Configuring Withholding Tax (TDS)

Two types of Withholding tax. Classic and Extended. Classic W/T means when the tax is deducted only at the time of payment and extended W/T means when the tax is deducted at the time of booking of invoice or payment which ever is earlier. In Indian context the extended w/t is applicable

Migration from classic W/H tax is possible but not vice versa.

Before configuring the withholding tax part first create GL accounts for the Tax and surcharge payable theron. For example in cse of TDS on Contractors u/s 194 C following accounts will be opened in the GL:

• TDS Payable
• Surcharge on TDS Payable
• Cess Payable

Check Withholding tax Countries

Financial Accounting
Financial Account Gloabal Setting
Witholding Tax
Extended Withholding Tax
Basic Setting
Check W/T Countries

Check the country code specified by the system for a country specific. If not there create new.

Define Official Withholding Tax Code (Key)

Financial Accounting
 Financial Account Gloabal Setting
   Witholding Tax
    Extended Withholding Tax
      Basic Setting
      Define Official Withholding Tax Code

Define Reasons for exemption

Financial Accounting
 Financial Account Gloabal Setting
   Witholding Tax
    Extended Withholding Tax
      Basic Setting
       Define Reasons for exemption

Define Business Places

Financial Accounting
 Financial Account Gloabal Setting
   Witholding Tax
    Extended Withholding Tax
      Basic Setting
       India
       Define Business Places

Assign Factory Calendar to Business Places

Financial Accounting
 Financial Account Gloabal Setting
  Witholding Tax
   Extended Withholding Tax
     Basic Setting
      India
      Assign Factory Calendar to Business Places

Maintain Tax Due Dates

Financial Accounting
 Financial Account Gloabal Setting
  Witholding Tax
   Extended Withholding Tax
     Basic Setting
      India
      Maintain Tax Due Dates

Define Withholding Tax Type for Invoice Posting

Financial Accounting
 Financial Account Gloabal Setting
  Witholding Tax
   Extended Withholding Tax
     Calculation
     Define Withholding Tax Type for Invoice Posting.

Method 1   Method 2

TDS    2    2%
Surcharge   10% of Tax Amount  0.20% of the Gross Bill Amount
Cess    2% of TDS+Surcharge  0.044% of the Gross Bill Amount

Define Withholding Tax Type for Payment Posting

Financial Accounting
 Financial Account Gloabal Setting
  Witholding Tax
   Extended Withholding Tax
     Calculation
     Define Withholding Tax Type for Payment Posting