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India TDS exemption related requirement

Hi FI Gurus

I have following query on TDS from India based manufacturing company. Please provide feedback.

Client wants to deduct TDS lets say @ 5%. BUT there is a catch to it. There are some suppliers who provide exemption certificate from tax department and want TDS deduction to be modified accordingly.

example-

Full rate of TDS is 5%, But if vendor has exemption approved from tax department, TDS rate could be 0%, 1%, 1.5% till a certain amount, and full rate after that amount.

lets say- Cumulative Vendor invoice amount is in range INR 0 - 1 million, vendor should be exempted partially or fully.

- Exemption % is specific to vendor, depending on approval by tax department.

- Exemption limit for cumulative invoice amount is also specific to vendor.

How can above requirement be met in SAP ? What is best practice followed by other customers in India ?? Do they apply some standard TDS % for all vendors.

I know how to configure SAP to vary TDS rate depending on amount, but issue is exemption amount can vary from vendor to vendor. There are no fixed scenarios for exemption amount.

Please share feedback.

-Thanks

Kapil

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1 Answer

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    Former Member
    Nov 02, 2015 at 11:40 AM

    Hi Kapil

    Go through note 1945137: Amount Based TAN level Exemption for India.


    Do check the prerequisites of this note before implementing the above note.


    Regards

    Ramnik

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