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Oct 02, 2009 at 12:12 PM

Withholding Tax Calculation Error for Vendor Down Payment Clearing:Oct '09

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Hi,

We are trying to incorporate the new Withholding Tax Structure w.e.f. 01-Oct-09.

There were 3 scenarios possible:

a. Invoice = Down Payment

b. Invoice < Down Payment

c. Invoice > Down Payment

While 1 & 2 were taken care of effectively, the third scenario did not work as expected. The scenario is as follows:

1. Down Payment (Date : 30/09/09)

Amt : Rs. 40000/-;

Withholding Tax @ 15% : Rs. 6000/- (40000 * 15%)

Surcharge @ 10% : Rs. 600/- (6000 * 10%)

Edu Cess @ 2% : Rs. 132 (Rs. 6600*2%)

Higher Edu Cess @ 1% : Rs. 66 (Rs. 6600*2%)

2. Invoice (Date : 02/09/09) - As per new TDS Rates

Amt : Rs. 50000/-

Withholding Tax @ 10% : Rs. 5000/- (50000 * 10%)

Surcharge : NIL

Edu Cess : NIL

Higher Edu Cess : NIL

3. DPC (Date : 02/09/09) - Reversal of TDS calculated in Down Payment (Step 1) above.

Issue:

-


While making J1INCHLN, amount is adjusted as Rs. -1000/- (hence zero) not payable.

Also, the Surcharge, Edu Cess & Higher Edu Cess are also getting reversed in DPC.

As suggested by SAP Note No. 1372734 - Handling of downpayment clearing scenarios after budget '09, the scenario does not seem to work.

Actual payable should be worked out as under:

Invoice : Rs. 50,000/-

DP : Rs. 40,000/-

Bal : Rs. 10,000/-

TDS @ 10% : Rs. 1,000/-

All TDS Challans, Certificates & Returns must reflect Rs. 1000/- in the Challan.

Require assistance.

Regards,

Kapil Tilwani