FICO – AP – Withholding Tax -CIN (Part 2)

So after the completion of the configurations, we have to do just 2 more configuration steps. And, one is, we need to activate the country India version settings. Go to Logistics general, tax on goods movements, Go here. India. First is basic settings, go to maintain company code settings.

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First, you go here. Go to new entries, company code, DRLB. 

Don’t do anything, just tell to the system from which month you are going to direct to TDS. So whatever the date that we have given there, here also, we have to tell to the system. This is only it will activate the country India version settings, nothing more than that. Without that, system will not allow you to save. And one more thing, system is asking for PAN. So the PAN means here what I need to do is here, we have already created legal advisor. 

So when we are deducting TDS, it is our responsibility to, we have to deduct and pay to the central government account and we have to issue a certificate to this fellow. In such case, there should be PAN number for this fellow. So without that you cannot even accept that vendor. So that’s why here, see nothing is there now. No pan number, nothing. There is no provision even for me to give the PAN number. To get that pan number field activated, I need to do a little configuration. That is after coming here, basic settings we have done. Then go to Master Data, Assign User to Material Master Screen Sequence for Excise Duty. We need to create 1 test user.

Go to User Screen Reference. 

Here, we do not have any user. Go to new entries. Say, user. Put a star there So that all activities will get applicable here.

Put a star. Save it. This is why I’m taking my name, it’s my username I’m giving here. Right. Come back.

Come to Master Records, Change. 

See? Now CIN Details. Previously, it was not there. Now this got activated.

Here, withholding tax, PAN number.  So we need to activate that field. PAN number, ABCD123456E. Only it should be a 10 digit number. And, in case of excise duty tab, you have to give excise numbers and all those things. Sales and service tax, those numbers I need to give here. Come back. Save it. Come out. Now, again, post the entry. This is this problem is this new feature, extra configuration is there only for EHP5. If it is below versions, EHP4 also, it will not ask you. The PAN number, etc, it is not required. From the EHP5 onwards, they made the PAN number mandatory, because even the PAN number is made mandatory in India for everything. What if you are even depositing more than 49,000 in a bank account of somebody, you need to give the PAN number. Now let us do it once again. 

So Mehta, legal adviser. TDS on legal charges. 400306 in my legal charges account. 

See. Now it is coming. TDS on legal charges.

Go to overview, Simulate. Right. This is the entry.

Now save it. Now system will allow you to save. 

See, document is posted. And one more thing, I told you that there are 2 checkboxes we have checked. Where? Under Extended withholding tax, Calculation, withholding tax type, define withholding tax type for invoice posting. 

Withholding tax base manual, manual withholding tax amount. Why? Because in some of the cases, say for example, because of any reason I could not deduct the TDS from earlier bill. Right. Previously, we have done manually, now we have switched out to SAP. Subsequently, we came to understand that, say for example, there is a 1 lakh bill. 1 lakh bill submitted by the vendor. Now I need to deduct a TDS amount. Say, 25,000, I need to deduct. But if I go like this, system calculates only 10% that is 10,000. Account is 400306. Just like previous entry, if I calculate, system calculates only 10% that is 10,000 rupees. But now I have to deduct, say, 25,000 because in my earlier bills or some other thing, whatever the reason may be, I forgot to deduct or I need to deduct more tax. So in such case, withholding tax base, say 1 lakh.

So manually I can change this. Now, I want to deduct 25,000. If I leave it to system, system calculates 10%. Now here, we told system, I want manual control. That’s why manually, these fields got open, and I can post it. 

Now simulate.

See, 25,000. So this will override the rule whatever we have defined in the configuration. So here, because of that check mark, I can do this.

 

So I’m creating one more vendor, and we’ll try to calculate TDS for this vendor. So that the 30,000 limit, we’ll see how it works. 

I’ll say some test vendor for TDS.

So recon account, 101202 Service vendors. Cash management group A1. We have to give CIN details also.

Some number I’m giving.

Payment terms, tolerance group. 

Withholding tax, so this is very important.

So our withholding tax code is W1, 194J for professionals. This is also W1. Liable. 10% TDS. 

So here the configuration is Withholding tax, Extended withholding tax, calculation, minimum and maximum amounts. If you remember in the beginning when we have defined the invoice posting here in the calculation while creating our W1, that is withholding tax type, we told system that define minimum or maximum amounts. 

So we are going to consider for base amount withholding tax code. For withholding tax amount withholding tax code. So here system will ask you if there is a condition for minimum or maximum amounts in calculating the base amount or tax amount, what is it that you are going to consider at what level you want to do, that is at withholding tax code level or withholding tax type level. So type, you know, the type of tax is 194J, 194I. That’s section wise. We call it as withholding tax type, that is a type of tax. That is the kind of service which you are going to receive, on that we are going to calculate the tax. But here, we told the system that we are going to consider TDS on withholding tax code. We have already created codes. Code is nothing but represent the percentage. So that’s why here what I’m doing now, Minimum or maximum amounts, Define minimum or maximum amounts for withholding tax codes, take this. So here, what is our withholding tax type? Withholding tax type is WW1, and withholding tax code also WW1. Currency INR. Account for withholding tax, valid from 01.00.04.2013.

So is 30,000. So that’s why here for that that mean to say up to 30,000 exempted. But if it is 30,001, system should calculate tax. So that’s why what I need to do is 30,001 I should take.

So we have to take 30,001 here so that system will calculate TDS on 30,001 onwards. Up to 30,000 it will not calculate. So because even the act says that don’t calculate up to 30000. If it exceeds 30000, then only you have to calculate. But if you exceed 30,000, the total amount you have to calculate tax. Save it. So this is the only step we have to do. 

So we have already created a new vendor and also assigned the withholding tax code. Now let me post an accounting entry. F- 43 invoice General. Let us imagine this vendor, we have received a bill. DRLB and pick up the vendor. 

Test vendor for TDS. I’m taking say 25,000. Test for EWT. Posting key, 40. Vendor account is credit, 40. That legal charges account should be debited. Account 400306.

So here, 25,000, system should not calculate tax. See now, if I simulate, system to calculate tax if it exceed 30,000, but it is not exceeding. Click Simulate. 

See, not calculated. So if amount is less than, even I’ll try 30,000 also. Double click the amount. Click Reset, because once you simulate, you cannot change the amount unless you reset. I’m calculating 30,000, simulate.

No, not calculated. I’ll take 30,001. Again reset. And I’ll take 30,001.

Now let me try to simulate. 

Section code is not copied. Don’t worry, press enter. 

See 3,010 rupees. So 10%. So with this configuration, whatever we have done here for W1, 30,001, like this, any amount, whatever it may be, if it is 1 lakh 80,000, you have to take 1 lakh 80,001. So that from then onwards, system would calculate the tax. So this is TDS.