settings-With holding tax-Extended withholding tax-basic settings-Check  with holding tax countries

Select new entries button

Country                                        :IN

Withholding tax country           :IN

Description                                  :India

Select save button or Ctrl+S

Save in account payable customization request

Define withholding tax keys

Same path

Give the country key     :In for India

Enter

Select new entries button

Official withholding tax             :194C

Name                               :TDS contractors

Save

Press enter to save in your request

Define Business places (section code )

Path :Up to extend with holding tax the path is same -Basic settings à India à Define business places

Select new entries  

Company code               :AML

Section code                   :AMLF

Name                               :AML HYD factory

Save

Give the name                :AML HYD Factory

Press enter to save in your request

Assign factory calendars to section code (Business places)

Same path

Select new entries button

Company code                           :AML

Section code                               :AMLF

Factory calendar ID                   :A2

Rule                                             :select day before

Save

Press enter to save in your request

Define business place

Path: Form the menu select System –Services –Table maintenance –Extended table maintenance  (Tr cod is SM30)

Table/view                       :J_1BBRANCV

Select maintain button

Give the company code            :AML

Enter

Select new entries button

Business place              :AMLF

Description                      :AML Hyderabad factory

Save

Give the name                :AML Hyd factory

Press enter to save in your request

Assign section code to business place (Tr code is SM30)

Table /View                                 :V_seccode

Select maintain button

Give the company code            :AML

Enter

For section code                        :AMLF

Business place                          :AMF

Save

Press enter to save in your request

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

Give the country key                 :IN

Enter

Select new entries button

With holding tax type                :D1

Description                                  :section sec 194C contractors Invoice posting

Select gross amount radio button

Select with holding tax commercial rounding radio button

Select post with hold tax amount check box

Select no accumulation radio button

Save

Press enter to save in your request

Define withholding tax for payment posing  

Same path

Give the country key                 :IN

Enter

Select new entries button

With holding tax type                :DA

Description                                  :Sec 194 C contractors –Advance posting

Select gross amount radio button

Select withhold tax commercial rounding radio button

Select no accumulation radio button

Select post with holding tax amount check box

Select central invoice propitiate radio button

Select save button or Ctrl+S

Press enter to save in your request

Why to select central invoice proportionate for advance payments

2.266%

1. Advance payment                 F-48                            20.11.2008

      Party special GL (A)             Dr                                            100000

                  To Bank                                                         97734

                  To TDS (To deposit before 07.12.2008)   2266

2. Purchase invoice posting    F-43                            14.12.2008

      Conversion charges            Dr                                            300000

                  To party                                                          293202

                  To TDS (to Deposit before 07.12.2009)    6798

1.    Transfer of advance from special GL to normal by clearing special GL -54 14.12.2008

Party   Dr                                                                    97734

TDS    Dr                                                                    2266 auto debit

            To Party special GL (A)                               100000

TDS payable on 07.12.2008 on 07.12.2008             2266

TDS payable on 07.12.2009                            4532

(6798-2266)

Define withholding tax codes

Path :Up to extend with holding tax the pat is same –Calculation à With hold tax codes à Define with holding tax codes

 Give the country key                :IN

Enter

Select new entries button

With holding tax type                :D1

With hold code                           :D1

Description                                  :section 194C contractors Invoice (2.266%)

Official with holding tax                        :section 194 C

Base amount percentage subject to tax        :100

With holding tax rate                 :2.266%

Posing indicator                         :selection 1 (standard posting :Bank /Vendor /Customer line item reduced

Save

Press enter to save in your request

Select back arrow

Select with holding tax type     :D1

Select copy as button

Change with holding tax type             :D1 to DA

Change with hold tax  code     :from D1 to DA

Description                                  :sec 194 C (contractors –Advance 2.266% )

Enter and Save

Check recipient type

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

Give the country key                 :In for India

Enter

Select new entries button

With holding tax type                :D1

Recipient type                            :CO

Text                                               :company

One more

With holding tax type                :DA

Recipient type                            :CO

Text                                               :Company

Save

Press enter to save in your request

Maintain tax due dates

Path :Up to extend with holding tax the path is same –Basic settings –India à Maintain tax due dates

 Select new entries button

Country                                        :IN

Official with holding tax key     :194C

Recipient type                            :CO

No.of days unit tax due date    :777

Save

Assign withhold tax types to company code

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

Select new entries button

Company code               :AML

Withholding tax type     :D1

Recipient type                :CO

Select with hold tax agent check box

Withholding tax obligated firm            :01.04.2008

Obligated to with hold tax until            :31.03.2009

Save

Press enter to save in your request

Select back arrow

Select company code AML with tax type D1

Select copy as button

Change the With holding tax type to DA

Enter & Save

Activate extended withholding tax :

Same path

Select position button

Give the company code                        :AML

Enter

For company code AML select extended with holding tax check box

Save

Ignore the warning message press enter

Press enter to save in your request

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)

Select new entries button

Company code               :AML

Withholding tax code    :D1

Recipient type                :CO

Surcharge rate               :10

Company code               :AML

Withholding tax code    :DA

Recipient type                :CO

Surcharge                       :10

Save

Press enter to save in your request

Creation of 2 GL masters (FS00)

1. Conversion charges under manufacturing group
2. TDS on contractors under Current Liabilities & Provision group

FS00

Give the GL A/c No.             :400200

Company code                     :AML

Select with template button

Give the GL A/c                    :400100 Salaries A/c

Company code                     :AML

Enter

Change the A/c group to manufacturing expenses

Change short text and GL A/c long text to Conversion changes

Save

One more

Give the GL Account no.    :100510

Company code                     :AML

Select with template button

Give the GL A/c No.100500 out standing exp.

Company code                     :AML

Enter

Change short text and GL account long text to TDS on Contractors

Save

Assignment of accounts for Automatic postings:

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

Give the Chart of Accounts :AML

Enter

Select with holding tax code check box

And with withholding tax type check box

Save

Withholding tax type           :D1

Withholding tax code          :D1

Account                                 :100510

Withholding tax type           :DA

Withholding tax code          :DA

Account                                 :100510

Save

Press enter to save in your request

Maintain company code settings

Path :SPRO-Logistic- General –Tax on goods movement –India –Basic settings –Maintain company code settings

Select new entries button

Give the company code AML and Save

Press enter to save in your request

Specify document type for remittance challans 

Remittance challans  TDS on contractors

1          CO      1000   (Company)

2          OT       2000   (Individual)

3          CO      3000

4          CO      4000

5          TO       5000

When we make TDS payment –we have to prepare two challans

1 for Companies

2 for Individuals

In remittance challan screen

recipient type                                    Company (CO)

1                                  CO      1000

3                                  CO      3000

4                                  CO      4000

TDS on contractors Dr-With Clg    8000 GL

            To Bank                                 8000 GL

            Doc .Type :SA

Path :Up to Extended with holding tax the path is same –Posting –India –Remittance challans –Document types –Specify document type (Accounts payable)

Select new entries button

Company code                                 :AML

Remittance challan document type         :SA

Save

Press enter to save in your request

Maintain number groups:

Same path

Select new entries button

Company code                     :AML

Section code                                     :AMLF

Official withholding tax key            :194C

Number group                      :08

Save

Press enter to save in your request

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

Same path

Select new entries button

Internal number range  group :08

Internal challan                    :08

Save

Maintain number ranges:(Tr code is J1INUMBER)

Same path  

Select maintain groups button

Select group without tax having 08 check box

From the menu select Interval à Maintain

Give the company code      :AML

Enter

Select interval button

Year                                        :2008

From no.                                :1

To number                            :100000

Enter & Save

Ignore the message press enter

Assign remittance challan number group to Business place

Tr code is (SM30)

Give the Table /View           :J_1IEWTNUMGR

Select maintain button

Select new entries button

Company code                     :AML

Business place                    :AMLF

Official with holding                        :194C Tax key

Number group                      :08

Save

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

Table /view    :J_1IEWTNUMGR_1

Select maintain button

Select new entries button

Company code                     :AML

Selection code                     :AMLF

Official withholding                         :194C  Tax key

Number group                      :08

Save

Press enter to save in your request

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

Select new entries button

Company code                     :AML

Section code                                     :AMLF

Official withholding tax key            :194C

Form                                       :J_11EWT_CERT

No group                               :09

Save

Press enter to save in your request

Assign number ranges to number groups

Same path

Select new entries button

Number group                      :09

Internal number range        :09

Save

Press enter to save in your request

Maintain number ranges

Sam path

Select maintain groups button

Select group without text having 09 check box

From the menu select interval maintain

Company code                     :AML

Enter

Select interval button

Year                                        :2008

From number                       :100001

To number                            :200000

Enter  & Save

Ignore the message press enter

Assign withholding tax code in Vendor master

Path :Accounting –Financial accounting –Accounts payable –Master records-Maintain centrally –change (Tr code is XK02)

Give the vendor no.                         :4200001

Company code                                 :AML

Select with hold tax check box

Enter

Give the withhold tax country :IN (India)

With holding tax type                      :D1

Withholding tax code                      :D1

Select liable check box

Recipient type                                  :CO

Withholding tax type                       :DA

Withholding tax code                      :DA

Select liable check box

Recipient type                                  :CO

Select CIN details button

Ignore the warning message press enter

Select withholding tax tab

Give the PAN of vendor                  :AP4C12345C

Select back arrow

Save

END USER AREA

Conversion charges posting (F-43)

Document type                                 :Today’s date 

Type                                                   :KR

Company code                                 :AML

Posting key                                       :31

Account no.                                      :4200001

Enter

Give the amount                              :100000

Business area                                  :AMLH

Business place /section code        :select AMLF

Enter

Text                                         :Conversion charges posting

Posting key                           :40

Account                                 :400200 conversion charges account

Enter

Conversion charges

Option 1	Option 2	Option 3
If the bill value is less than 20000 and whole year contract value is less than 50000	If the value consists of material 30000 and conversion charges 70000	If the bill amount is only for conversion charges
No TDS	A) For D1 with –holding tax base amount enter  70000 TDS will be deducted on 70000	A) Remove DA
Remove D1 and DA	B) Remove DA

Remove with hold tax code           :DA

Enter

Amount                                  :*

Business area                                  :AMLH

Text                                         :+

From the menu select Document à Simulate and Save

Note :  If you get a error message once check it Activate extended withholding tax / Document splitting

Create remittance challan

Path :Accounting –Financial accounting –Accounts payable –With holding tax –India –Extended with holding tax –Remittance of withholding tax-Create remittance challan (Tr code is J1INCHLN)

Company code                                 :AML

Fiscal year                                         :2008

Business plane/ Second code      :AMLF

Posting date                                      :01.01.2009 to 31.01.2009

Section                                              :194 C

Recipient type                                  :CO

Document date                                :07.02.2009

Posting date                                      :07.02.2009

Bank account                                   :200105 SBI CA

Execute (F8)

Enter

Business area                                  :AMLH

Text                                                     :Conversion charges amount

Double click on all open items (by default one rupee can not see in SAP zero)

Select document overview button

Double click on the line item

SBI current A/c with one rupee

Amount                                              :*

Save

Select clearing document button

Select back arrow

Enter Bank challan

Path: Same path  ( Tr code is J1INBANK)

Give the company code                  :AML

Fiscal year                                         :2008

Challan clearing number               :select document no.37

(Once we select challan clearing number, Internal challan number and internal challan date will be update automatically)

Base challan no .                             :789

Bank challan date                           :07.02.2009

Bank key                                           :select SBI

Execute

Print TDS Certificate

Path :Up to extend with holding tax the path is same –Certificates –Print (J1INCERT)

Company code                                 ;AML

Fiscal year                                         :2008

Business area /Section code         :AMLF

Section                                              :194C

Posting dates                                    :01.04.2008 to 31.03.2009

Bank challan dates                                     :01.05.2008 to 30.04.2009

Certificate date                                 :30.04.2009

Signatory                                           :Mr X

Designation                                      :Manager

Place of printing                               :Hyderabad

Execute

Select print button

Output device                                   :LP01

Select print button

To view the print out

From the menu select –System –Services –Output control

Select execute button

Select spool no.check box

Select display contents button

Quarterly return

( Tr code J1INQEFILE)

Path for Entering acknowledgement numbers.

In TDS certificate we have to specify acknowledgment number  for each quarterly return field.

Path :System –Service –Table maintenance –Extended table maintenance  (Tr code is SM30)

Table /View J_1IET_ACKN_N

Select maintain button

Select new entries button

Company code                     :AML

Year                                        :2008

Section code                                     :AMLF

Period                                                :select second quarter

ACK No.                                :123

Save

Note:   Quarterly return not working in pirated software’s patches updated in genuine SAP software

Advance posting:

1. Advance payment posting F-48

15.12.200850000 1133 TDS to deposit before 07.01.2009

2. Conversion charges  posting F-43

02.01.2009    200000           4532

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

02.01.2009    1133   Auto debit will come before 07.02.2009 to deposit         4532-1133=3399