India TDS exemption related requirement

[kapil_mehta]

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

[former_member219217]

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

[kapil_mehta]

Hello Ramnik

Thanks for your reply.

I am not aware about TAN based accumulation.

My client is India based legal entity, BUT it is a global MNC with headquarters outside India. I do not see "CIN Details" section in vendor master data. Hence they are not using CIN.

Considering this, how can we meet above TDS requirement ?

Regards

Kapil

[former_member219217]

Hi Kapil

Do you have withholding tax implemented as the above note will work if withholding tax is implemented.

[kapil_mehta]

Yes. WHT is implemented, but CIN is not implemented.

I did go through note but still not clear how this note will help me in meeting specific TDS requirement.

[former_member219217]

Hi Kapil,

Go to Tcode OMT3E Tcode and enter your user id under user screen reference then you will see the CIN details tab.

If you have withholding tax configured, then you can implement the notes i mentioned.

I am attaching the screenshot of the functionality where you can maintain the percentage and time frame of exempted TDS percentage.

[kapil_mehta]

Hi

CIN is not implemented in client's SAP system. Your screenshots are from CIN system.

Extended WHT is used in system. Can we still meet requirement ?

-Thnxs

[former_member219217]

Yes this settings is for withholding taxes so you can try to implement the same.

Regards

Ramnik

[kapil_mehta]

Hi

Your screenshots are not applicable to our system. CIN Details section is not visible in our vendor master data.

-Regards

Kapil