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Withholding tax calculation for India - threshold limit consideration for TAN based & Extended WHT

Dear Experts... need help with WHT calculation & Threshold limit consideration for India

I ahve done with the TAN based config and it works perfect, when we add the details in "Exemption threshold value + Exemption rate" on the 'CIN-TAN Exemption' tab

TAN based exemption is working well in accumulating INV+Payment & calculating the WHT, only if we add any rate like 100% as exemption rate and 30000 in exemption threshold value; system calculates WHT after the 30000 but the exepectaion is after we cross the accumulation there should be no exemption, WHT should be calculated on entire amount as explained in the example

Example :

Expected : WHT should calculate on entire value after threshold limit crossed; Inv/Payment together should be accumulated for the threshold limit

194C - 2% WHT; Threshold limt 30000

Transaction 1 : Invoice A - posted for 20000 - No WHT, as the values is less than the Threshold

Transaction 2 : Downpayment 1 - for 5000 - No WHT, as lesss than the Threshold (Inv A + DP1 = 25000)

Transaction 3 : Invoice B - for 25000 - WHT should be calculated on 50000, as Vendor transactions all together crossed the Threshold value of 30000

Please suggest if there is any tricky to update the TAN-Exemption tab to achieve the above calculation?

I also tried the extended WHT with rate feature, which is working well if we activate 'Accumulation type : Per year, from period' in WHT type + Minimum base amount maintained in the WHT code level - but the problem here is, it will not accumulate INV+Payment :( it gives the exemption seperately for Inv & Payment. The legal requirement is INV/Payment which ever is earlier

PS : Moderators, I have gone through with many discussions on the above in the forum & also referred list of OSS notes, still this issue is not explained clearly! hence I am posting a new question instead re-starting/hijack the old discussions!!

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1 Answer

  • Posted on Dec 12, 2018 at 08:29 AM

    May be you can have a look at OSS note 1945137

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    • Dear G Lakshmipathi thank you for your response

      With OSS 1945137 it enables TAN based WHT for India and it will not helps on above Expected & Example detailed

      it was confirmed by SAP (response received from SAP after I start the discussion here) as it is not supported :( - I surprise, how other friends from India cater this legal requirement!!

      1415026 : The said provision has two levels of threshold checks one is at the individual transaction level (for individual transaction) and another is at the accumulated payment level for the financial year (for the financial year).

      Threshold based on accumulated payments within the financial year is currently not supported along with the transaction level threshold in system configurations.
      SAP recommends to configure tax type and tax code in the normal way to deduct the tax and later the vendor can claim the extra tax paid from the tax authority.