I'm configuring Withholding Taxes for my Indian client using Extended withholding Taxes configuration in SAP. When a Works contract is executed, there are two TDS deductions. One portion that is payable to Central government based on Vendor's TAN number and is calculated on Base price. The second portion is payable to the State government based on Vendor's TIN number and is calculated on Base price+Service tax. My understanding is that Withholding tax configuration -India in SAP is only payable to Central government. In the tax code, there is a field setting to enter Region which we have used to configure the State, but this field seems to be for informational purposes only and does not impact how tax is calculated.
Is there any setting in SAP where TDS can be configured at State/Regional level? Currently, I have configured the same as a central government line item and used the reports to filter by section code, and bifurcate returns into Central government and State government entries.
Also, how can I make the State level TDS to calculate on Base price + Service Tax? I have tried different settings at tax code level to change the base amount (net amount, tax amount etc.) but am not getting the correct calculation. I am entering the base amount manually as of now.
Kindly share your expertise.... Will award points if useful.
Many thanks.