In India, companies can define the withholding tax exemption for a vendor on the basis of the tax account deduction number (TAN). A new solution is available for India localization to calculate exemption based on the TAN number. This solution has the following features.
- Exemption based on TAN number.
- Accumulation on both invoice and payment time document postings
- Exemption rate is applicable based on the threshold value.
To implement this change, choose the CIN Details pushbutton. On the resulting screen, under the TAN Exemption tab, make the following settings:
- Enter the section code that identifies under which TAN the tax was deducted.
- Enter the exemption certificate number and the exemption rate.
- The exemption certificate field is mandatory.
- Assign a period to this certificate number that identifies the duration for which the tax exemption is applicable.
- Enter the reason for exemption from withholding tax.
- Enter the withholding tax type and tax code.
- Enter the threshold amount for the exemption.
Notes:
- For example, if the threshold is 100000 INR and the invoice time tax type /tax code is T1/T1 and payment time tax type/ tax code is T2/ T2 for the Section Code IN01, you may need to maintain the entries as below.
Section Code
|
Certificate Number
|
Exemption Rate
|
Exempt From
|
Exempt To
|
Exempt. Reason
|
Wtax Type
|
Wtax Code
|
Exem. Threshold
|
IN01
|
ABC123
|
10%
|
01.07.2013 |
31.12.2013 |
|
T1
|
T1
|
100000
|
IN01
|
ABC123
|
10%
|
01.07.2013
|
31.12.2013 |
|
T2
|
T2
|
100000
|
- Multiple entries can be maintained for a single TAN number; but the “Exempt From” date should be different and the system will consider the latest exemption for calculation.
- The standard accumulation should be deactivated.
Once the exemption details are maintained, you may need to maintain the “link” between invoice time tax type and payment time tax type. This needs to be maintained in the view “V_FIWTIN_TDS_MAP”.
