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

[former_member330742]

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:

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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

[Former Member]

Hi Kapil,

The following needs to be taken care of -

The message controls settings as the note suggests must be set as W.

When entering the details the logic is Vendor Debit amount is Tax amount + 1

The Vendor credit line, the tax code has to be assigned with the advance amount (amount for which the challan has been created) as the tax base amount and the tax amount will be the extra liability that needs to be created.

In your example -

The tax amount will be - 2000 ( the debit at the time of downpayment clearing should have been 4000 instead of 6000)

Tax base amount - 40000 (Challan for this amount has already been made at the time of downpayment made)

The vendor Debit - 2001 (2000 + 1)

The vendor credit - 1

Note - Tax amount and base amount has to be made manually in the withholding Tax tab for the credit entry.

Please revert for any clarification.

Thanks and Regards,

Anit