TDS tax accounting

[Former Member]

hi experts,

i want to know accounting process of TDS,from which T.codes i can see all information of vendor TDS,and where it configured.pls tell me in detail....

Thanks

Rekha sharma

[Former Member]

thanks to all

[Former Member]

Hi Rekha,

The following is the process for TDS in SAP.

Step 1:

Updating of TDS codes in vendor master (T-Code FK02)

Step 2:

Mention tax codes in transactions of advance payments (T-Code F-48)/ invoice booking (in T-Code FB60/MIR0/MIR7)

Step 3:

Following accounting entries get posted:

In transactions of advance payments:

Vendor A/c u2026 Dr

Bank A/c u2026 Cr

TDS Payable u2026 Cr

Ecess Payable u2026 Cr

In transactions of invoice booking:

Expenses A/c/ GRIR A/c u2026 Dr

Vendor A/c u2026 Cr

TDS Payable u2026 Cr

Ecess Payable u2026 Cr

Step 4:

At month end, we will have to post the Challan through T-Code J1INCHLN. This will transfer the amount to a TDS Clearing A/c

Accounting entry:

TDS Payable u2026 Dr

Ecess Payable u2026 Dr

TDS Clearing A/c u2026 Cr

Step 5:

The amount in the TDS clearing account will be transferred to Income Tax Authority Vendor through T-Code F-04

Accounting Entry:

TDS Clearing A/c u2026 Dr

Income Tax Authority Vendor Cr

Step 6:

Accounts dept will make the payment to Income Tax Authority Vendor through T-Code F-53 and print the cheque through T-Code FBZ5

Step 7:

The cheque is then deposited in a bank along with a tax Challan. The banks receive the same and gives a Challan number.

Step 8:

The Challan number given by the bank will be updated in the system through T-Code J1INBANK

Step 9:

Periodically TDS Certificates will be printed vendor wise through T-Code J1INCERT

Prerequisites:

1. Vendor/Employee Master

2. Tax Type

3. Tax Code

4. Recipient Type

5. Section Code

6. Vendor number for INCOME TAX AUTHORITY

7. Number Ranges for Challan

8. Number Ranges for Certificate

I hope this found very useful to you.

Regards,

Jigar

[Former Member]

Hi Rekha,

With holding tax (TDS)

2types

1)Classic

2) Extended

Classic: SAP Introduced in India 1995

1996, 97, 98,99,2000 if there is any changes the company will provide program called patches or hot packs

Extended: Instead of patches/hot Packs Company provides original program with additional program (Because patches are more than original program)

TDS is applicable other than salaries

Contacts - 194C

Professional charges u2013 194J

Rent u2013 194I

TCS u2013 Scrap sales/waste sales (to collect at source)

In India TDS is introduced in DEC.2003

In Interim budget u2013 introduced education cess-2%

Previous Present

Contractors 26 L 26

Rent 26 I 26

Professional Charges 26 J 26

Sec 194c u2013 TDS on contractors:

a)Recipient  The person who is receiving money u2013 It may be company, partnership firm or others

b)TDS 2% of basic 2% of basic

Surcharge 10% of Basic TDS 10% of basic TDS, if the value

Exceeds 10 lakhs in a year

Educational Cess 2% 2%

Educational cess is calculated 2% on (TDS + Surcharge)

c) Choice to use one code or number of codes u2013 It is advised to go for No. of codes

d) TDS is to be deducted at the time of invoice posting or advance payment posting which ever is earlier.

e) If the value is less than 20000/- in the whole year u2013TDS need to be deducted.

f) The contractor can get exemption certification from dept for nil rate/lower rates.

g) Exemption certificate given for each year.

h) To make TDS payment with in 7 days from the close of the month

If 7 days comes on holiday, choice to pay one day before or after

i) Incase of year end credits u2013 TDS to be paid before 31st May

j) Issue TDS certificate in form u2013 16A u2013 you can issue monthly (or) consolidate certificate.

k) File annual return (Now quarterly) in form u2013 26

l) If the bid includes material and service changes u2013 Deduct TDS on service charges.

Regards

Surya