Payment of Foreign Currency Invoice in Local Currency

[shabbir_hussain2]

We have 2 parallel currency ledger configured in our SAP ECC6.0 system. We made a Purchase Order in Foreign Currency (USD) then did the GR and IR in USD but the payment to be made in Local Currency (PKR) after some days of booking IR. The payment also involves Tax Deduction At Source and the payment to be made from the Local Currency bank account.

When I try to post the payment in PKR, there comes the difference in PKR amount of the vendor as well as the Tax at source. Consider the following example:

01.04.2012 - IR in USD @ 90.0

Expense (DR) = 1000 (USD) or 90,000 (PKR)
Vendor (CR)    = 1000 (USD) or 90,000 (PKR) with 15% Tax at source

10.04.2012 - F-58 (payment) in PKR with exchange rate 91.0/USD

Vendor (DR)          = 90,000 (PKR) or 1000 (USD)

Tax at source (CR) = 13,500 (PKR) or 148.35 (USD)

Bank (CR)             = 77,350 (PKR) or 850 (USD)

However, only bank line is correct and other 2 lines are incorrect. Differential is

Vendor (DR) = 1,000 (PKR) or 0.00 (USD)

Tax at source (CR) = 150 (PKR) or 1.65 (USD)

Please assist me in this regard, What I am doing wrong?? and how to rectify it??

Regards,

Shabbir

[narasimhulu_konnipati]

Dear,

Since the difference is due to FX, it should post the deifference of FX Gain / Loss to separate GL Account which would have configured in OBA1 (FI).

FX difference should not revaluate and post it to BANK / VENDOR / TDS Accounts.

However, the bank is showing correct with 850 USD.

Just check the settings of TDS code in SPRO, whether the assimilation is causing for this.

Thanks

[shabbir_hussain2]

Dear Konnipati

Thanks for the reply, but the actual liability was 91,000 (pkr) or 1000 (usd). This is a comprised of 77,350 (pkr) or 850 (usd) actually paid to vendor and 13650 (pkr) or 150 (usd) paid to government on account of Tax deduction at source.

If I just charge the differential lines mentioned in the original question to Realized Exchange Rate GL account then both the Vendor liability and Tax will be reported incorrectly to the Central Revenue department. And this may cause serious reporting issue. Our actual payment of tax will not reconcile with the reported tax and may cause discrepancy.

The scenario in question involves prior bank transfer by the bank, which is then communicated to our concerned Finance staff who then records the same in our SAP system. Therefore, the posting of transaction must be same as paid by the bank.

Please assist in the light of further discussion.

Regards,

Shabbir