TDS to be calculated on base value excluding service tax amount.

[former_member185462]

Dear Experts,

My client has a requirement for TDS calculation in FB60 vendor Invoice.

Scenario:

A vendor issues an invoice for Rs 100000 with 12.36% service tax, where the total invoice amount is 112360.

As per their requirement, the client will enter the whole amount i.e 112360 in the amount filed in FB60 screen which has to be fully posted in the expenses GL.

As per the normal TDS calculation the TDS will be calculated for 112360. (Value 11236) But the client wants TDS to be calculated only for base amount i.e for 100000 (Value 10000) and not on the total amount.

Condition: The base amount should not be entered in the With holding tax field manually. The system has to automatically calculate the TDS for Base amount alone and no manual intervention is done.

The vendor invoice amount and the TDS % will vary for different invoices. But the TDS has to be calculated only on the base amount without manual intervention.

Kindly provide me ideas and solutions on what can be done for the above issue.

Thanks in advance....

[former_member222241 · Accepted solution]

Hi,

Please create the withholding tax type and select radio button Net amount and assigned the same to new withholding tax created.

Regards,

Tejas

[Former Member]

Hi Pradeep,

              You can create new withholding tax code with tax rate below the actual tax percentage.

For Eg: If your withholding tax code % is 10 then you can create a new withholding tax code with 8.899967 in the tax rate slab for your new withholding tax code. If you create like this then the system will automatically deduct the 12.36% value and calculate TDS for base amount only.

100000 + 12360 = 112360

TDS will be calculated for 100000 alone if the above said tax code is used.

You can assign this new withholding tax code in your vendor master and you can execute FB60 without manual intervention. You do not have to enter Base amount in withholding tax tab.

Note: This will be applicable in FB60 entries if you post the same kind of entries for the particular vendor. If you post normal entries for the same vendor without service tax then you will have to change the tax code manually in vendor master or while doing FB60.

If the above condition satisfies then you can create a tax code with above mentioned tax rate.

Regards,

Ramprasath

[former_member191939]

Hi Pradeep,

You need to do step one in calculation in SPRO

1.     Define Withholding Tax Type for Invoice Posting--change withholding tax base amount to "Modif. net amount" for required TDS code.

If you set this indicator, the modified net amount is used as the base amount for calculating the withholding tax.

Modified means that the additional amount is added to the net amount. This additional amount consists of the tax amount and is determined by one or more transaction keys that you define in your Customizing settings for the withholding tax base amount.

so you need to add those tax keys which you are assigned in input tax code in FTXP

you can get those from table T030K.

from all tax keys please remove service tax related tax keys and map balance as below for required TDS tax code (If you are using same tax key for service tax & other taxes; you need to create Z tax key for service tax than map that to condition type, "In my case it was NVV & condition type JSV2")

2. Withholding Tax Base Amount--Define Processing Key for Modified Net Amount-- maintain withholding tax type & Internal processing key for which you need to deduct withholding tax

now you are calculating TDS on (net amount  + tax keys mapped with TDS code) in above transaction.

Regards

Eugene

[Former Member]

Dear Mr.Pradeep,

You should not total amount in Amount filed .Create inventorised tax conditions and assign to tax code . Maintain tax code at FB60 screen.

Or

Create service tax also as Withholding tax codes maintain both service tax and withholding tax codes in vendor master

Or

If service tax is fixed to 12.36 % Change  change percentage subject to tax to 87.64 (100-12.36)