Amendment to Section 206C TCS - Why Two G/L Accounts are required?

[dheerendar_jain]

Hello Experts,

As per Notes 2898812 - Amendment to Section 206C TCS - Updates. In India W.E.F 01.10.2020

It is mentioned that Two G/Ls to be used for TCS postings.

Can you please help us to need of 2 G/L accounts?

Thanks and Regards

Dheerendra Jain

[sanilbhandari]

Hello dheerendar.jain

The amendment to TCS under Section 206 clearly states that TCS is applicable based on Sales of Goods or Payment, which ever happens first as per the legal view. However, the seller has to raise an invoice with the TCS Liability included. However, the liability for remittance of the TCS for the seller does not rise till the time it is not collected. That is what is defined in the Income Tax Rules, with respect to TCS and this should be known to your Tax Colleague.

Now coming to the set up in SAP, there is a functionality called as deferred tax used in many countries, where the taxable event is the recognition of payment or collection. This is used in many countries like France, South Korea, Thailand etc. The OSS Note below already mentions it

https://launchpad.support.sap.com/#/notes/1800344

This is the reason why you need to use two GL Accounts.

However, if your user does not want two GL Accounts, you are welcome to use a normal code and assign the right GL Account for final tax liability during VF01. However, it is a consulting issue that you need to check with your business user and it is perfectly possible to use TCS without deferred tax as well. However, in such a case, business user must not come and say that even though liability is recognized for the full invoice, 27EQ must be generated only to the extent of payment made and if that is the case, it should be done as per the recommendation for TCS using deferred tax.

The changes that are to be done if you need to use a single GL are:

1) Create a normal tax code in FTXP and do not assign the indicator for target tax code. Also do not assign the target tax code in this.

2) Assign the percentage in FTXP and GL Account in OB40

3) Maintain the Condition record in VK11 for the new tax code

Hope this helps

Thanks & Regards

Sanil Bhandari

[former_member432282]

But no where in the note 1800344 mentioned about TCS challan generation for making payment against the TCS charged in the bills transferred from interim GL to target GL as it is not populating in the J1INCHLC once bill generated.

If we want to make payment TCS liability by J1INCHLC directly without going the process from interim to target, is there any way exists.

Please suggest how to get these documents in J1INCHLC so that TCS liability can be paid to Govt

Regards

Prakash.

[sanilbhandari]

Hello naveen.sharma6

Please read the FAQ for TCS in the OSS Note # 2963124 Question No 14

https://launchpad.support.sap.com/#/notes/2963124

In the OSS Note 1800344, read the GL Account set up for Deferred Tax, Step 1, which mentions the GL Account set up for deferred tax

https://launchpad.support.sap.com/#/notes/1800344

As far as I knw J1INCHLNC reads data from WITH_ITEM, which is when you create the TCS Tax code under with holding tax. The new process is structured from Tax On Sales and Purchase, where the tax data is in BSET. Since the technical architecture is different, you probably do not use J1INCHLNC

Thanks & Regards

Sanil Bhandari

[Abinathsiva]

Hi,

Please refer below program and note for reference.

RFUMSV50 - Note no. 1800344- How to start using deferred tax report

This program to be executed - so that transfer of tax amount from intermediate G/L will happen to Final G/L