Withholding Tax threshold limit for India Vendors

[pandu_bad]

Dear Friends ...

I am looking for assistance on the below… I been referring to SCN and other discussion (CIN / Ex WHT …) forums for the solution, unfortunately I could not find any relevant!! Request you to share your ideas

In India, Withholding Tax (WHT) should be calculated on Invoice / Payment whichever is earlier! We have different threshold limits for each tax type/code (15000 / 180000 / …)

In SAP we have WHT separately for Invoice & Payment, and also the threshold can be defined separately for each! Considering this and above condition how do we achieve threshold together for Invoice & Payment?

Since we have two different WHT codes (Invoice & Payment) and also threshold is defined at each level separately, system only considers WHT calculation once after crossing the threshold either Invoice or Payment

I also referred few of the below notes …

1945137 - Amount Based TAN level Exemption for India

1769234 - Withholding Tax Enhancements for India

1737480 - Withholding tax India Localization : DPC with MIRO

Example: Vendor A with threshold of 1, 80,000

In the month of July:

1. We have an Invoice for 1, 20,000 – no WHT calculated as within the threshold limit
2. Advance of 80,000 –Even now no WHT calculated as Payment is less than the threshold

Expected: When we put together Invoice+ Advance (1, 20,000 + 80,000 = 2,00,000)  Vendor is already crossed the threshold of 1,80,000 hence from the ‘Advance’ system should calculate WHT!

Hope friends from India could have already have comments on this this, Is there a way to achieve the above expected?

[former_member198650]

Hi Bose,

It is a standard behavior of the system. You cannot maintain thresh hold limit together. Because limits are maintained at w.h.tax type/code level. However, the TDS what ever deducted/not deducted at advance will get reverse once you clear the advance against invoice. So final check will be done at invoice level. So in your case, if the system has not deducted at advance, but once you post invoice the system will get deduct TDS, if the limit crossed. Due to this the limit has not set together.

Regards,

Mukthar

[pandu_bad]

Hi Mukthar,

Thank you for your response above, yes its a standard SAP. We can maintain threshold either Invoice or payment type / codes level

However considering the scenario explained, Yes of-course when we clear the advance / post the Invoice against the advance SAP will calculate WHT accordingly.

If we receive the respective Invoice in 2/3 months later then system will calculate WHT on that date.

But If we didn't deduct WHT in the current month as Invoice + advance crosses the threshold, it will be a compliance issue! company has to pay a penalty to the Govt.

Since its an India requirement may be some of our friends might have already experienced it and followed an automated solution / best way using within the standard (standard / custom)! would like to hear those

[former_member198650]

Hi Bose,

If you got solution, please share it.

Regards,

Mukthar