Difference Between Withholding Taxes and Extended Taxes

July 18, 2017 | Author: rohit12345a | Category: Withholding Tax, Taxes, Invoice, Accounts Payable, Payments
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Difference between Withholding Taxes and Extended Taxes What is the difference between Withholding Taxes and Extended Withholding Taxes? Please read this for the same. I have mentioned prominant difference between the two. Withholding Tax Classic Withholding Tax (All release) Extended Withholding Tax (from release 4) Difference between the two S.No 1 2 3 4 5 6

7 8 9 10 11 12

Individual Function Withholding Tax on Outgoing payment TDS on Incoming payment TDS at the time of Invoice TDS on partial payment Yes No. of withholding tax from each document TDS basis - Net amount -Gross amount -Tax amount x Rounding rule Cash discount consideration Accumulation Minimum/Maximum amt and exemption Certification Numbering Calculation Formula

Classic Yes

Max 1 Yes Yes


Extended Yes Yes Yes Several Yes Yes Yes Yes Yes Yes Yes Yes Yes

SAP FI Tips by : Kapil 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. SAP FI Tips by : Rahul Gupta How To Configure Withholding Tax? Steps for extended withholding tax : 1. Check withholding tax countries 2. Define Ex. Withholding tax types for invoice postings 3. Define Ex. Withholding tax codes 4. Formula for Ex. Withholding tax calculation 5. Assign Ex. Withholding tax types to Company code 6. Activate Ex. Withholding tax 8. Create a G/L a/C for Ex. Withholding tax 9. Define A/C for Ex. Withholding tax (DBWW) 10. Make changes in Vendor master (XK02) 11. Maintain Company Code Settings: Path: IMG -> Logistic -> General -> Taxes on goods movement -> India -> Maintain company code settings 12. Activate country version for specific fiscal year position Path: IMG -> FA -> -> FAGS -> Taxes on sales purchases -> Basic Setting -> India -> Activate country specific for fiscal year position

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