Dear All,
based on the below circular I did some configuration changes and tested with two case scenarios. Please check if this is helpful
Purpose:Based on the below circular, certain modifications have been effected to meet the conditions. The document also projects the accounting treatment in SAP for payment made under section 194J where Service tax is explicitly mentioned or not mentioned in the invoice.
Circular 01/2014 dated 13.01.2014 reproduced hereunder.
F. No_ 275/59/20124T(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Circular No.01/2014
New Delhi, the 13th January-'2014
Subject: TDS under Chapter XVII-,13 of the Income-tax Act, 1961 on service tax component comprised in the payments made to residents - clarification regarding
Configurational Changes
**** (New)→Withholding Tax→Extended Wtt→Define Wtt Type for invoice posting
Change the Settings from Gross Amount to Net Amount as shown below.
By considering the following example, we will take two scenarios,
►Service Amount : 10000
►Service Tax @12%: 12000
►Edu Cess @2%: 240
►Sec Edu Cess 1%:120
►Total :112360
Scenario 1 - where the bill amount is 112360 and service tax component is not shown separately
TDS will be | 11236 |
Net Payment to vendor | 101124 |
At the time of executing the invoice (FB60/Miro), user is required to select the NIL tax code, system will
automatically pick up the base amount for calculation of TDS if the relevant tax code is maintained in the vendor master.
Scenario 2 - where the bill amount is 112360 but the service tax component is shown separately
At the time of executing the invoice (FB60), user is required to select the relevant service tax code ,system will pick up the net amount for calculating the TDS by excluding the service tax amount. The relevant TDS tax code should be maintained in vendor master
I hope this will help you in understanding the new changes.
best regds
Subha
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