Withholding Tax

Hello everyone! In today’s session, we’ll learn about taxes and excise duty in SAP Finance. Before moving ahead with this session, let us summarize what we have learnt from our previous session that was on fixed assets. Now there we have learnt about creation of material master data, vendor master data. Then we have seen how to create internal orders and purchase orders.

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And we have seen about goods receipts and invoice verification. Also, we have explored about asset master that is creation of asset master, then final settlement on main master and access on the main masters. Then we have seen about depreciation run and what are depreciation areas. Then we have seen about asset sale with customer and what is asset sale without customer. Then we have seen about asset transfer. So these were the topics which we have seen in fixed asset session.

Now in this tax and excise duty session, we’ll cover country India versions. We’ll see about various country codes which are used inside SAP finance for the version India. Then next we’ll see that what is withholding tax with the country code India. Then we’ll learn how to create a remittance challan that is dependent on the company code. Then we’ll see how to enter a bank challan, then how to print a certificate, then we’ll see what are quarterly returns. Then last we’ll see what is TDS for concessional rate of tax. Then we’ll see what are service tax in SAP finance related to different company codes. Then in that we’ll see how to create a tax code.

We’ll also see what are the service tax process. After that, we’ll come across excise duty. Now here we’ll see how to maintain the excise master data. Then we’ll see what is excise JV. Then we’ll see how to make adjustment posting for scrap materials.

Then adjustment posting for materials which are not used in production. And we’ll see adjustment postings for additional excise which are paid by vendors, adjustment postings for money transferred to PLA, and last, we’ll see how to make adjustment postings for other transactions. So these all are related to excise duty adjustments.

Then we’ll see what is CENVAT register that is related to excise register extraction. Then how to print that excise registe. we’ll see what are monthly utilization for CENVAT credit and payment from PLA. And last we’ll see how to execute this register by clicking on the execute button.

Then we’ll come across to capital goods excise. Here we’ll explore on sale of capital goods in the year of purchase. Then we’ll see claiming balance that is 50% credit on assets in the next accounting year, And we’ll see what is ER 1 register. Then we’ll see the output format for the ER 1 register and under sales tax, we’ll see what is form tracking. So these are the cost content for this particular session, which is on tax and excise duty.

 

Now first we’ll see what is the withholding tax. Now this is related to the country version India. Now here we have some withholding tax types at the time of invoice. So these are some taxes which are related to the invoice. Now here it is done initially when the configuration of an SAP finance system is based.

Now here we have something called GL account and minimum account related to the tax types. So here in this particular table we have the width types, that is the tax types and the code related to that tax types. And along with that we have a fixed defined tax rate which will be uploaded into the system.

So here we’ll only have to mention the type or a code and the tax rate will already defined in the system. Now here we’ll see how to maintain the TDS codes in the vendor master using a TDS tab.

 

So here in this SAP menu screen, we’ll use the path like accounting, then financial accounting, then we’ll go to accounts payable, under that we’ll go to document entry and we’ll go to down payment.

Now under down payment for TDS, we’ll go to transaction code F-48. So here it will do down payment to the vendors, that is, it will calculate the TDS in the vendor master table. So we’ll go to F48 transaction code. There we’ll maintain the values like vendor data, like account number and the special GL indicator. And we’ll maintain the bank details like the account and the amount to be paid in advance to the vendor. Then we’ll have to maintain a value date to it.

After providing all these values we’ll press on the enter button. Then on the next screen we’ll have to maintain the item details. That is the vendor item details.

So here in the above screen we’ll maintain business place in the section code field. So this is the business place in the section code field. Here as a TDS reports are based on the business place. Business place has been defined based on the TAN number. Now after maintaining this we’ll press the enter button. Now next once we press the enter button the system will propose this particular screen that is withholding tax information screen. So here we’ll have to provide the tax details in this particular field.

Once we maintain this detail, we’ll press the enter button or the continue button. After that, we’ll get a display overview screen. That is a down payment display overview screen where it will give the details of the nine items which we have entered for that particular document.

Once the details are correct we’ll click on the simulate button and check for the entries and if it is okay, we’ll click on the save button. And then once we click on the save button, it will create a document for the down payment to the vendor. This is how we create a down payment to the vendor.

Now here at the time of invoice, booking system will provide information in relation to the advance user and we need to reduce the advance amount out of invoice value and need to put that amount and user need to remove the withholding tax type at the time of payment.

So here initially at the time of the invoice booking the system will provide some information, that is, the invoice information related to the advance user. So we need to reduce the advance amount out of that invoice. So what we’ll do, we’ll remove the withholding tax that is the TDS amount at the time of the payment. So this is how we remove that TDS amount at the time of the payment by using the withholding tax option.

So here this is the item description here we don’t have the tax information calculated, so here the TDS is deducted. So that was withholding tax, so there we have seen how to perform the tax at the TDS under the invoice and how to do the down payment to the vendor.

 

Now next we’ll see how to create a remittance challan. Now here we’ll use a transaction code called J1INCHLN. So this is a transaction code for remittance Challan. So here we can also use the following navigation path.

Here we’ll go to withholding tax, under that we have taken the country code as India, so we’ll go to India. Under that we’ll go to extended withholding tax in which we have remittance of withholding tax so we’ll click on this create remittance challan transaction code. Now here all the line items that have been posted to the TDS payable account will get displayed. So here we’ll select all and go to the document overview. So once we click on this we’ll get this screen.

Here we’ll have to provide the details for withholding tax items and tax remittance details. After that we’ll click on the execute button and we’ll press enter.

So here we’ll choose the criteria as document number. Once we click on the document number we’ll click on the continue button and we’ll get a next screen where we have to select the charge off difference icon. So here once we click that we’ll get this payment display overview screen with the number of line items which we have created.

Now we’ll double click on this particular line item.  Once we double click on that we’ll get a screen where we can change the line item details.

Here we’ll put star in the amount and click on the process open items button. Now after clicking on this, we’ll click on the simulate option. So here we’ll get this particular display overview of the line items which we have created. And finally, we’ll save this line items. So this is how we create a remittance Challan using a transaction code J1INCHLN. Next, we’ll see how to enter a bank Challan update .

 

So here the bank Challan update is done by using a transaction code J1INBANK. Now here this is the SAP menu path. Under India, we’ll go to extended withholding tax and under that we’ll have the remittance of withholding tax having entered bank Challan transaction code.

So here we’ll enter the values for the bank Challan along with the remittance Challan details.

Then after that, we’ll click on the execute button. And once we click on the execute button, we’ll get the screen where it will display the details for the Bank Challan. So here we’ll have the document number that year for that particular document, the Challan Number, then the Internal Challan date, then we have the extension number that is the bank Challan number and the Bank Challan Date. Then we have the house bank details and the clearing amount. So this is the bank Challan details.