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Withholding and Extended WH Tax

Former Member
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Hi Guys,

Why do we need to have extended withholding tax? Is it applicable only in india?

On what transactions is this tax applies? Difference between WT and EWT?

Pls suggest.

thanks

srikanth.

Accepted Solutions (0)

Answers (2)

Answers (2)

Former Member
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Hi

Please read this for the same. I have mentioned prominant difference between the two.

Withholding Tax

Classic Withholding Tax (All release) - (C)****

Extended Withholding Tax (from release 4) - (E)****

Difference between the two

S.No Individual Function Classic Extended

1 Withholding Tax on Outgoing payment Yes (C) Yes(E)

2 TDS on Incoming payment Yes(E)

3 TDS at the time of Invoice Yes(E)

4 TDS on partial payment Yes

5 No. of withholding tax from each document Max 1 Several

6 TDS basis

- Net amount Yes (C) Yes(E)

-Gross amount Yes (C) Yes(E)

-Tax amount x 7 Rounding rule Yes(E)

8 Cash discount consideration Yes(E)

9 Accumulation Yes(E)

10 Minimum/Maximum amt and exemption Yes(E)

11 Certification Numbering Yes(E)

12 Calculation Formula Yes (C) Yes(E)

Withholding tax is calculated and posted to the appropriate withholding tax accounts at different stages, depending on the legal requirements in each country. As a rule, withholding tax is posted at the same time that the payment is posted, in other words the outgoing payment (Accounts Payable) or incoming payment (Accounts Receivable), is reduced by the withholding tax amount.

In certain countries, such as Brazil, the Philippines, and Spain, withholding tax can or must be posted when the invoice is posted. This means that the amount receivable or payable is reduced by the withholding tax amount.

Extended withholding tax supports both concepts.

The key concept in extended withholding tax is the distinction between withholding tax type and withholding tax code. While withholding tax types represent basic calculation rules, specific features of these rules - in particular the percentage rate -

are represented by the withholding tax code. You can define any number of withholding tax codes for a given withholding tax type.

If a particular transaction requires more than one kind of withholding tax, this is covered in the SAP System by defining more than one withholding tax type.

When entering a line item, you can enter withholding tax data for each of these withholding tax types.

Best Of Luck

Tanmoy

Former Member
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Hi Srikanth,

Extended with holding tax is the Tax deducted at source.

In older versions only with holding tax is available. This Extended with holding tax is newer version with updated patches for the with holding tax.

Now no one uses with holding tax.

Hope this helps you....

Regards,

Sreekanth....