WHT - Threshold Limit for 194C

[Former Member]

Hello Experts,

As per Indian Income Tax law, TDS on contractor should be deducted as per following:

1. TDS should be deducted if single invoice is more that Rs.20000

or

2. TDS should be deducted if cumulative invoices exceed Rs.50000, in a year. In this case, TDS should be deducted on all earlier invoices in that year

Can we achieve this?

--

Meena

[former_member198650 · Accepted solution]

Hi Meena,

Yes, we can achieve this. You have to define min. base amount as 50000/- for the combination of w.h.type/w.h.code. Later system will calculate the tax if your invoice amount exceeds the above limit, it will calculate the TDS on full amount.

Regards,

Mukthar

[Former Member · Accepted solution]

Hi Mukhtar,

What do you mean by "full amount" Does it mean full amount of that Invoice or something else?

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Meena

[former_member198650 · Accepted solution]

Hi Meena,

Full amount means TDS calculates on invoice amount + exemption amount also. Suppose you post an invoice with 20000/-. After that you again post another invoice with Rs.10000/-, then here system will calculate the TDS on 10000/-+20000/-. But it depends on the exemption amount provided for w.h.tax type.

Regards,

Mukthar

[Former Member · Accepted solution]

So what do you mean by Invoice.. Is it MIRO or Credit Notes or Both...

[former_member198650 · Accepted solution]

Yes, both.

[Former Member · Accepted solution]

So it means, system considers all the credits (in that vendor account) whether paid or unpaid. This credit can be from MIRO or FB60. However if there is any reversal then it is not considered. Is my understanding correct?

I checked one scenario with settings maintained in screenshot. I maintained minimum base amount of Rs.20000. By doing so, system is deducting TDS only on individual invoices which is above 20000.

For Example: I posted following invoices:

1. Invoice 1 - Rs. 15000 (No TDS deducted)

2. Invoice 2 - Rs. 30000 (TDS deducted on Rs.30000)

3. Invoice 3 - Rs. 18000 (No TDS deducted, even though cumulative is exeeded Rs.20000)

In my case, this setting is not working as per requirement. Please help, if i am missing something.

--

Meena

[former_member198650 · Accepted solution]

Hi Meena,

Have you done below settings for accumulation type in withholding tax type invoice/payment configuration?

Regards,

Mukthar

[Former Member · Accepted solution]

Hi Mukhtar,

It worked correctly. Thanks. However, I tested for FB60 (only invoice).

Please let me know if it will correctly work for:

1. MIRO

2. Advances (F-48)

--

Meena

[former_member198650 · Accepted solution]

Hi Meena,

It works for both MIRO & F-48.

Regards,

Mukthar

[former_member216872]

Hi Meena ,

I want to maintain threshold limit RS 75,000 for section 194C . I have maintain min base amount RS 75000 in both WHT Type ( invoice and payment) also use accumulation functionality in both tax type. But system consider this threshold limit separately for invoice and payment.

As per my client requirement we want to define this threshold limit combined for invoice and payment type.

Example-->   Down payment   RS 30000    exist in system.

                      now I am posting Invoice RS 60000 , here system should calculate TDS on RS 90,000

But system is not calculate TDS because invoice amount is not exceed 75000.

Please help to resolve this issue.

Thanks

Rohit Singh

[former_member198650]

Hi Rohit,

Please raise a new thread and do not raise query in some one else thread.

Regards,

Mukthar

[former_member1350409]

Hi Meena

can u share the configuration for 194C