TDS Expense - to be debited to same expense

[Former Member]

Hello Experts,

I have one requirement for TDS. There are some scenario where we bear the TDS and pay to government. I checked the setting for WHT Code there are following three settings:

1    Standard posting: Bank/vendor/customer line item reduced

2    Offsetting entry to G/L account ("grossing up")

3    Offsetting entry to G/L account

I tried with 2nd and 3rd option. However, in both the cases, we need to specify seperate TDS expense GL. Its not getting to same expense account where basic is debited.

Please help me, how we can achieve the same.

Expected entry:

Invoice amount is Rs.10000

Expense Account ... Dr 11000 (Basic + TDS)

   To Vendor 10000 (Invoice)

   To TDS Payable 1000 (TDS)

However, now entry is getting posted as (which is not as per my requirement):

Expense Account ... Dr 1000 (Basic)

TDS Expense Account ... Dr 1000 (TDS)

   To Vendor 10000 (Invoice)

   To TDS Payable 1000 (TDS)

--

Meena    

[former_member198650]

Hi Meena,

You have to create a tax code in FTXP with TDS %rate and this would have the account key as non deductible. Assign this tax code to the co.code. After that create a withholding tax code as usual and it has posting indicator as 1. So when you book invoice, the non deductible part book to expense a/c and TDS amount will go to payable account.

Regards,

Mukthar

[Former Member]

Hello Mukhtar,

I am not getting the link between FTXP and WHT Code. Please elaborate.

[former_member198650]

Hi Meena,

Suppose you want to deduct TDS with 10% rate and this has to book at expense side as well as liabilities side. For that you have to create a new tax code with 10% rate in FTXP. While booking expense you have to assign this tax code for the expenses. However, this tax code should be non deductible nature. Then only it books to expense account. At the same time create a withholding tax code with 10% and maintain the posting indicator 1. So when you post the invoice this will book to TDS Payable account. So your accounting entry will be.

Expenses A/c Dr 11000

Vendor A/c Cr  10000

TDS Payable A/c Cr 1000

Regards,

Mukthar

[Former Member]

Hello Mukhtar,

This expense is TDS only. Suppose if there is service tax also, then how can I charge two tax codes (one for service tax and one for TDS) for one line item

--

MEena

[former_member198650]

Hi Meena,

You have to create a tax code which should have service tax + TDS. I believe you are using condition based tax procedure. If yes, then first create a new tax code which has combination of service tax + TDS. Then you have to maintain the conditions in FV11 with the tax code. At the time of invoice posting you have to select the tax code, then system will post the tax accordingly.

Suppose you have to charge service 10% + TDS 2% on the invoice. Then create a tax code in FTXP for service tax 10% + TDS 2% and maintain the tax conditions in FV11 with respective rates. Then after post the invoice with the tax code.

I hope you are clear now.

Regards,

Mukthar