Depreciation posting as per Income tax act in India

[former_member224726]

Dear Experts,

We are implementing SAP for an LLP organization in India and the following are the requirements

1. Depreciation to be posted as per income tax act. I know SAP can calculate depreciation as per Income tax act but i didnt find any thread which speaks of posting the depreciation to books of accounts. How to achieve this?

2. We have non leading ledgers as well with two currencies? what additional steps do i need to take care of as this is the first time i am handling this scenario?

Awaiting your help and appreciate your quick response.

thanks

Suresh

[Former Member · Accepted solution]

Hi Suresh,

With EHP5, SAP has introduced new solution for Income Tax depreciation for India. You need to enable Business function FIN_LOC_CI_8. Refer to this note 738919 for details that you need to follow.

Before this, Group Asset functionality was used but SAP does not recommend to use Group Asset any more for Income Tax depreciation.

Regards,

Kavita Agarwal

[former_member224726 · Accepted solution]

Dear Kavita Agarwal,

Thanks for  your reply and the details provided.

I did check this note and the solution it gave speaks of only reporting. At the end of the period/year it will show a report with depreciation calculation.

But my requirement is to post the depreciation in the books of accounts. As the organisation is an LLP (Limited Liability Partnership), depreciation as per companies act does not apply to it. The depreciation has to be posted in the books of accounts as per Income tax act.

Is it possible to achieve it?

Suresh

[former_member224726 · Accepted solution]

This message was moderated.

[Former Member · Accepted solution]

Hi Suresh,

In order not to post it and have reporting only, we assign the GL indicator "0", meaning "Area does not post" to the depreciation area that we create for Income tax act.

But, if you want to post it, you can use depreciation area "01", ie: book Depreciation and use GL indicator 1 for your depreciation area.

Regards,

Kavita Agarwal

[former_member224726 · Accepted solution]

Dear Kavita,

Thanks for your reply.

Not able to give GL indicator 1 for income tax depreciation area. The following is the error message

Depreciation area 15 has an incorrect posting control. Posting control '1', 'post assets in General Ledger realtime,' is limited to the depreciation area for balance sheet values (master area) and/or depreciation areas for investment support on the liabilites side.

Area 15 does not fall into either of these categories.

Not able to remove the GL Indicator 1 for depreciation area 01, the following is the error message.

Depreciation area 01 is specified in the system as the master area. As such, it represents the values for the balance sheet in Financial Accounting.

Therefore, the posting control in this area always has to be '1', that is, acquisition and production costs are posted in real time.

I think even SAP hasn't defined it in such a way that we can post the income tax depreciation to books of accounts.

Suresh

[ajaycwa1981 · Accepted solution]

Hi Suresh

Posting indicator 1 can be assigned only to one dep area (Ideally Area 01)

Your settings should be like this to post IT Dep to books

Area 01 - Posting indicator 1

Area 15 - 03

Area 20 (Delta between 15 & 1) - 06

Br, Ajay M

[Former Member · Accepted solution]

Hi Suresh,

Please paste your existing set up.

Your Book depreciation will be 01 always, for any additional reporting you will need additional depreciation area and if you want the additional depreciation area to post, you need to create a delta depreciation area as well.

Please follow as suggested by Ajay above.

Regards,

Kavita

[Former Member]

Hello Suresh,

You can create a separate ledger for the purpose of Indian income tax. Create a depreciation area as Income Tax act.

Based on your requirement you can post in Depreciation Area either APC and Depreciation Periodically or APC Directly and depreciation periodically. In the same setting mention the Ledger.

In this ledger you can make all the adjustment specific to Income tax and get all the repoer required from system.

[former_member224726]

Dear Ajay / Kavita / Lavanya,

Thanks for your inputs, I am trying change the configurations and will come back to you for any further queries.

Suresh

[former_member224726]

Dear All,

I did the necessary settings for Depreciation calculation as per Income Tax act using the Blocks and the depreciation calculation is working fine. I did this based on the note 738919.

But I think this is only a report and will not post any depreciation.

Can you pls help me to post these values to books of accounts(either leading or non-leading ledger)?

I changed the Depreciation area 15 relevant to Non-leading ledger. Is this correct? Is there anything else that needs to be done?

Pls advise.

Suresh

[former_member224726]

Dear All,

Can you please guide me? I am not able to find a solution for this.

Suresh

[former_member224726]

Dear All,

We raised the issue with SAP and they replied that it is not possible and out of scope. The following is the reply given by them

Dear Customer,

The solution of India IT depreciation is purely reporting based on

Income tax act law 1961 using blocks.

The values cannot be posted to book of accounts using India IT

depreciation as it is out of scope. Sorry for not providing a positive

answer on this.

Thanks and appreciate your replies. But its really strange that SAP is not providing solution for this.

[former_member224726]

This message was moderated.