TAN Based Exemption - Withholding Tax (CIN) for Vendor Invoice Posting - India

[Former Member]

Hi All,

We have a scenario where the withholding tax amount during vendor invoice posting from FB60 or MIRO, should be calculated considering the exemption percentage and exemption thresholds which is specific to vendors.

Example:

--> Standard Tax percentage of Tax Type T1 and Tax Code C1 is 2%

--> Vendor 9000 has an exemption of 50% on tax type T1 and Tax code C1, only upto threshold amount of 1 lakh

--> Now Invoice-1 came with 50k, as it falls under threshold the WT will be calculated at 1%  which is 500 Rs (Considering exemption of 50%)

--> Now Vendor 9000 has only 50k balance in threshold

--> Now Invoice-2 came with 1 lakh, now only 50k falls under threshold and the WT tax should be calculated as below:

     50k @ 1% (Considering exemption) which is 500 Rs

     50k @ 2% (As it falls outside the threshold) which is 1000 Rs

     Total 1500Rs should reflect as with holding tax line item.

We have achieved the above functionality by implementing note 1945137 (), however the problem we are facing now is with the quaterly TDS returns report ( TCODE: FIWTIN_QRETURNS), where we the above entries for vendor lists as below:

Example:

Vendor	Document No	With.hold Tax code	WTTax Amount	Base Amount	Rate (Exemption)	P W/Tax rate
9000	1900000000	C1	500	50000	50	1
9000	1900000001	C1	1500	100000	0	2

From the above we can see that the second line's W/Tax rate is shown as 2%, but our calculated amount 1500 is derived at a rate of 1.5 % (Considering split between below threshold and above threshold of exemption limit vendor has) 

But client want to see the below:

Vendor	Document No	With.hold Tax code	WTTax Amount	Base Amount	Rate (Exemption)	P W/Tax rate
9000	1900000000	C1	500	50000	50	1
9000	1900000001	C1	1500	100000	Not Sure what it should be here(Its okay even if its blank like above scenario)	1.5 (Client want to see this coz they will key in the same to tax report filing)

Kindly guide me to achieve the above functionality.

Observation: The reason for the above behavior of report (FIWTIN_QRETURNS) is the report is getting data from WITH_ITEM table and the table doesn't have the exemption details for the second document (1900000001), for the first document (1900000000) it  has an exemption rate as 50% in WITH_ITEM table because of which the report is showing 1% as P W/Tax rate on the report; where as it is showing 2% for second as it don't have exemption percentage.

Please let me know if there is any way to solve this, I believe WITH_ITEM should be updated with exemption percentage as 25% for second document (1900000001) considering our split with threshold limit exemption. so that the quarterly report will show 1.5% on output.

Thank you!

Siva Chidam

Message was edited by: Siva Chidam

[former_member259759]

Hi

I am facing the same problem.

You found any solution on this.

Regards

Akash

[ravichandran_iyer]

First of all, you should understand that the rate shown here is not a calculated or derived rate but the rate that is defined in the tax code.  SAP will not give out a calculated rate in any case for tax reporting.  The reasons are two fold:

• It is only logical because if you calculate, you lose the trace of the transaction and the Government will not be in a position to assess the right amount since the rates keep fluctuating in every transaction.
• The Government of India will not accept when you report a tax deduction at a rate other than what they have prescribed even if you show it clearly in the calculation.  You declare the applicable rate for the transaction and produce the calculation to support it which will clearly show how much is charged and the exemption availed.

Also, the WITH_ITEM table is the base for all the statutory forms printing including the TDS challans and Returns.  Therefore this table cannot fully satisfy internal reporting needs.  You should only see if the calculations are happening right as per the exemption limits defined.

Ravi.