Financial Accounting (FI)

Purpose
The Financial Accounting (FI) component covers the most important laws and business practices specific to India. The following documentation describes these aspects of the component.

Features
Country-Specific Functions
Country Version India comes with a large number of additional functions for withholding taxes. The customer and vendor masters have been enhanced to store data only used in India. An extra report is also provided for depreciating assets according to the Income Tax Act.

Country Template
The country template for India comes with: Sample settings for calculating and posting taxes A chart of accounts and financial statement version Sample settings for asset depreciation

Taxes (FI-AP/AR)
Purpose
The Taxes component covers the most important laws and business practices specific to India. The following documentation describes these aspects of the component. For generic information about Taxes, see Taxes (FI-AP/AR).

Features

Value Added Tax (VAT)

Use
In India, VAT has been levied in certain states from April 1, 2005. VAT is levied instead of the Local Sales Tax (LST). VAT also replaces other taxes such as, turnover tax, surcharge, additional surcharge.

Prerequisites
You can configure the following tax procedures:
For Condition-Based Excise Determination, configure the tax procedure TAXINN. For more information about TAXINN, see Configuration of Tax Calculation Procedure TAXINN. For Formula-Based Excise Determination, configure the tax procedure TAXINJ. For more information about TAXINJ, see Configuration of Tax Calculation Procedure TAXINJ.

Features
The essence of VAT is that you can set off the input tax against the tax paid earlier. VAT is based on the value addition to the goods, and your VAT liability is calculated by deducting input tax credit from tax collected on sales during the payment period (say, a month).
You have purchased input worth INR 1,00,000 and your sales are worth INR 2,00,000 in a month, and input tax rate and output tax rate are 4% and 10% respectively, then input tax credit/set-off and calculation of VAT will be as follows:

Input purchased within the month = INR 1,00,000 Output sold in the month = INR 2,00,000 Input tax paid = INR 4,000 Output tax payable = INR 20,000 VAT payable during the month after set-off/input tax credit = INR (20,000 4,000) = INR 16,000 The excise invoice that you capture contains one of the following:
1. VAT Number If your buyer belongs to a state where VAT is levied, VAT Number has to be printed on the excise invoice. 2. Bill of Sale Number - If your buyer belongs to a state where VAT is not levied, Bill of Sales Number has to be printed on the excise invoice.

1. 2. 3. 4. 5.

During billing, the system generates the VAT number if the VAT Registration number is maintained in customer master in the Tax Code 2 field. Else, the system generates a Bill of Sale number. These numbers have to printed serially and separately for Bill of Sale, VAT invoice, credit and debit notes. You can do this using the Official Document Numbering. Country-Specific Functions
Country Version India uses the standard functions for calculating and collecting withholding taxes. However, both Classic Withholding Tax and Extended Withholding Tax come with additional functions for tax remittance, journal vouchers, creating withholding tax certificates, and preparing annual returns. If you want to handle excise duties, you must post the excisable transactions using the Materials Management (MM) and Sales and Distribution (SD) components. The system calculates the excise duty in these components and creates the appropriate line items in Financial Accounting (FI). However, if you only want to handle withholding taxes, you can use FI on its own.

Country Template
The country template for India comes with settings for calculating and posting withholding taxes, and account determination settings for posting excise duty.

Excise Duty
Use
The SAP system automatically calculates excise duties in Materials Management (MM) and in Sales and Distribution (SD), and posts them in Financial Accounting (FI). The system covers all types of excise duty, all of which need to be calculated and reported separately: Basic excise duty (BED) Special excise duty (SED) Additional excise duty (AED) National calamity contingency duty (NCCD) Cess Education cess Countervailing duty Additional duty of customs

Features
The system of excise duties is complex, and differs from the generic functions for taxes on sales and purchases in a number of ways: The rate of duty on a single material can vary according to which chapter ID it is listed under. You cannot offset all excise duty on inputs against outputs. Depots cannot offset any input duties at all. Manufacturing plants can only offset input duties if they can show that the input materials are used to produce output materials. You have to record all excise duty (inputs and outputs) in excise registers. Your company may only be entitled to offset a portion of the duty on inputs against duty on outputs. Companies that qualify as small-scale industries can levy excise duty on outputs at reduced rates, so if you purchase materials from these companies, you must calculate a different rate of excise duty.

Excise Determination
MM comes with two ways of determining excise duties (and sales taxes) on input materials: formula-based excise determination and condition-based excise determination. The system calculates excise duties using a tax procedure. SD also supports formula-based and condition-based excise determination, but in SD, the system calculates the taxes using a pricing procedure, not the tax procedure (see Pricing).

Reporting
You have to remit the excise duty that you have collected to the central excise authorities. The law requires you to remit excise duty twice monthly: for the first half of any given month (115 inclusive) and from 16 to month-end. In each case, you are allowed five days to remit the excise duty. Country Version India offers a report to help you do just that (see Remittance of Excise Duty Fortnightly). A small number of transactions have to be remitted on the same day (see Other Outward Movements). In addition, the system allows you to prepare printouts of the various excise registers for the tax authorities.

Partial CENVAT Credit

Use
In some industries, businesses are only allowed to set off a portion of their input excise duty against output duty. In this case, the remainder of the duty is added to the material value.

Activities
Customizing
If any of your excise registrations are only entitled to claim partial CENVAT credit, set the indicator in Customizing for Logistics General, by choosing Taxes on Goods Movements India Basic Settings Maintain Excise Registrations. Configure separate tax codes that split the excise and post some as tax and add the rest to the material price.

Day-to-Day Activities
The portion of the excise duty that is added to the material value is displayed in the excise invoice, along with the CENVAT credit. This amount is added to the inventory value when you post the goods receipt.

Remittance of Excise Duty Fortnightly

Use
You use this report to calculate how much excise duty you must remit to the authorities. Legislation requires you to remit excise duty twice monthly: for all the goods issues in the first half of any given month (115 inclusive) and from 16 to month-end. In each case, you are allowed five days to remit the excise duty. Once the report has determined how much you have to pay, it allows you to specify where the money should be paid from whether it should be deducted from the CENVAT credits that you have accumulated, or whether it should be deducted from the personal ledger account (PLA). Irrespective of which date you execute the report on, you can only utilize CENVAT credits posted up until the 15th or the last day of the month as the case may be.

Prerequisites
You have:
Customized the system so that when you create an excise invoice for a sale, the system automatically debits the excise to a CENVAT clearing account Made the settings in Customizing for Logistics General, by choosing Taxes on Goods Movements India Business Transactions Utilization

Features
To access the report, on the SAP Easy Access screen, choose Indirect Taxes Sales/Outbound Movements Fortnightly Payment. Selection On the selection screen, enter data as required:
Organizational data (in the General data group box) Posting date for the CENVAT payment, if it is different from the run date The period to be covered by the report (for example, 115 January) If, for any reason, you want to select an excise invoice individually, you can do so. Any entry in the Period field will be disregarded. To display a list of all the excise invoices whose excise duty you have not yet remitted, choose Display pend. invoices. To display a list of only the excise invoices for a given period, enter the period in the Period fields, select Select pending inv. for period, and choose Display pend. invoices. You can also print the list of pending invoices. To display the last date when tax was remitted, choose Display last util. date (Display last utilization date).

Output For each sort of excise duty, the system shows you:
How much you have to remit (Amounts payable group box) How much credit you have at your disposal on the appropriate CENVAT account (Available balances) This figure is equal to the credits on the CENVAT account less the minimum balance. How much credit you have on the CENVAT accounts (G/L account balances)

You now have to specify which accounts can be used to utilize the duty amount. In the Balance Utilization group box, the system proposes how much money should be taken from which accounts. You can overwrite these fields if you want, and choose to refresh the display. For a list of excise invoices that are considered for the CENVAT payment, choose Display excise invoices. You can print the list and use it as an annexure. When you have finished, save your entries. The system then:
Creates an accounting document that:

Credits the CENVAT clearing account to remove the excise duty owed Debits the accounts from which the excise duty is to be paid
Updates the Updates the Part II register

1.

Value Added Tax (VAT)

Use
In India, VAT has been levied in certain states from April 1, 2005. VAT is levied instead of the Local Sales Tax (LST). VAT also replaces other taxes such as, turnover tax, surcharge, additional surcharge.

Prerequisites
You can configure the following tax procedures:
For Condition-Based Excise Determination, configure the tax procedure TAXINN. For more information about TAXINN, see Configuration of Tax Calculation Procedure TAXINN. For Formula-Based Excise Determination, configure the tax procedure TAXINJ. For more information about TAXINJ, see Configuration of Tax Calculation Procedure TAXINJ.

Features
The essence of VAT is that you can set off the input tax against the tax paid earlier. VAT is based on the value addition to the goods, and your VAT liability is calculated by deducting input tax credit from tax collected on sales during the payment period (say, a month).
You have purchased input worth INR 1,00,000 and your sales are worth INR 2,00,000 in a month, and input tax rate and output tax rate are 4% and 10% respectively, then input tax credit/set-off and calculation of VAT will be as follows:

Input purchased within the month = INR 1,00,000 Output sold in the month = INR 2,00,000 Input tax paid = INR 4,000 Output tax payable = INR 20,000 VAT payable during the month after set-off/input tax credit = INR (20,000 4,000) = INR 16,000 The excise invoice that you capture contains one of the following:
1. VAT Number If your buyer belongs to a state where VAT is levied, VAT Number has to be printed on the excise invoice. 2. Bill of Sale Number - If your buyer belongs to a state where VAT is not levied, Bill of Sales Number has to be printed on the excise invoice.

1. 2. 3. 4. 5.

During billing, the system generates the VAT number if the VAT Registration number is maintained in customer master in the Tax Code 2 field. Else, the system generates a Bill of Sale number. These numbers have to printed serially and separately for Bill of Sale, VAT invoice, credit and debit notes. You can do this using the Official Document Numbering.

Configuration for Official Document Numbering

Purpose
Official Document Numbering is used to to print the numbers serially and separately for Bill of Sale (BOS), Value Added Tax (VAT) invoice, credit and debit notes.

Process Flow
To configure the Official Document Numbering for India, execute the following activities in the IMG under Cross-Application Components General Application Functions Cross-Application Document Numbering Taiwan. 1. ... 1. 1. Define Business Places for different plants. 2. 2. Assign Business Place to Sales Office. 3. 3. Maintain different document classes to generate different number ranges, for example, B for Bill of Sale, V for VAT Invoice. 4. 4. Assign the document class for the VAT and BOS to the Document Type. 5. 5. Maintain the Number Group. 6. 6. Maintain the Number Ranges for the Number Group. 7. 7. Assign the Number Range to a combination of Business place, Document Class and Number Group.

Service Tax
Use
This is a tax that is levied on the services rendered. It is applied on the total price of the service.

Prerequisites
In addition to the standard Implementation Guide (IMG) settings for taxes on service tax, you must also have maintained the tax registration numbers of your vendors, customers and your own plants. If there are multiple tax registration numbers, you should have separate account postings to different General Ledger Accounts based on service registration number. You can do this provided you have maintained a separate tax code for each service registration number. To do this, for every service registration number, you should define separate General Ledger Accounts for service tax and education cess on service tax.

Features
Service tax has the following features: It is charged at 12% on the price of the service rendered. An education cess of 2% is applicable on the service tax. This is a deferred tax. Only the amount of service tax that is actually received (credits) by the customer can be offset against the tax payable.

The interim General Ledger Account contains the total service tax that you have to receive. The final General Ledger Account contains only the actual amount that you have received. You can take credit for only the amount in the final General Ledger Account. Service tax can be used to set off excise duty paid by you. Additional duty of customs cannot be used to set off the service tax paid by you. This tax is payable to the Central Government.

Example
The price of the service is INR 10,000. Service tax that is applicable is INR 1,200. Education cess is INR 24. Total amount to be received by you is INR 11,224. The system updates the interim General Ledger Account with this amount. Now, assume that the customer makes a part payment, out of which INR 500 is against service tax. You have to manually update the final General Ledger Account with this amount. You can offset only INR 500 against the payables in that month.

Sales Tax
Use
This is a tax levied on the sale of a product. It is applied on the gross price of goods, inclusive of excise duty.

Prerequisites
In addition to the standard Implementation Guide (IMG) settings for taxes on sales and purchases, you must also have maintained the tax registration numbers of your vendors, customers, and your own plants. Furthermore, if the state legislation allows you to offset input local sales tax (LST) against output LST, you must also have defined this (see Material Master (Excise Data)).

Features
There are two types of sales tax. Interstate sales (for example, between Karnataka and Tamil Nadu) are subject to central sales tax (CST). The tax rate is the same throughout the country. Intrastate sales, on the other hand, are subject to local sales tax (LST), which differ from state to state. The system handles these using tax jurisdiction codes. A percentage of input LST can be deducted against output LST, depending on what percentage of goods you have purchased in the state in question. The system calculates the sales taxes automatically, when you enter the tax codes. A report is also available that tells you how much sales tax you have paid and collected.

Withholding Tax
Use
Country Version India comes ready configured with all the settings you need to track and remit withholding taxes under the following sections of the Income Tax Act, 1961: Payments to contractors and subcontractors (Section 194 C) Insurance commission (Section 194 D)

Rent (Section 194 I) Fees for professional or technical services (Section 194 J) Interest other than interest on securities (Section 194 A) (only supported in the Extended Withholding Tax solution)

Features
Country Version India offers you two solutions for handling withholding tax (also known as tax deducted at source or TDS). You can either use the Classic Withholding Tax solution or the Extended Withholding Tax solution. If you are installing the SAP system for the first time, we recommend that you use the Extended Withholding Tax solution. Before you decide one way or the other, however, you must give careful consideration as to whether Extended Withholding Tax covers your requirements. If you start working with this solution and it transpires that it does not cover your needs, SAP does not offer a strategy for migrating to Withholding Tax. Taxes withheld under each section are treated differently with regard to the time limits for remitting tax to the authorities, providing the taxpayer with a withholding tax certificate, and filing an annual return. In addition, the formats for the withholding tax certificates and the returns also differ. The Income Tax Act requires you to calculate taxes as soon as you enter an invoice. However, if you make a down payment to a vendor before you have received an invoice from it, you withhold tax on the down payment. Then, once the invoice arrives, you clear the down payment against it. When you prepare your annual returns, the act also requires you to make provisions for taxes on services received but not yet invoiced.

Country Version India

Country Version India complements the generic Classic Withholding Tax and Extended Withholding Tax solutions with additional functions that meet the needs of the Income Tax Act. These functions allow you to: Ensure that you remit taxes within the due date Track and report withholding tax surcharges separately Adjust withholding taxes when you clear a down payment against an invoice Prepare withholding tax certificates and annual returns Calculate withholding tax on provisions

Classic Withholding Tax

Use
Under the terms of the Income Tax Act, you are required to calculate withholding tax (tax deducted at source, or TDS) when you post a vendor invoice. The system calculates withholding tax at the time of payment. To handle this difference in the calculation of the tax and to incorporate additional requirements, such as withholding tax certificate printing and annual returns, additional functions are provided.

Features
The withholding tax for an invoice or a down payment is calculated at header level. That is, only one withholding tax code can be used for a down payment or invoice. This implies that an invoice cannot contain items with different withholding tax rates. It can, however, contain one or more

items with the same withholding tax rate and one or more items with no withholding tax. This can be handled by specifying the base amount on which withholding tax is to be calculated. On account of calculation at header level, companies have to instruct their suppliers not to include items with different withholding tax rates in a single invoice, but issue separate invoices for different tax rates. The system also allows you to print TDS certificates for vendors, and to reprint or cancel them if necessary. In addition, you can also prepare TDS returns.

Recipient Type
Definition
A system object that you use to classify payment recipients as legal persons or natural persons, for the purposes of withholding tax reporting.

Use
Customizing
Define the recipient types in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Withholding Tax Basic Settings Maintain Types of Recipient. Create two entries as follows: Recipient type CO OT Text Companies Others

Master Data
When you enter the withholding tax types and codes in the vendor master, enter CO or OT in the Recipient Type field, depending on whether the vendor is a legal person or a natural person.

Reporting
The annual returns separate the information about taxes withheld on legal persons and on natural persons.

Calculate Tax Deducted at Source

Use

You use this program to calculate withholding tax on vendor invoices. It you have already posted a down payment for an invoice and withheld tax on it, the system automatically takes the tax already paid into account. To access the program, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Withholding Tax Tax Deduction at Source: Classic.

Prerequisites
You have already entered the invoices and the down payments.

Features
Selection
On the selection screen, enter the following data: Run Program in Test Mode We recommend that you first run the program in test mode, then once you are satisfied with the results, in update mode. Process Invoices Only Select this if you want to post TDS for a specific invoice. It speeds up the response time. TDS Date This is the posting date that the system enters in the TDS document (update mode only).

Output
The system displays a list of invoices and specifies whether there are any down payments to be cleared against them.

Activities
In the output list, you can clear an invoice against a down payment as follows:

1. Position the cursor on the invoice that you want to clear the down payment against and
choose . 2. Select the down payment that you want to clear. 3. Save the down payment. The system:

Creates an accounting document to clear the down payment and reduce the vendor liability Recalculates the withholding tax base amount and the withholding tax amount, based on the amount of the down payment against which the invoice was cleared.

You can also clear invoices against down payments by first taking a list of all the invoices listed above by choosing . You can then clear them by choosing Financial Accounting Accounts Payable Document Entry Down Payment Clearing, and then clear each invoice one by one. By clicking on the document numbers, you can display the document of the TDS posting. You will have to make a manual FI posting to transfer the amounts from the respective withholding tax accounts (as defined in the withholding tax line items) to the TDS government payable vendor account. To make the payment to the TDS government payable vendor account, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Document Entry Outgoing Payment Post.

Handling of Credit Memos

Use
This procedure shows you what happens if you post a credit memo against a vendor invoice. If you have already remitted the TDS from the invoice, the credit memo against that invoice is not considered at all for processing. Otherwise, the system calculates TDS for the amount stated on the credit memo and debits it from the TDS payable account.

Procedure
1. You post a credit memo, entering with the invoice number as the reference number. 2. You post the TDS in test mode. The system displays a message, telling you to run the program in update mode. 3. You post the TDS in update mode. The system makes the appropriate posting and displays the number of the credit memo along with the TDS posting document.

Making Down Payments on Invoices Where TDS Has Been Calculated

Use
If you have withheld TDS on an invoice but not yet remitted it to the government, and the invoice needs to be cleared against a down payment, you have to adjust the tax amount accordingly.

Prerequisites
You have posted the invoice and the TDS document has been created.

Procedure
1. Clear the down payment against the invoice using the standard clearing transaction. 2. The next time you run the TDS posting program in update mode, the system makes a posting to correct the TDS, by debiting the G/L account associated with the entered tax code. It also displays the numbers of the down payment clearing document and the TDS document.

Reversing TDS Postings

Use
If you reverse an invoice or down payment that you have already calculated TDS on, you also have to reverse the TDS postings.

Procedure
When you reverse a down payment in the standard, the system automatically reverses the TDS posting. When you reverse an invoice, the system reverses the TDS posting the next time you run the TDS report in update mode.

Remittance Challans
Use
When you have remitted the deducted TDS to the government, you are sent a bank challan confirming that payment has been received. The system allows you to record the number of the challan in the invoices from which the TDS had been deducted and paid. You can also use this function to change the challan number or date later on, if necessary.

Features

To access this report, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Withholding Tax Enter Remittance Challans.

Selection
The system displays the transactions on which you have withheld TDS. You select the transactions for which you have remitted the TDS, enter the challan details. The system then records the challan number in each of the transactions. If you need to change a challan number or date, enter the challan number and date that is to be changed. The actual TDS amount and the surcharge on this TDS amount are shown separately. To handle cases where the company needs to have many TAN numbers, you can enter the TAN number when you update the challan number. This number will be used subsequently for the certificates.

Print Certificates
Use
You use this program to print TDS certificates for your vendors (individually or in batches). It covers the TDS in all the invoices and down payments that you have posted over a specified period. To access the program, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Withholding Tax Certificates Print Vendors.

There is a separate print program for one-time vendors, which you can access from the SAP Easy Access screen, by choosing Accounting Financial Accounting Accounts Payable Withholding Tax India Withholding Tax Certificates Print One-Time Vendors.

Prerequisites
You have already remitted the TDS to the government and recorded the challan number in the transactions concerned (see Update of Challans). Only transactions with a challan number can be included in certificates. The certificate printing program uses SAPscript form J_1ITDSCERT. If there are some changes in the certificate format this layout set can be changed accordingly.

If the certificates are to be divided by business area, with a unique number range per business area, you must have maintained the sections as a combination of section and business area, so for business area 0001 and section 194C, you could maintain the section as 194C0001, for example.

Features
Selection
Enter data as required, including: The dates of the transactions that are to be covered in the certificate Withholding tax section

If you enter the business area in combination with the section, it must also be used in all other transactions involving this certificate, including annual returns.

Output
If you select the preview option, the system displays a certificate without any certificate number. The number will be assigned only when the certificate is actually printed directly (not from the print preview). A summary of all the certificates is printed at the end, summarized by certificate and challan number.

Reprint Certificates
Use
You use this program to reprint TDS certificates. To access the program, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Withholding Tax Certificates Reprint.

Features
Selection
On the selection screen, enter the numbers of the certificates that you want to reprint and the details of the signatory.

Output

The system prints the certificates. Each certificate is marked as a duplicate.

Cancel Certificates
Use
You use this program to cancel TDS certificates. To access the program, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Withholding Tax Certificates Cancel.

Features
Selection
Enter data as required, including the number of the certificate that you want to cancel.

Output
The system marks the certificate as canceled. It does not delete it from the database.

Archiving of TDS Documents

Use
You use these functions to archive documents for tax deducted at source (TDS). For more information about archiving, see Introduction to Data Archiving.

Prerequisites
Before you can archive this data, you must have archived the related data form Financial Accounting (FI) and Material Management (MM).

Features
The TDS documents are archived using archiving object J_1ITDS, which is supplied with Country Version India (CIN). It is used for archiving the data in tables J_1ITDS and J_1ICERTIF. Once you have archived the TDS documents, you must delete the originals from the database. Once you have deleted the originals, you can reload them from the archive file. Finally, you can also analyze them.

Archiving of TDS Documents

Use
You use these functions to archive documents for tax deducted at source (TDS). For more information about archiving, see Introduction to Data Archiving.

Prerequisites
Before you can archive this data, you must have archived the related data form Financial Accounting (FI) and Material Management (MM).

Features
The TDS documents are archived using archiving object J_1ITDS, which is supplied with Country Version India (CIN). It is used for archiving the data in tables J_1ITDS and J_1ICERTIF. Once you have archived the TDS documents, you must delete the originals from the database. Once you have deleted the originals, you can reload them from the archive file. Finally, you can also analyze them.

Creating an Archive Report Variant

1. Choose
Maintain. 2. Enter a variant name of your choice. 3. Choose Create. 4. Specify which certificates you want to archive and enter other data as required: o Create Specifies that the program will run in update mode. o Delete in test mode Select this for test runs. o Package Enter the optimum package size. o Comments Enter any comments for your own reference.

5. Choose

Attributes. 6. Enter data as required.

7. Save the variant. 8. Go back to the Archive Management: Create Archive Files screen.

Deleting TDS Documents

1. From the SAP Easy Access screen, choose Accounting Financial Accounting
Accounts Payable Withholding Tax India Withholding Tax Utilities Archive Documents. In the Object Name field, the system displays the name of the archiving object, J_1ITDS.

2. Choose Delete. 3. In the User Name field, enter the name of user who will delete the documents. 4. Select Test Run if you do not want to run the report in update mode.
This will report any inconsistencies between the table data and the archive file that can be fixed.

5. To specify what archive file you want to delete the documents for, choose 6. 7. 8.
selection. To specify when to start the report, choose Start Date. To enter the print parameters, choose Spool Params. Choose .

Archive

Reloading TDS Documents

1. From the SAP Easy Access screen, choose Accounting Financial Accounting
Accounts Payable Withholding Tax India Withholding Tax Utilities Archive Documents. In the Object Name field, the system displays the name of the archiving object, J_1ITDS.

2. Choose
o

Reload. 3. Enter data as follows: Variant Enter the report variant that you want to use. You can create a variant if you need to. o User Name Enter the name of user who will reload the data.

4. To specify what archive file you want to reload the documents from, choose 5. 6. 7.
Selection. To specify when to start the report, choose Start Date. To enter the print parameters, choose Spool Params. Choose .

Archive

Archive Overview
Use
You use this report to find out where you have archived a tax deducted at source (TDS) document.

Features
Selection
On the selection screen, you specify which TDS documents you want to view. You can make your selection by vendor, business area, and TDS certificate number.

Activities
To access the report, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Withholding Tax Utilities View Archived Documents.

Transaction Codes for Classic Withholding Tax

Transaction Code J1INC J1I8 J1ICCERT J1ICOTV J1ICREP J1ICREP J1INEFILE J1IHBK J2ID J2IE Action Post withholding tax on invoices Enter remittance challans Print withholding tax certificates for vendors Print withholding tax certificates for onetime vendors Reprint withholding tax certificates Cancel withholding tax certificates Prepare TDS returns Copy bank IDs from invoice to TDS document Archive TDS documents Display archived TDS documents

Extended Withholding Tax

Use
Country Version India contains a number of features that complement the generic Extended Withholding Tax solution. For information about the generic functions, see Extended Withholding Tax. The country-specific features are described in the following documentation.

Features
Using the Extended Withholding Tax solution, you can withhold and report tax under all sections of the Income Tax Act listed in Withholding Tax. Since a company may consist of more than one entity responsible for withholding taxes, each of which is identified by a separate TAN, you use a separate SAP organizational unit to represent each entity, the section code.

Activities
Customizing
For generic information about customizing Extended Withholding Tax, see Settings for Extended Withholding Tax: Overview. Country Version India comes with sample Customizing settings for all of the aforementioned sections of the Income Tax Act. The settings include: Withholding tax types Withholding tax codes Official withholding tax keys, which represent the different sections of the Income Tax Act

Recipient types, which represent the categorization of taxpayers into "companies" and "others," again, as per the Income Tax Act You must also customize your own section codes.

Master Data
Enter the required information in the vendor masters and in the customer masters.

Day-to-Day Activities
You are required to calculate taxes either when you enter an invoice or when you make any sort of payment, whichever comes first. Since a full payment is seldom made before the invoice arrives, that means in effect that you withhold taxes when you enter an invoice or a down payment. When you enter a vendor invoice or make a down payment that is liable to withholding tax, the system automatically creates line items for the appropriate taxes, including surcharges. Since different taxes need to be remitted on different dates, depending on the section of the Income Tax Act, the system also calculates and records each line item's due date. If you first make a down payment (and withhold tax on it) and then enter the vendor invoice later on, you have to clear the invoice against the down payment so that you do not withhold tax on the same item twice. As far as your receivables are concerned, you also enter withholding tax certificates sent to you by your customers, as proof of tax that they have withheld on payments to you.

Periodic Processing
At the end of each period, you make provisions for taxes on services received. The authorities in India require you to remit taxes following a specific procedure. First, you create a remittance challan with a list of the withholding tax items that you are remitting. You then send

the challan to the authorities, along with the check. Once the check has been cashed, the bank sends you a bank challan to confirm the payment. You then enter the bank challan in the system. The system automatically tracks each withholding tax item's remittance challan and bank challan. When you have remitted the tax, you can print out withholding tax certificates for all taxes that you have withheld, using functions specific to Country Version India. Before you create your annual returns, you can also check for any customers that have not yet sent you a withholding tax certificate for tax that they have withheld from you. Again, with receivables, if you make interest payments to your customers, you must also withhold tax on them as appropriate.

Reporting
Country Version India offers a report that you can use to prepare annual returns, and a Withholding Tax Information System for tracking and reporting purposes. See also: Accounts Payable (FI-AP) Accounts Receivable (FI-AR)

Section Code
Definition
A system object that represents the organizational unit responsible for collecting and remitting withholding tax, as identified by a TAN. Each company can have more than one TAN, so in the SAP system, a company code can also have multiple section codes.

Use
Customizing Define section codes in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Basic Settings India Define Section Codes. Day-to-Day Activities When you post a document with a withholding tax item (for example, a vendor invoice or a credit memo), enter the section code in order to make sure that the tax item is assigned to the correct TAN. For more information, see Entering Vendor Invoices. In order to ensure that you always enter a section code, we recommend that you create a validation for this field. Periodic Processing When you print withholding tax certificates, each of your section codes can define its own forms, depending on which format is required by the income tax office. The certificate supplied with the standard system also shows the address data from the section code.

Reporting Each TAN holder files its own tax returns. When you prepare a TDS return, you enter the TAN holders section code on the selection screen. The annual returns then show only the withholding tax items that are assigned to that section code.

Withholding Tax Type

Definition
See withholding tax type. For generic information about withholding tax types, see Withholding Tax Types. Defining

Use
Customizing
You define withholding tax types in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Calculation Withholding Tax Type Define Withholding Tax Type for Invoice Posting and Define Withholding Tax Type for Payment Posting. Country Version India comes with one set of sample withholding tax types for calculating tax at invoice posting and another one for calculating tax at payment posting. Both sets contain two separate tax types for each of the supported sections of the Income Tax Act (see Extended Withholding Tax), one for basic-rate tax and one for the surcharge. All of the withholding tax types are customized so that certificate numbers are not assigned at this level. They are assigned by the programs that you use for printing the withholding tax certificates instead. When you have defined the withholding tax types, define the withholding tax codes and recipient types.

Master Data
Assign the appropriate withholding tax types to your vendor masters and customer masters.

Day-to-Day Activities
When you enter a document that is liable to tax (for example, when you enter a vendor invoice), the system automatically applies the tax type and tax code appropriate to that vendor or customer. See also: Accounts Payable (FI-AP) Accounts Receivable (FI-AR)

Withholding Tax Code

Definition
For generic information about withholding tax codes, see Codes. Defining Withholding Tax

Use
Customizing Define the withholding tax codes in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Calculation Withholding Tax Codes Define Withholding Tax Codes. Country Version India comes with a sample tax code for each of the sample withholding tax types provided. The basic-rate withholding tax codes are set to 2%; the surcharge tax codes are set to 0.4%. For reporting purposes, assign each withholding tax code to a withholding tax key. Observe the special procedures when you customize withholding tax codes for Section 194 A of the Income Tax Act (see Exemptions and Reduced Rates for Section 194 A). You must use withholding tax codes with posting indicator 1, otherwise you cannot clear down payments against invoices or remit withholding taxes. Master Data Assign the appropriate withholding tax codes to your vendor masters and customer masters. Day-to-Day Activities When you enter a document that is liable to tax (for example, when you enter a vendor invoice), the system automatically applies the tax type and tax code appropriate to that vendor or customer. See also: Accounts Payable (FI-AP) Accounts Receivable (FI-AR)

Withholding Tax Key

Definition
A system object that you use to classify withholding tax items according to which section of the Income Tax Act they belong to. This information is required in TDS returns.

Use
Customizing Check the withholding tax keys provided in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Basic Settings Define Withholding Tax Keys.

Assign an official withholding tax key to each withholding tax code. Day-to-Day Activities Whenever you post a withholding tax item, assign it a withholding tax code as normal. Since each withholding tax code is also assigned to an withholding tax key, the system automatically knows which section of the Income Tax Act you have withheld the tax under. Reporting When you prepare a TDS return, it shows which section of the Income Tax Act you withheld each item under.

Recipient Type
Definition
A system object that you use to classify payment recipients as legal persons or natural persons, for the purposes of withholding tax reporting.

Use
Customizing Define the recipient types in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Basic Settings Check Recipient Types. For each withholding tax type, create two entries as follows:
Recipient Type CO OT Text Companies Others

Country Version India comes with sample settings for the sample withholding tax types provided. Master Data Enter the recipient type in each vendor master and each customer master. Reporting The TDS returns separate the information about taxes withheld on legal persons and on natural persons.

Exemptions and Reduced Rates for Section 194 A

Use
Under Section 194 A of the Income Tax Act, you withhold tax on interest payments that you make, with the exception of interest on securities. You declare such taxes withheld using form 26A.

However, some payments are exempt from withholding tax, and on others, you only have to withhold tax at a reduced rate for example, if the recipient of the payment is a bank or is a company in possession of an exemption certificate. When you prepare your annual return, you have to declare how much interest you have paid to companies without withholding tax or with reduced-rate tax.

Activities
Customizing Define separate withholding tax codes for calculating withholding taxes at the reduced rates and for exemptions. Make the additional settings for the withholding tax codes in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Calculation Exemptions and Reductions. Master Data Enter the appropriate withholding tax codes in your customer masters and vendor masters as normal. Do not enter any exemption reasons. Day-to-Day Activities Whenever you post a withholding tax item that falls under this section of the Income Tax Act, make sure that you use the appropriate tax code. Reporting When you create a TDS return, it shows how many rupees worth of business you have taxed at a reduced rate, and how much was exempt from tax.

Exemptions and Reduced Rates Under Sections 197 and 197 A

Use
Under sections 197 and 197 A of the Income Tax Act, the Income Tax Department can grant companies exemptions from having tax withheld from payments to them, or reduce the withholding tax rates. You need to record this information in the system and report it in TDS returns.

Activities
Customizing Define separate withholding tax codes for calculating withholding taxes at the reduced rates and for exemptions. Make the additional settings for the withholding tax codes in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Basic Settings India Exemptions and Reductions.

Master Data Enter the appropriate withholding tax codes in your vendor masters as normal. Do not enter any exemption reasons. Reporting When you prepare a TDS return, it shows how many rupees worth of business you have taxed at a reduced rate, and how much was exempt from tax. See also: Withholding Tax Code Vendor Master (Withholding Tax Data) TDS Returns

Surcharges
Use
As well as withholding tax on payments to vendors, in India, you may also be required to withhold a surcharge.

Features
Some tax offices require you to track surcharges separately from the basic withholding tax, that is, to create separate line items for the surcharges. Others prefer you to combine the two in a single line item. The system supports both calculation methods.

Activities
Customizing Set up the surcharge function in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Basic Settings India Surcharges. Create withholding tax types and withholding tax codes for the surcharges. The standard system comes with samples for both. Day-to-Day Activities When you enter a vendor invoice, the system automatically calculates any surcharges that apply. It either creates one withholding tax item or two, depending on how you have customized the system. The following examples assume that the surcharge is 2% of the basic-rate withholding tax:
Vendor Invoice with Surcharges Shown Separately

Vendor Invoice with Surcharges Combined with Other Withholding Tax Items

Reporting No matter which of the calculation methods you use, TDS returns show the surcharges separately.

Tax Due Dates

Use
When you enter a vendor invoice, the SAP system automatically determines what date you have to remit the withholding tax to the tax office and records it in the tax line item.

Features
There are several factors that influence the tax due date, all of which you can customize: 1. Which section of the Income Tax Act the tax is from (represented in the SAP system by the official withholding tax key) 2. Whether the vendor is classified as a company or not (in the system, the recipient type) 3. In the event of the tax being due on a public holiday, whether the tax office requires you to remit the tax a day earlier or a day later

Activities
Customizing Set up the due dates in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Basic Settings India Maintain Tax Due Dates. In Customizing for FI, under Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Basic Settings India Assign Factory Calendars to Section Codes, specify whether, in the event of the due date falling on a public holiday, you must remit the tax on the day before or the day after. Day-to-Day Activities When you enter a vendor invoice, the system automatically determines the tax due date and enters it in the tax line item.

Periodic Processing When you come to create a remittance challan to remit the withholding tax, the system uses the tax due date.

Withholding Tax on Interest Payments to Customers

Use
Under Section 194 A of the Income Tax Act you are required to withhold tax on interest payments that you make to customers. To calculate the interest, use the Balance Interest Calculation program, which calculates the interest and the amount of tax to be withheld.

Activities
Customizing
You have made the settings for interest calculation in Customizing for Financial Accounting (FI), by choosing Accounts Receivable and Accounts Payable Business Transactions Interest Calculation.

Periodic Processing
Execute the program as described in the documentation. There are two types of output. The system either creates a batch input session, which you can process, or it displays the details of the interest to be posted, which you can post manually. In both cases, you must ensure that each customer line item contains a section code. The program creates an accounting document as follows:

It copies the section code from the customer line item to the withholding tax item, and calculates the tax due date (see Tax Due Dates).

Journal Vouchers
Use
If, after you have entered and cleared a vendor invoice and you have discovered that you have posted the wrong amount of tax or that you have posted the tax using the wrong official tax key, you have to enter a journal voucher (JV) to correct the error. To access the function, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Extended Withholding Tax Journal Vouchers Enter.

Prerequisites

You have maintained the settings in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Postings India Journal Vouchers.

Features
You only need to create JVs to adjust withholding tax items and vendor items that you have already cleared. Otherwise, you can reverse the original document using the generic functions. You do not need to adjust a tax item if you have already issued a withholding tax certificate for it and the vendor has accepted it, since, in this case, the vendor can use this certificate to claim a refund from the tax authorities. When you enter a journal voucher, the system creates an accounting document as follows: Type of change Tax refund to vendor (tax already remitted) Tax refund to vendor (tax not yet remitted) Tax increase, payable by vendor Debit Loss account Tax payable account Vendor account Credit Vendor account Vendor account Tax payable

If you have already remitted the tax to the tax office and you change the tax code so that it uses a different official withholding tax key, the system makes a second posting to correct the tax under the right tax key. This posting debits the loss account and credits the tax expense account. See also: Entering Journal Vouchers

Entering Journal Vouchers

1. In the Document Number field, enter the invoice number. 2. Enter other data as required and choose Check. 3. Depending on what you want to change, choose Amount Correction or Tax Code
Correction. 4. Change the tax amount to the correct amount, or change the tax code. To check what adjustment posting will be made, select the line item that you have changed and choose Simulate. 5. Save the journal voucher.

Provisions for Taxes on Services Received

Purpose
In India, when you come to prepare your financial statements, you are required to make an adjustment entry for any accrued withholding taxes. That means that if, when you prepare your statements, a vendor has provided you with some services but not yet sent you an invoice, you make an adjustment entry for the taxes that you will withhold on the vendor payment. When you make the entry, you must take into account any tax that you have already withheld on any down payments that you have made. Once the vendor sends the invoice, you reverse the provision.

Prerequisites
In Customizing for Financial Accounting (FI), you have made the settings under Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Postings India Provisions for Taxes on Services Received.

Process Flow
1. A clerk enters a purchase order for services to be provided. 2. A vendor provides you with some services on 25 January, and the clerk
service receipt in the system accordingly. The system then automatically creates the following accounting document: enters the

3. At month-end, the vendor has not sent you an invoice. You will be required to withhold
tax on the payment, so you enter a provision for the withholding tax. The system creates an accounting document as follows:

You can now prepare your financial statements correctly.

4. On 7 February, the vendor sends you the invoice, and you

enter it in the system.

When you enter the invoice, the system automatically calculates how much tax you have to withhold when you pay the vendor. It does not clear the provision against the invoice, so at this moment your accounts are actually incorrect, because they have two entries for the same amount of withholding tax.

5. In the evening, you reverse the provision.

The system creates the following accounting document:

By reversing the provision, you put your accounts in order again.

Entering Provisions
2. ... 8. 1. On the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Extended Withholding Tax Provisions for Tax on Services Received Enter. 9. 2. Enter the following information: Organizational data, such as company code and financial year The G/L accounts that you want to post provisions for Other information relating to the items that you want to adjust (for example, vendors or purchase orders) Information relating to the posting document that the system will make the tax postings with 10. 3. Choose .
A list appears, which shows you per purchase the following: Column Open amount Information The total amount of all services received that have yet to be invoiced, irrespective of whether you have already calculated tax on them The amount from goods receipts that you have already calculated tax on The amount on which tax still has to be calculated

Open provision LC bas.amt (Base amount in local currency)

11.

4. You now have to specify how much tax has to be withheld. For each purchase order: 1. ...

1. 2. 3. 4.

a. Enter the tax type and tax code of the tax that has to be applied Use invoice tax types only.

b. Enter the section code. c. Enter the business area, if required. d. If you have made a down payment on the purchase order, reduce the tax base amount by this amount. 1. 5. When you have entered all the data, save it.

Reversing Provisions
Use
Follow this procedure to reverse provisions that you have made for taxes on services rendered. You can only reverse the provisions for invoices that you have received since you posted the provision.

We recommend that you run this program every night in the background, in order to avoid discrepancies in your data.

Procedure
1. From the SAP Easy Access screen, choose Accounting Financial Accounting
Accounts Payable Withholding Tax India Extended Withholding Tax Provisions for Tax on Services Received Reverse. 2. On the selection screen, enter: o o o Organizational data, such as the company code The posting date of the invoices The posting period .

3. Choose

Remittance of Withholding Tax

Purpose
You are required to follow a specific procedure when remitting withholding tax to the authorities.

Prerequisites
Before you remit your withholding tax, you must have entered any provisions for taxes on services received.

Process Flow
3. ... 12. 1. When the time comes to remit a given sort of tax (see Tax Due Dates), you create a remittance challan.
The system creates an accounting document to transfer the withholding tax items to the appropriate bank account.

13. 14.

2. You send the challan to your bank with a check for the appropriate amount. 3. After a few days, the bank sends you a bank challan to confirm that it has received your check. 15. 4. You enter the bank challan in the system.
When you do so, the program records the bank challan number in every withholding tax item remitted. This information may be required in order to substantiate your accounts.

Result
You can create withholding tax certificates for the withholding tax items that you have remitted.

Remittance Challans
Use
The system allows you to create and cancel remittance challans for payables and receivables.

Prerequisites
You have made the Customizing settings in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Postings India Remittance Challans.

Features
Accounting Documents
When you create a remittance challan, the system identifies which withholding tax items need to be remitted (see Tax Due Date). It then creates an accounting document to clear these items from the withholding tax payable account to the bank account that you want to transfer the tax from.

Challan Numbers
The system generates separate remittance challans for each tax office (section code) and each section of the Income Tax Act (withholding tax key) and numbers each one accordingly. It records the challan number in the withholding tax items for future reference, although you cannot display it directly from any of the system transactions.

Constraints
The programs do not cover part payments of tax items or residual payments.

Creating Remittance Challans

4. ...

1. To access the programs, on the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Extended Withholding Tax Remittance of Withholding Tax Create Remittance Challan or Accounting Financial Accounting Accounts Receivable Withholding Tax India Withholding Tax for Payments to Customers Remittance of Withholding Tax Create Remittance Challans. 17. 2. On the selection screen, enter the following data: Organizational data, such as company code and section code (TAN) Which withholding tax items you want to remit We recommend that in order to get the most accurate selection, you enter a payment due date. 16. If you need to restrict the selection to a specific vendor or customer, for example, if you want to remit the tax for government bodies only, you can do so. 1 1 Tax remittance information, including any charges made by your bank for accepting the check 3. Choose .
The system calls the standard outgoing payment program, which presents you with a selection of tax line items for clearing. To make it easier for you to select the open items, we recommend that you create a line layout that includes the following fields:

18.

Value Date (tax due date) Section Code Reference Key 3 (tax code and recipient type information) Text (information on down payment clearing tax transfer) 19. 4. Activate the items that you want to remit and make a note of the total in the Assigned field. 20. 5. Choose .
The system displays an overview of the line items created so far, including any bank charges that you have entered, and an offsetting posting to deduct your bank account.

21. 22.

6. Double-click the credit entry for your bank account. 7. Change the amount so that it matches the total line items (from step 3) plus the bank charges. 23. 8. Choose Document Simulate.
The system goes back to the line item overview.

24. 9. To update the overview, choose Document Simulate. 25. 10. Save the document.
The program displays a list with the details of the challan numbers generated and the tax remitted. Basic withholding tax and surcharges are listed separately.

Canceling Remittance Challans

Purpose
If for any reason an error occurs when you create a remittance challan, you use this function to cancel the challan and reverse the accounting document. This function does not work, however, if you have already entered the bank challan (see Entering Bank Challans).

Procedure
1. From the SAP Easy Access screen, choose Accounting Financial Accounting
Accounts Payable Withholding Tax India Extended Withholding Tax Remittance of Withholding Tax Cancel Remittance Challan or Accounting Financial Accounting Accounts Receivable Withholding Tax India Withholding Tax for Payments to Customers Remittance of Withholding Tax Cancel Remittance Challan. 2. Specify which accounting document you want to reverse. This is the accounting document that the system created when you created the remittance challan. 3. Choose . The system prompts you to specify what sort of reversal you want to make.

4. Choose Resetting and Reverse. 5. Enter a reversal reason and choose

The system displays two dialog boxes, one with the number of the document posted. After you have closed the dialog box, you go back one screen to display a list of the documents that you have reversed.

Result
The system: Cancels the remittance challan Creates an accounting document to reverse the postings made when you create the remittance challan

Entering Bank Challans

Purpose
When the bank sends you a bank challan, you enter the bank challan in the system. The system stores the bank challan number in all remitted withholding tax items by way of proof that you have remitted the tax.

Procedure
5. ... 26. 1. On the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Extended Withholding Tax Remittance of Withholding Tax Enter Bank Challan or Accounting Financial

Accounting Accounts Receivable Withholding Tax India Withholding Tax for Payments to Customers Remittance of Withholding Tax Enter Bank Challan. 27. 2. Enter data as required, including: Organizational data, such as your company code Remittance challan number Bank challan details 28. 3. Choose .

Result
The system:
Records the bank challan details in the remitted withholding tax items This information will be included in the vendor withholding tax certificates when you print them. Displays a list of the updated items

Withholding Tax Certificates for Vendors and Customers

Use
You must present your vendor or customer with a withholding tax certificate within 60 days of the business transaction. You do not use the generic programs for printing withholding tax certificates. Instead, Country Version India offers two programs that you can use to print withholding tax certificates, one for vendors and one for customers.

Prerequisites
You can only print the certificates once you have remitted the tax in question and entered the bank challans. Any other tax items will not be included in the certificates.

Features
Certificates
The programs print a separate certificate for each vendor or customer. Each certificate shows all the withholding tax items belonging to that vendor of customer. The items are listed according to their bank challan number, as required by law. The program numbers the certificates, but only when you print the certificates directly, not in the print preview. If you have had dealings with the same vendor or customer in more than one tax jurisdiction (tax office), the system prints a separate certificate for each tax office. The system allows you to print out the certificates on different SAPscript forms for every tax office and every section of the Income Tax Act, if required.

Credit Memos, Down Payments

The system deducts credit memos and down payments from the invoices that they belong to, if such information is available.

One-Time Accounts
For one-time vendors or one-time customers, only one business transaction is printed. The address details are taken from the appropriate document for the vendor or customer.

Separate programs are available for reprinting and canceling vendor certificates.

Activities
Customizing
Make the Customizing settings for the programs in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Postings India Vendor Withholding Tax Certificates. Since you do not need the generic programs for printing withholding tax certificates, ignore the generic Customizing activities. Deactivate certificate numbering in the withholding tax types.

Master Data
Maintain your section codes' address data, and maintain your customers' and vendors' PANs (see Vendor Master (Country Version India Data) and Customer Master (Country Version India Data)). This data will be printed out on the certificates.

Periodic Processing
You print vendor withholding tax certificates and customer withholding tax certificates once monthly or once annually as required. If necessary, you can reprint and cancel withholding tax certificates for your vendors (but not for your customers).

Print Vendor Withholding Tax Certificates

Use
You use this program to print out withholding tax certificates for vendors. To access the program, on the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Extended Withholding Tax Withholding Tax Certificates Print.

Features
Selection On the selection screen, enter the following data:
Organizational information, for example, your company code The section code and withholding tax key that you want to create forms for Details of the bank challans that you want to cover Information that is to appear on the certificates

Output The program:

1.Prints out the certificates, numbered consecutively 1.Displays a list of all the certificates printed, grouped by certificate, challan, and section code

Reprint Vendor Withholding Tax Certificates

Use
You use this program to reprint withholding tax certificates for vendors. Note that you can only reprint one certificate at a time, and that you cannot reprint withholding tax certificates for customers. To access the program, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Extended Withholding Tax Withholding Tax Certificates Reprint.

Features
Selection
On the selection screen, enter data as follows: The company code The number and date of the original certificate

Cancel Vendor Withholding Tax Certificates

Use
You use this program to cancel withholding tax certificates for vendors. Note that you cannot cancel withholding tax certificates for customers. To access the program, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Extended Withholding Tax Withholding Tax Certificates Cancel.

Features
Selection
On the selection screen, enter the following data: Company code The number and date of the original certificate

Print Customer Withholding Tax Certificates

Use
You use this program to print out withholding tax certificates for customers. To access the program, on the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Receivable Withholding Tax India Withholding Tax for Payments to Customers Withholding Tax Certificates Print.

Features
Selection On the selection screen, enter the following data: 6. ...
Organizational information, for example, your company code The section code and withholding tax key that you want to create forms for Details of the bank challans that you want to cover Information that is to appear on the certificates

Output The program:

1.Prints out the certificates, numbered consecutively 2.Displays a list of all the certificates printed, grouped by certificate, challan, and section code

Withholding Tax Certificates from Customers

Use
You use this program to enter the withholding tax certificates sent to you by your customers. When you enter a certificate, the system clears the withholding tax to a G/L account that records how much tax your customers have withheld on your behalf, known as the customer tax creditable account. You can offset this tax against your income tax payable at year-end. You run the program immediately you receive a certificate from a customer. To access the program, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Receivable Withholding Tax India Tax Withheld by Customers Enter Certificate.

Prerequisites
You have maintained the settings in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Postings India Withholding Tax Certificates from Customers.

Features
Selection
On the selection screen, enter the following data: Your company details In the Section field, enter the official withholding tax key that you use for the section of the Income Tax Law in question. The numbers or posting dates of the documents that you want to clear The certificate date serves as the posting date and the document date. The information from the certificate clearing program. You

When you execute the program, the system takes you to the standard then select which withholding tax line items are to be cleared.

Output
The system creates an accounting document to transfer the withholding tax from the G/L account for the withholding tax deducted by your customers to the customer tax creditable account.

Activities
If you need to reverse the clearing document, you can do so using the standard reversal program.

Selecting Which Line Items to Clear

1. On the Post with Clearing: Process Open Items screen, choose
. 2. Double-click the line item. 3. In the Amount field, enter the amount of withholding tax as specified on the tax certificate. 4. Save the change. The system automatically goes back to the Post with Clearing: Process Open Items screen. 5. Double-click the amounts that you want to clear. 6. Save your entries.

Withholding Tax Information System

Use
You use this report to gather information relating to the withholding tax transactions that you have carried out. You can also use it for carrying out pending transactions like challan updates, bank challan updates, and certificate printing. You can display the individual documents (invoices, down payments, challan clearing documents) pertaining to withholding tax transactions. You can run this report at any stage in the withholding tax cycle in order to obtain the necessary information. To access the report, from the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Extended Withholding Tax Information System Withholding Tax.

Features
Selection
On the selection screen, enter the selection criteria as required and specify which report you want: Challan Update Status Displays a list of all documents involving withholding tax. For each document, it shows the tax amounts and whether or not the tax has been remitted. Bank Challan Status Displays the bank challan update status (whether carried out or not) of all transactions for which challan updates have been carried out. Certificate Status Displays the transaction details for which bank challans have been updated. It shows whether or not a certificate has been issued for the transaction. Consolidated Report Lists all documents involving withholding tax.

Activities
Each report contains functions for processing the documents in the list, as follows: In the Challan Update Status report, you can create a remittance challan for various documents: Select the documents that you want to remit the tax on and choose Challan Update. The system takes you to the Create Remittance Challans program, which you then execute. However, you can only process documents for one withholding tax section at a time. In the Bank Challan Status report, you can enter a bank challan: Select the documents (in this case identified by the internal challan numbers) that you have been sent a bank challan for and

choose Bank Challan Update. The system takes you to the Enter Bank Challans program, which you then execute. However, you can only a single internal challan at a time. In the Certificate Status report, you can print withholding tax certificates: Select the documents that you want to print a certificate for and choose Certificate Printing. The system takes you to the Print Withholding Tax Certificates program. However, you can only process documents for one withholding tax section at a time.

Transaction Codes for Extended Withholding Tax

Transaction Code J1INJV J1INPR J1INUT J1INCHLN J1INREV J1INBANK J1INCERT J1INREP J1INCANC J1INCC J1INCUST J1INEFILE J1INMIS Action Enter journal vouchers Enter provisions for taxes on services received Reverse provisions for taxes on services received Create remittance challans Reverse remittance challans Enter bank challans Print withholding tax certificates for vendors Reprint withholding tax certificates for vendors Cancel withholding tax certificates for vendors Print withholding tax certificates for customers Enter withholding tax certificates from customers Prepare TDS returns Withholding Tax Information System

TDS Returns
Use
You use the TDS Returns report to generate electronic TDS returns for sections 194 A, C, D, I, and J of the Income Tax Act. To access the report, on the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Withholding Tax India Withholding Tax or Extended Withholding Tax Reporting TDS Returns.
Use this report irrespective of whether you use the Classic TDS or the Extended Withholding Tax solution. If you have migrated from Classic TDS to Extended Withholding Tax during the course of the fiscal year, the report covers all withholding tax items that you posted under both solutions.

Prerequisites
You have customized the withholding tax solution as described in Extended Withholding Tax or Classic Withholding Tax. In particular, you have made the settings specifically for TDS returns in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax or Withholding Tax Reporting India. So that the report can handle reduced-rate taxes and exemptions under Sections 194, 197, and 197 A, you must have customized the withholding tax codes accordingly (see See also below).

Features
Before you generate a TDS return, you can check which withholding tax items will be included in it. To do so, you generate a list using the report. Note that the report only covers withholding tax items that you have remitted to the authorities and for which you have entered a bank challan in the system. Selection The selection screen breaks down as follows:
Withholding Tax Datagroup box Fill out either the EWT Section Code or the Withholding Tax (Classic) group box, depending on whether you use Extended Withholding Tax or Classic Withholding Tax. However, if you have migrated from Classic Withholding Tax to Extended Withholding Tax during the course of the fiscal year, fill out both group boxes. 1.Statutory Signatory Details and Address Details tabs Enter your companys details. The report saves this data in the electronic TDS return. 1.Output Processing Options tab Specify whether you want to list the withholding tax items for inclusion in the return, or generate an electronic TDS return file, or both. If you want to generate a file, specify where you want the report to save it.

Output Depending on what settings you make on the selection screen, the report:
1.Lists the withholding tax items for inclusion in the TDS return 2.Generates an electronic file at the location that you specify

See also: Exemptions and Reduced Rates for Section 194 A Exemptions and Reduced Rates Under Sections 197 and 197 A

Migration from Withholding Tax to Extended Withholding Tax

Purpose
This procedure shows you how to migrate from the Classic Withholding Tax solution (Classic TDS) to its successor, Extended Withholding Tax.

In order for the existing documents involving with withholding tax items to be compatible with Extended Withholding Tax, you have to migrate the data. But before you can do so, you have make the appropriate Customizing settings, archive old documents, and so on. Follow the instructions given below.

Ensure that no one can post any documents in the company codes during the withholding tax changeover. We recommend that you block your system for all end users and carry out the conversion runs at the weekend. You must also carry out the migration in a test system before you start work on your production system.

Process Flow
Preparations 1. 2. 3. 4. 5.
You implement Logistics Invoice Verification. You archive all of the cleared items. You make the Customizing settings for Extended Withholding Tax. You set up the authorizations for the Migration Program. Just before you start the migration, you block the users from working in the system.

Migrating the Existing Transaction Data and Activating Extended Withholding Tax 1. 2. 3. 4. 5.
Execute the Health Check Program You map the Classic TDS tax codes to the Extended Withholding Tax types and codes. You activate Extended Withholding Tax. You maintain your vendor master records. You migrate the documents.

Cleaning Up
You clean up the system.

Implementing Logistics Invoice Verification (MM-LIV)

Use
The customer carries out this step.

Classic TDS supports conventional invoice verification and Logistics Invoice Verification (MM-LIV) while Extended Withholding Tax supports only Logistics Invoice Verification. After you have migrated, you cannot use conventional invoice verification anymore. If you do not use invoice verification of any kind, you do not need to take any action.

Procedure
Make the Customizing settings for Logistics Invoice Verification in the Implementation Guide (IMG) for Materials Management, by choosing Invoice Verification Logistics Invoice Verification.

Archiving Cleared Items

The customer carries out this step.

Archive as many cleared items as you can. Documents that have already been archived are not converted, so you can considerably reduce the time required for the conversion run by doing so.

The number of cleared items managed in a system is usually much greater than the number of open items. If, for example, a system contains a hundred times more cleared items than open items, it will take a hundred times longer to convert the cleared items than to convert the open items. For more information about archiving documents, see the SAP Library under Cross-Application Components Archiving Application Data (CA-ARC) Financial Accounting (FI) Archiving Financial Accounting Data (FI) Archiving FI Documents .

Procedure
1. From the SAP Easy Access screen, choose Accounting Financial accounting 2.
General ledger (or Accounts receivable or Accounts payable) Periodic processing Archiving Documents. Archive the required cleared documents.

Customizing Extended Withholding Tax

Use

The customer carries out these steps. Before you start the conversion of the withholding tax data, you must set up Extended Withholding Tax in the Implementation Guide for Financial Accounting. Make the system settings described below.

Do not activate Extended Withholding Tax yet. If you activate Extended Withholding Tax before converting the withholding tax data, documents could be posted with Extended Withholding Tax. This could result in your system containing documents with both classic withholding tax and Extended Withholding Tax which, in turn, could lead to serious problems when you migrate the documents.

Procedure
1. 2. 3. 4.
Define the official withholding tax keys. Define the withholding tax types and withholding tax codes. Define the minimum and maximum amounts per type and code. Make any additional settings.

Defining Official Withholding Tax Keys

1. In the Implementation Guide for Financial Accounting, choose Financial Accounting 2.
Global Settings Withholding Tax Extended Withholding Tax Basic Settings Define Official Withholding Tax Codes. Define the official withholding tax keys (also known as official withholding tax codes) for reporting withholding tax. For example, define the keys for the various sections of the Income Tax Act, 1961.

Defining Withholding Tax Types and Withholding Tax Codes

Use
Define all types and codes that you require for all countries that you want to implement Extended Withholding Tax in.

Procedure
Defining Withholding Tax Types

1. In the Implementation Guide (IMG) for Financial Accounting (FI), choose Financial
Accounting Global Settings Withholding Tax Extended Withholding Tax Calculation Withholding Tax Type. 2. Make the necessary settings for the required withholding tax types in the following activities: a. Define Withholding Tax Type for Payment Posting, and if necessary, Define Withholding Tax Type for Invoice Posting b. Define Rounding Rule for Withholding Type c. Assign Condition Type to Withholding Tax Type

Defining Withholding Tax Codes 1. In the IMG for FI, choose Financial Accounting Global Settings Withholding Tax 2.
Extended Withholding Tax Calculation Withholding Tax Codes Define Withholding Tax Codes. If any of the withholding tax codes use formulas to calculate withholding tax, you must also carry out the activity Define Formulas for Calculating Withholding Tax.

Defining Minimum and Maximum Amounts

Use
Define, if necessary, the minimum and maximum amounts for the withholding tax codes and types that you have defined.

Procedure
1. In the Implementation Guide for Financial Accounting, choose Financial Accounting 2. 3.
Global Settings Withholding Tax Extended Withholding Tax Calculation Minimum and Maximum Amounts. To define the minimum and maximum amounts for the withholding tax types, choose Define or Maintain Min/Max Amounts for Withholding Tax Types. To define the minimum and maximum amounts for the withholding tax codes, choose Define or Maintain Min/Max Amounts for Withholding Tax Codes.

Making Additional Settings

Now that you have defined the withholding tax codes and types, make the remaining settings, including: Define the recipient types you need for your vendors and attach them to the appropriate vendor master records. Make the account determination settings. Specify for each company code which withholding tax types they are allowed to withhold tax for.

Do not activate Extended Withholding Tax yet.

Setting Up Authorizations for Migration

Use
The customer carries out this step. In this activity, you create authorization profiles for the people involved in the withholding tax migration. In order to execute the Migration Program, you require the role TDS Supervisor or the authorization object J_1IEWTJV, provided by SAP.

Once the withholding tax migration is completed, take the precaution of withdrawing the change authorization for all the users involved. This prevents the conversion being started while the system is being used for normal day-to-day activities, for example.

Procedure
1. In the Implementation Guide for Financial Accounting, choose Financial Accounting
Global Settings Maintain Authorizations. 2. Make the required Customizing settings. The authorization object J_1IEWTJV is in the India Version object class under the object name Authorization Check for JV.

Blocking Users
The customer carries out this step.

Use
You must block the system for normal activities while the conversion is being prepared and carried out. Documents must not be posted or processed, and master data must not be changed, otherwise your accounting documents and system settings may contain serious discrepancies.

Procedure
1. Ensure that all users involved in the withholding tax changeover have the appropriate access authorizations. 2. Block your SAP System for all other users.

If it is not possible to take measures to ensure that there are no users working in the system, you should block the users and the whole system throughout the organization. Restart the SAP System so that all users are logged off.

Withholding Tax Migration Health Check

Use
You must execute this report before you proceed with the Migration Program. It makes sure that all the Customizing settings have been made properly (for a list of the checks, see under Activities below), so that the Migration Program will migrate the data correctly. Additionally, the report also displays a list of the documents that you will not be able to process any more after the migration. You must run the report for each company code that you want to carry out the migration for, and the health check status for each company code must be OK.

Prerequisites
You have carried out all the activities described under Preparations in Migration from Classic TDS to Extended Withholding Tax.

Features
To access the report, in Customizing for Financial Accounting (FI), choose Financial Accounting Global Settings Withholding Tax Withholding Tax Changeover Withholding Tax Changeover India Health Check. Selection On the selection screen, enter the following data:
Selection Criteria

Specify which country and which company code you want to perform the health check for. You can only execute the report for one company code at a time. Specify whether you want to run all checks, or just the obligatory ones. We recommend that you perform all of the checks.

1. Document Details In this group box, you specify which sorts of documents you want the report to cover, and from which dates. 1. Other Checks Specify whether you want the vendor master records to be checked, and the tax code mapping from Classic TDS to Extended Withholding Tax.

Output The output list shows:

1. 2. 3. 4. The results of the Customizing checks The documents that cannot be processed after the migration The results of the vendor master checks The results of the checks on the tax code mapping

The key is as follows:

Indicator Meaning One check has been run on an obligatory Customizing activity, and the settings are incorrect One check has been run on an optional Customizing activity, and the settings are incorrect One check has been run on an obligatory Customizing activity, and the settings are correct Multiple checks have been run on an obligatory Customizing activity, and some of the settings are incorrect Multiple checks have been run on an obligatory Customizing activity, and all of the settings are correct

Process all of the activities marked , , or , and execute the report again. Only when all activities are marked or will the report assign the company code the status OK.

Activities
The report makes the following checks at country level:
1. 2. 3. 4. 5. 6. 7. 8. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Withholding tax country Official withholding tax key Withholding tax types Withholding tax codes Recipient types Tax due dates Rounding rules Business transaction events Company code global parameters Extended Withholding Tax has been activated Withholding tax codes are assigned to company code Accounts for withholding tax to be paid over have been defined Accounts for posting withholding tax and losses to be paid Clearing accounts liable to withholding tax Section codes have been defined Factory calendar has been assigned to section codes Creation of remittance challan Vendor withholding tax certificates Vendor master data Surcharge calculation

And these at company code level:

Mapping Withholding Tax Types and Withholding Tax Codes

Use
You map the Classic TDS withholding tax codes to the Extended Withholding Tax withholding tax types and codes.

Procedure
1. From any screen, choose System Services Table maintenance Extended Table
Maintenance.

2. Enter table J_1IEWT_MIGRATE and choose Maintain. 3. Map the Classic TDS tax codes to the Extended Withholding Tax tax types and codes.
4. Save your entries.

Activating Extended Withholding Tax

Use
The customer carries out this step just before you migrate the data.

Procedure
1. In the Implementation Guide (IMG) for Financial Accounting (FI), choose Financial 2.
Accounting Global Settings Withholding Tax Extended Withholding Tax Company Code Activate Extended Withholding Tax. Activate Extended Withholding Tax for each company code whose data you want to migrate.

Maintaining Vendor Master Records

Use
Here, you specify which withholding tax types apply to each vendor. Under Extended Withholding Tax, you can assign any number of withholding tax types to a vendors master record. When you come to make a posting involving withholding tax for this vendor, you can then enter withholding tax for each withholding tax type that you have assigned it.

Make sure the withholding tax types in the vendor master record match those in the mapping table: When, during migration, the system converts the various documents (for example, payments), it replaces any Classic TDS withholding tax types with the Extended Withholding Tax types and codes that entered in the mapping table. However, it does not cross-check the withholding tax type against the appropriate vendor master record. If, during migration, the Migration Program assigns a document a withholding tax type that you have not assigned to the vendor, you will not be able to process the document afterwards.

Prerequisites
Just before you start maintaining the vendor master records, activate Extended Withholding Tax for the company code in question. Otherwise, the system will not display the appropriate fields. As soon as you have finished, deactivate it.

Procedure
Make the changes in the vendor master records of all vendors that you have to withhold tax on. For each vendor: Enter the relevant withholding tax types Enter the relevant withholding tax codes and select Liable, in order to activate it Enter the recipient type Enter any exemption information

Withholding Tax Data Migration Tool

Use
This program converts documents created under the Classic TDS solution so that they are suitable for use with Extended Withholding Tax. For example, after you have migrated to Extended Withholding Tax, neither the Payment Program nor the Clearing Program will be able to work with Classic TDS documents. This program migrates all documents involving withholding tax, such as invoices, down payments, down payment clearing documents, and TDS documents. After the migration, the system will treat them as though they were created using Extended Withholding Tax.

Integration
The program contains two user exits: Selecting the section code The section code is mandatory in down payments that are to be migrated. You can either enter them by filling out the selection screen or using the user exit. The user exit provides the section code, business area, company code, and TAN number as input parameters. The appropriate section code can be derived from this information. Data selection and validation There are two user exits available to choose and validate additional clearing documents and down payment documents.

1.

Prerequisites
You have carried out all the steps in Migration from Classic TDS to Extended Withholding Tax under Preparations and steps 14 under Migrating the Existing Transaction Data and Activating

Extended Withholding Tax. You cannot go back and complete these steps after you have migrated the documents. In order to execute the program, you must have the role TDS Supervisor.

Features
To access the program, in Customizing for Financial Accounting (FI), choose Financial Accounting Global Settings Withholding Tax Withholding Tax Changeover Withholding Tax Changeover India Migration Program. First check the documents to see if they will be migrated properly, and edit any that result in problems. Then, when all the documents have been checked, migrate them.

Selection
On the selection screen, enter the following data:

1. 1.

Selection Criteria In this group box, specify which documents you want to migrate. If you enter invoice document numbers, the system picks up the associated clearing documents. Additional Selection Criteria Use these fields to refine your selection. If you need to migrate a large number of documents, we recommend that you process one small quantity at a time in order to improve performance. Migration of Down Payments If you want to migrate down payments, select this option. If you do, you must enter a section code or have it defaulted by means of a user exit. Posting Run Select this indicator to execute the program in test mode.

1. 1.

Output
In the result screen, verify the invoices and credit memos and check them. Down payments are only migrated after you have checked them from the screen. If you want to migrate down payments, the list shows all the open down payments. You then have to select the down payments and save them for migrating the data. You can migrate invoices, credit memos, clearing documents, and TDS documents on the above live or previewed.

Activities
Migrate invoices, credit memos, clearing documents, and TDS documents if you have not yet paid the vendor or if the payment is likely to be reversed. You must decide before you start on the migration if this is likely or not. Do not migrate the documents if the vendor has been paid and it is unlikely that you will have to reverse the payment. Migrate all open down payments so that tax adjustment on down payment clearing could happen along with clearing. Decide on the appropriate section code entity to which the down payments pertain and choose from the list displayed. If the status of a document changes, you execute the program again. For example, say that you have migrated an invoice. If you then post TDS later on, you must migrate the invoice again so that the TDS document is also migrated. When you come to run the Automatic Payment Program and the error Inconsistent withholding tax information occurs for a line item, one of the reasons could be that the line item is not migrated.

Checking the Documents

Use
In this step, you execute the report in test mode. The system: Shows you how many vendor items, open items, and cleared items it has found in the company code that match your selection criteria Shows you how many vendor items and so on there are per Extended Withholding Tax code Checks the assignment of the Classic TDS withholding tax codes to the Extended Withholding Tax types and codes to see whether the characteristics of each combination of type and code for extended withholding tax correspond

Procedure
1. Fill out the selection screen, making sure that you have selected Test run for
invoice/credit memo, and choose . The output list appears, with a list of the documents selected and any warnings.

2. Check the documents for any discrepancies that could lead to problems later on, when
you make postings for Extended Withholding Tax: o Check whether any documents are missing withholding tax codes. If so, check whether the codes have been deleted by mistake, in which case you have to make the relevant system settings again, or whether you intentionally wanted the tax code to be deleted. o o Check whether any withholding tax codes exist that have not been used, and delete them. Check down payments to see if the migrated base and tax are correct.

3. Correct any errors and execute the report again.

Migrating the Documents

Use
In this step, you execute the report in update mode. The system migrates the documents from Classic TDS to Extended Withholding Tax. Note that this is the most time-consuming step.

Procedure

1. Fill out the selection screen, making sure that you have deselected Test run for
invoice/credit memo, and choose . The output list appears, with a list of the documents selected and any warnings. 2. In the list, select the down payments that you want to migrate and save. This procedure does not apply to any other types of documents.

Cleaning Up
Use
Once you have migrated the documents, there is some cleaning up to do in the sytem:

Procedure
1. Check the Customizing settings for Extended Withholding Tax.
2. Check, edit, and save any of the following, which the Migration Program does not handle: o o o Recurring entry documents Sample documents Noted items

3. Release the system Once you have finished the migration and cleaning up activities, release the system for the users.

General Ledger Accounting (FI-GL)

Purpose
The General Ledger (FI-GL) component covers the most important laws and business practices specific to India. The following documentation describes these aspects of the component. For generic information about FI-GL, see General Ledger Accounting (FI-GL).

Features
The country template for India comes with its own chart of accounts and a financial statement version.

Chart of Accounts
Definition
See Chart of Accounts.

Use
The country template for India comes with its own chart of accounts, CAIN. It contains all accounts common to most businesses in India. It also takes into account the requirements of Schedule VI of the Companies Act 1956. The country template also contains settings for automatic accounting postings in most components, with the exception of Controlling (CO).

Financial Statement Version

Definition
See Financial Statement Version.

Use
The country template for India comes with its own financial statement version, BAIN. You can use it to prepare financial statements in accordance with Schedule VI of the Companies Act 1956. This act lists the headings under which the individual accounts are to be grouped. Each of the headings is represented by an item in the financial statement version.

Accounts Payable (FI-AP)

Purpose
The Accounts Payable (FI-AR) component covers the most important laws and business practices specific to India. The following documentation describes these aspects of the component. For generic information about FI-AP, see Accounts Receivable and Accounts Payable: Overview.

Features
Country Version India comes with a number of functions relating to withholding tax (see link below).

Extra fields are available in the vendor master data for information required in India only. See also: Withholding Tax

Vendor Master (Withholding Tax Data)

Definition
The part of the vendor master record where you record information about which taxes you have to withhold from payments to a vendor. For generic information about withholding tax data in the vendor master, see Defining Liability to Tax and Authorization to Deduct Tax. To access the vendor master, on the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Master Records

Use
Enter the withholding tax types and withholding tax codes that the vendor is liable to, and for each entry, enter the recipient type, depending on whether the vendor is a legal person or a natural person. See also: Vendor Master (Country Version India Data) Vendor Master (Excise Data)

Entering Vendor Invoices

Use
In India, when you enter a vendor invoice in Accounts Payable (FI-AP), you follow the standard procedure and, in addition, you assign the invoice to the appropriate section code.

Procedure
1. 1. From the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Document Entry Invoice. 2. 2. Enter the header data as required, including: Bus. Place/Sectn: Your section code. 1. 3. Enter other data and save the invoice.

Result
The system: 7. ...
1. Creates an accounting document with the necessary withholding tax items (including surcharges)

2. 3.

Assigns all vendor items and withholding tax items to the section code that you have entered Assigns each withholding tax item a tax due date, which it enters in the Value Date field (which is not shown on the user interface)

When the time comes, you must: 1. Remit the withholding tax
The system automatically selects which withholding tax items need to be remitted on the basis of their tax due date.

2. Create a withholding tax certificate for the vendor If you post the wrong amount of tax or you have posted the tax using the wrong official withholding tax key, you can enter a journal voucher to reverse the posting.

Entering Vendor Down Payments

Use
In India, when you enter a vendor down payment in Accounts Payable (FI-AP), you follow the standard procedure and, in addition, you: 1. Assign the down payment to the correct section code 2. Calculate any withholding tax required

Procedure
1. 1. On the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Document Entry Down Payment Down Payment. 2. 2. On the Header Data screen, enter the header data as required and choose 3. 3. On the Add Vendor Item screen, enter data as required, including: 1. Bus. Pl. (Business Place): The section code handling the down payment 1. 4. Save the down payment.

Result
The system creates an accounting document with the appropriate withholding tax items. It enters the business place in each vendor item and each withholding tax item.

Clear Invoices Against Down Payments

Use
If you withhold tax on a vendor down payment, and the vendor then sends you an invoice, you have to clear the withholding tax when you have entered the invoice (not when you pay the invoice, as is customary in other countries).

Features
This function has been incorporated into the standard function for clearing down payments (see Clearing). When you clear an invoice against a down payment for an

Indian company code, the system clears the withholding tax automatically, if the company code is located in India.

Activities
Customizing In order for the tax to be cleared correctly, you must post the down payments using:
A withholding tax type that is marked as Central Inv. Prop. (Central invoice proportionate) A withholding tax code that uses the posting indicator 1 (Standard posting: bank/vendor/customer line item reduced) If you use either of the other two methods, the adjustment will be made against the offsetting account instead of the vendor account.

Day-to-Day Activities Make sure that the withholding tax codes you use when you enter the down payment and the invoice are assigned to the same withholding tax key, otherwise the clearing program will not let you clear them. Once you have posted the vendor invoice, clear the down payment against it. To access the function, on the SAP Easy Access screen, choose Accounting Financial Accounting Accounts Payable Document Entry Down Payment Clearing.

Example
A vendor provides you with some services, for which it promises to send you an invoice in a few days' time. In the meantime, you make a down payment on the services for a total of INR 10,000, presenting the vendor with a check for INR 9,796 and withholding the remaining INR 204 as tax:

A week later, the vendor sends you the invoice, for a total of INR 20,000 on which you have to withhold a total of INR 408. You post the invoice as normal, which gives the following accounting document:

You then clear the invoice against the down payment. The system takes into account the INR 204 of tax that you have already withheld, and creates the following accounting document to clear the down payment against the invoice, and clear the withholding tax account:

Accounts Receivable (FI-AR)

Purpose
The Accounts Receivable (FI-AR) component covers the most important laws and business practices specific to India. The following documentation describes these aspects of the component. For generic information about FI-AR, see Accounts Receivable and Accounts Payable: Overview.

Features
Country Version India comes with a number of functions relating to withholding tax (see link below). Extra fields are available in the customer master data for information required in India only. See also: Withholding Tax

Defining Liability to Tax and Authorization to Deduct Tax

Use
Withholding tax is only posted for a withholding tax type if the vendor is defined as subject to tax for this withholding tax type, and the customer is defined as authorized to deduct tax for this type.

Prerequisites
Each withholding tax type assigned to a company code must have been defined for the country of the company code.

Procedure
The following differences apply to vendor and customer business transactions.

Vendor Business Transactions

In order to be able to post withholding tax in vendor business transactions, for each withholding tax type, the company code must be authorized to deduct withholding tax, and the vendor must be subject to withholding tax.

1. To make the required settings, proceed as follows from the Implementation Guide for
Financial Accounting: Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Company Code Assign Withholding Tax Types to Company Codes. For Accounts Payable, you specify whether and for how long the company code is authorized to deduct withholding tax for the specified withholding tax type. 2. Define the following in the vendor master record: o o o Make an entry for each withholding tax type Define the vendor as subject to withholding tax If necessary, also define the withholding tax code, type of recipient, withholding tax ID, and details of any withholding tax exemption

Customer Business Transactions

In order to post withholding tax in customer business transactions, the company code must be subject to withholding tax for the type concerned, and the customer must be authorized to deduct withholding tax.

1. To make the required settings, proceed as follows from the Implementation Guide for
Financial Accounting: Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Company Code Assign Withholding Tax Types to Company Codes. Similarly, for Accounts Receivable, you specify whether the company code is subject to withholding tax or if it is authorized for self-withholding tax. If necessary, you can also enter details concerning withholding tax exemption. 2. Define the following in the customer master record: o o o Make an entry for each withholding tax type Define the customer as being authorized to deduct withholding tax and define the validity period for the authorization. If necessary, also define the withholding tax code and the withholding tax ID.

Additional Notes
In the withholding tax master data of the company code and the business partner (customer/vendor), you define which withholding tax types are relevant for a business transaction.

A withholding tax type is relevant if the following conditions apply: The withholding tax type is entered in the master record of the business partner and defined as subject to withholding tax (vendor) or entitled to deduct withholding tax (customer). For this withholding tax type, the company code is defined as entitled to deduct withholding tax for vendors, and subject to withholding tax for customers. The posting date is within the validity period for the deduction authorization (customer master record or withholding tax data for the company code).

Due to the validity periods that you have to define, the withholding tax master data is timedependent. This means that the withholding tax information saved in an open item may be different to the current relevant withholding tax types. In the document display, the system displays appropriate warnings about the validity of the withholding tax information in the withholding tax dialog box. If, between the time a document is entered and the time it is cleared, you have changed the list of relevant withholding tax types, the system will not clear the document. The following situations can occur: A withholding tax type is no longer relevant This is the case where the company code is no longer authorized to deduct tax for a withholding tax type, although it was authorized to do so at the time the document was entered. The item in question is displayed in the withholding tax dialog box with all the withholding tax data stored in the database. The system displays a message telling you that this withholding tax type is no longer relevant. A withholding tax type is new This is the case if you have entered a new withholding tax type for a company code since the time of document entry. The system displays the withholding tax data not yet saved to the database in the dialog box with a message that the withholding tax type is new.

You have the following options for clearing documents despite these warnings: Change the posting date for clearing, so that the relevant withholding tax types are the same on the posting date and on document entry. Change individual documents using the document change function: To do this, you delete the withholding tax code in withholding tax types that are no longer relevant, and then save new withholding tax types. Start report RFWT0010. Once you have changed the relevant withholding tax types, this report adjusts the open items to take account of the current relevant withholding tax types. It either creates new withholding tax information, or changes existing information.

Configuring Certificate Numbering for Withholding Tax

Use
Withholding tax certificates are proof for the vendor and the tax authorities that tax was withheld. In certain countries, such as Argentina, it is a legal requirement that withholding tax certificates are numbered clearly and consecutively. To be able to exercise as much control as possible over the way withholding tax certificates are numbered, the SAP System offers you a range of numbering methods, of which three are currently available. You can assign one of these methods to any given country. Each number is taken in sequence from a number range interval assigned to a numbering group. The numbering groups are assigned to numbering classes. The number is then determined according to the numbering class the method is assigned to.

Method 1
Numbering class assigned to company code(s), with no distinction as to withholding tax type

Company Code 0001 0002

Numbering Class A A

Method 2
Numbering class assigned to combinations of withholding tax type/company code

Company Code 0001 0001 0002

Withholding Tax Type T1 T2 T1

Numbering Class A B A

Method 3
Numbering class assigned to a combination of withholding tax type/branch/company code

Company Code 0001 0001 0002

Withholding Tax Type T1 T2 T1

Branch XXXX YYYY YYYY

Numbering Class A B A

Procedure
1. In the Implementation Guide for Financial Accounting, choose Financial Accounting
Global Settings Withholding Tax Extended Withholding Tax Postings Certificate Numbering for Withholding Tax. 2. Choose a suitable numbering method and assign it to your company code country. 3. Define numbering classes, for example, one class per withholding tax type used. 4. Assign numbering groups to the numbering classes. In this activity, you specify the company code and numbering class. When you save the data, the system creates the numbering group and assigns it to a numbering class automatically. 5. Assign your numbering classes in accordance with the numbering method chosen.

Document Entry, Document Change, and Document Display

Use
Withholding tax is taken into account in all normal posting transactions. The withholding tax information must therefore be entered here.

Prerequisites

The field status for document entry must be defined in such a way as to allow withholding tax data to be entered in at least one withholding tax field. You must select at least one withholding tax type. For more information about the relevance of withholding tax types, see Defining Liability to Tax and Deduction Authorization.

Features
Extended Withholding Tax on Document Entry
When entering documents, you can enter withholding tax data for every customer/vendor line item. Once you have confirmed entry of the line item (on the customer or vendor screen), the system displays the dialog box Enter Withholding Tax Information which contains one line per withholding tax type. During document entry, this withholding tax dialog box appears each time you create a new customer or vendor line item. If you edit one of these customer or vendor line items again during document entry, you will need to access the withholding tax dialog box by choosing Extras Withholding tax data . You determine the status of the fields W/tax b/at (withholding tax base amount) and W/tax amnt (withholding tax amount) displayed in the withholding tax dialog box when defining the withholding tax type. Document Simulation and Posting Processing withholding tax involves two separate activities, namely: Calculation of the withholding tax base The system determines the withholding tax base amount according to the Customizing settings for the combination of withholding tax type and withholding tax code. There is therefore only an entry for withholding tax once you simulate the document. The base amount can also be entered manually by the user (if the relevant Customizing settings have been made), and a manual entry overrides the amount calculated by the system. Where payments are made by installments, the withholding tax base is apportioned across the new customer/vendor line items. Calculation of the withholding tax amount The way in which withholding tax is calculated depends on the withholding tax type: The withholding tax type controls when the withholding tax is calculated and posted for example. Withholding tax is calculated and posted either when the invoice is entered or when payment is made. Withholding tax is generally calculated by the system. However, if you have made the appropriate settings in Customizing, it can be entered manually. A manual entry overrides the amount calculated by the system.

Special Transactions Down payment requests and payment requests When you post down payment requests and payment requests, the system only calculates the withholding tax base amounts. Document parking The system does not calculate any withholding tax base amounts when you save or change parked documents, only when they are posted. Document holding When documents are held, the system does not calculate any withholding tax amounts/base amounts. Posting with reference When you post documents using a reference, the system defaults withholding tax base amounts, but not any existing withholding tax amounts. The system does not calculate any withholding tax base amounts/tax amounts when you enter a reference document. Recurring entry documents The system does not calculate any withholding tax base amounts/tax amounts when you enter a recurring entry document.

Extended Withholding Tax: Changing Documents

Provided you have not already posted the withholding tax, you can change the withholding tax information in a document. This is only the case for withholding tax of the type posting at time of payment. You can only make changes however in transactions that are not relevant for payments. When you change the document, the system enables you to change the selection date in the withholding tax dialog box. If you have made changes in the relevant withholding tax types, the withholding tax fields for this type are ready for input. The settings you made in Customizing for the withholding tax type in question determine whether the amount fields such as Withholding tax base, Withholding tax amount, and Withholding tax amount already withheld can be changed or not. If you enter a new withholding tax code and do not enter the withholding tax base amount manually, the system recalculates the withholding tax base amount automatically. If you delete the withholding tax code, the system resets all withholding tax information for this withholding tax type. Whenever you change withholding tax information, the system creates change documents.

Extended Withholding Tax: Document Display

The same rules apply for displaying documents as for changing them, with the exception that you cannot enter any data in the fields. If, for example, when displaying the document, the list of relevant withholding tax types differs from the withholding tax types already defined in the withholding tax information for a line item, the same rules apply as for changing documents. When displaying documents, you can display the withholding tax base amount and withholding tax amount in all the currencies maintained for that company code. You can call up the various currencies in the withholding tax dialog box by choosing the appropriate pushbutton.

Clearing with Extended Withholding Tax

Use
For withholding tax types with posting at time of payment, the withholding tax is calculated and posted when open items are paid.

When you clear open items without a payment (transfer posting), no withholding tax is posted.

If you implement extended withholding tax, you cannot carry out the following functions when processing open items or clearing items automatically: Distribution by age Automatic search If you select these functions, your selections are reset and the system displays an appropriate message.

Features
Manual Posting with Clearing
For postings with clearing, the system calculates and, if necessary, posts the withholding tax for the withholding tax types with Posting at time of payment. Any withholding tax amounts you may have entered manually override those calculated by the system. An open item can only be activated if, at the time it is cleared, the withholding tax information it contains is still relevant. This will depend on the date the document was entered and the posting date of the payment. For more information about the relevance of withholding tax types, see Defining Liability to Tax and Deduction Authorization. If an open item is not active, all withholding tax amounts are zero.

The system recalculates all withholding tax amounts for all open items if you: (De-)activate one or more open items Change the cash discount for one or more open items Change the partial payment amount for one or more open items

If you recalculate the withholding tax amounts for an active open item, these amounts can change due to the Customizing settings for withholding tax types. This may be the case, for example, if you have defined withholding tax after cash discount or accumulation for this withholding tax type. The total of withholding tax amounts for all open items is displayed in the appropriate field in the lower half of the withholding tax screen. The system takes this figure into account when determining the total amount to be cleared. Note however that this total amount does not include withholding tax amounts posted as Offsetting entry to G/L account/No reduction in subledger, Self-withholding or Offsetting entry to G/L account . When you post or simulate the payment document, the total withholding tax amounts are subtracted from the payment amount. The withholding tax amounts are posted to the G/L accounts specified in the account determination in Customizing for the withholding tax types/codes. Those withholding tax amounts posted as Offsetting entry to G/L account/No reduction in subledger, Self-withholding or Offsetting entry to G/L account do not reduce the payment amount, even though the system makes a posting to a withholding tax account. Instead of the payment line item being reduced, an offsetting entry is made to a G/L account in accordance with the account determination defined for the transaction key in question.

Automatic Clearing (Payment Program)

The payment proposal includes information about potential inconsistencies in a business partners withholding tax status and in the open items. If the relevant withholding tax types for an open item are different to the relevant withholding tax types when the payment is posted, this is an inconsistency and the system adds these open items to the exception list. You have to change each document in the exception list individually. For more information about the relevance of withholding tax types, see Defining Liability to Tax and Deduction Authorization. As is the case for manual payment transactions, the payment program also supports payment of withholding tax calculated for more than one document. In this case, the withholding tax amount is not calculated on a single line item but on all the selected line items linked by the invoice reference. With the exception of withholding tax types for which accumulation is active, this calculation method is restricted to open items cleared by a single payment document. When you call up the payment proposal, you can have the system recalculate the withholding tax at any time. When you save the proposal, the system always recalculates the withholding tax. When you call up the proposal, you can display the withholding tax data for every individual document.

Special Features of Incoming Payments

Differences in Withholding Tax If the withholding tax amount withheld by your customer differs from the withholding tax amounts calculated by the system, you can enter and post the tax amount withheld by your customer manually in place of the amount calculated by the system. In the withholding tax dialog box, you can enter the tax amount withheld by your customer for every open item. You can use this function for any withholding tax type (setting WT acc. to payment in withholding tax type); it is not dependent on the settings you made in Customizing for manual entry of withholding tax amounts during document entry (setting Manual w/tax amount in withholding tax type). If you enter withholding tax amounts in this way, the system posts them without checking these amounts. Self-Withholding If self-withholding applies to a given withholding tax type, the withholding tax amount is posted to a second G/L account instead of being deducted from the incoming payment amount. In order to be able to use the self-withholding function, you must select the field Self-withholding in Customizing for the withholding tax type. You can select a standard self-withholding setting for each company code and withholding tax type (Calc. self-withholding): For manual payments, you can then decide in each case whether this setting should apply for all open items in connection with this withholding tax type. For automatic payments, postings are either generally made with self-withholding if the field Calc. self-withholding is selected, or without self-withholding if the field is not selected.

Generic Withholding Tax Reporting

Use
You use this program to: Prepare withholding tax reports Prepare withholding tax returns (either on paper or as a DME file) Print withholding tax certificates for vendors or customers

You can use the program irrespective of whether you use Classic Withholding Tax or Extended Withholding Tax.

Prerequisites
Before you execute the report, you must make the Customizing settings in Customizing for Financial Accounting, by choosing Financial Accounting Global Settings Withholding Tax or Extended Withholding Tax Generic Withholding Tax Reporting.

Features
Printouts
The program creates all printouts using Smart Forms.

Where withholding tax certificates are concerned, it produces one certificate per vendor, for all of the tax that you have withheld, and it records in each withholding tax item which certificate it was included in, for future reference. If you want, it also numbers the certificates for you.

DME Files
The program creates all DME files using the DME format from the DME Engine. The system saves the file on your PC, under the name and path you specify on the selection screen.

Sample Content
Sample content is provided for a number of countries. The content includes Smart Forms, DME formats, output groups, and standard selection variants for executing the program. For more information about the sample content, see the country version documentation below. See also: SAP Smart Forms (BC-SRV-SSF) Data Medium Exchange Engine Colombia | Italy | United Kingdom | Mexico | Philippines | South Korea | Spain | United States | Venezuela Thailand | Turkey |

Certificate Numbering
Use
The Generic Withholding Tax Reporting program can assign the withholding tax certificate a number at the time that it prints them out. This feature is only available in Extended Withholding Tax.

Features
The system offers you two different ways of numbering withholding tax certificates. You can generate a withholding tax certificate number whenever you enter a withholding tax item, which ensures that the withholding tax items are numbered in the order that you post them. You can use different numbers for each withholding tax type. For more information about this procedure, see Configuring Certificate Numbering for Withholding Tax. The Generic Withholding Tax Reporting program takes a different approach. You do not assign the withholding tax items a number as you enter them. Instead, the program assigns each certificate a number itself.

Activities
Customizing
Create a number range for the certificates in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global Settings Extended Withholding Tax Generic Withholding Tax Reporting Printouts Define Number Range for Withholding Tax Certificates.

Set the withholding tax types to No Cert. Numbering (No Certificate Numbering), in Customizing for FI, by choosing Financial Accounting Global Settings Withholding Tax Extended Withholding Tax Calculation Withholding Tax Types Define Withholding Tax Type.

Periodic Processing
When you execute the Generic Withholding Tax Reporting program, fill out the Numbering and Updating group box. Here, you can either enter the number range that you defined in Customizing, or you can specify the number of the first withholding tax certificate manually. The program numbers the certificates sequentially. If you select Record Certificate Numbers, the program records the withholding tax certificate number in each withholding tax item.

Executing the Generic Withholding Tax Reporting Program

Use
This procedure shows you how to execute the program.

Prerequisites
You have created an output group and any Smart Forms and DME formats that you need in Customizing. The output group settings affect which group boxes on the selection screen you can fill out. For example, if you only want to print out a withholding tax return, you cannot fill out the Files group box, since this is only intended for when you create a DME file.

Procedure
1. From the SAP Easy Access screen, choose Financial Accounting Accounts Payable
Withholding Tax General Generic Withholding Tax Reporting. 2. Fill out the Output Groups and Mandatory Selections group boxes. 3. If you want to restrict the selection of withholding tax items, fill out the General Selections and Further Selections group boxes. 4. Fill out the other group boxes, depending on what output you want: o o o o Withholding tax report: Forms, Output Control and Lists Withholding tax return on paper: Forms Withholding tax return as a DME file: Files Withholding tax certificates: Forms, Numbering and Updating .

5. Choose

Withholding Tax Changeover

Purpose
In your company, you have been using an SAP standard version of classic withholding tax. After upgrading to Release 4.0 or higher, you can use extended withholding tax instead of classic withholding tax. For more information about the functions of classic and extended withholding tax, see Withholding Tax In order to change over to extended withholding tax, you cannot just simply activate extended withholding tax; in this case, you would not be able to carry out further processing to items already posted in the system. All relevant Customizing, master, and transaction data must be converted so that it can then be used in extended withholding tax. SAP provides a tool that supports the withholding tax changeover by automatically converting the relevant withholding tax data. The individual steps of the withholding tax changeover are listed below. To access the tool for converting withholding tax data in the IMG, choose Financial Accounting under Financial Accounting Global Settings Withholding Tax Withholding Tax Changeover.
The individual steps of the withholding tax changeover must be carried out in the order specified.

Prerequisites
First carry out the withholding tax data conversion in a test system. Once you have converted the withholding tax data and activated the extended withholding tax function, the data conversion cannot be reversed. Activate the extended withholding tax function for the company codes for the changeover only when explicitly directed to do so.

Upgrade to Release 4.0 and Above

It is essential that you complete all tasks relating to the release upgrade before starting the withholding tax changeover.

System Block
You must ensure that no documents are posted in the company codes concerned during the withholding tax changeover.
Block your system for all end users and carry out the conversion runs at the weekend.

Logistics Invoice Verification

If you do not use invoice verification in your organization, you do not need to take any action at this stage. The extended withholding tax function is only supported by the Logistics invoice verification; it is not supported by the conventional invoice verification. You can therefore no longer use the conventional invoice verification once you have carried out the withholding tax changeover.
Change over to the Logistics invoice verification before converting the withholding tax data and changing over to extended withholding tax. Note that the range of functions provided by the Logistics invoice verification has been extended with each release since Release 4.0B.

For more information about the combination of extended withholding tax and invoice verification, see notes 133426 and 133435. For more information about replacing the conventional invoice verification and about the features of the Logistics invoice verification, see notes 127366 (for Release 4.0B), 116272 (for Release 4.5B), and 144081 (for Release 4.6).
Activities

8. ... 29. 1. In the Implementation Guide for Materials Management, choose Invoice Verification Logistics Invoice Verification. 30. 2. Make all the required system settings for the Logistics invoice verification.

Process Flow
The changeover process is made up of the following procedures: Preparations
Carrying Out the Financial Accounting Comparative Analysis Archiving Cleared Items Checking the System Settings for Extended Withholding Tax Setting Up Authorizations for the Withholding Tax Changeover Blocking Users

Converting Data and Activating Extended Withholding Tax Converting the Withholding Tax Data and Activating Extended Withholding Tax
Creating and Editing a Conversion Run Preparing the Data Conversion Data Conversion Activating Extended Withholding Tax

Postprocessing Carrying Out Postprocessing of Withholding Tax Data Conversion

Asset Accounting (FI-AA)

Purpose
The Asset Accounting (FI-AA) component covers the most important laws and business practices specific to India. The following documentation describes these aspects of the component. For generic information about FI-AA, see Asset Accounting (FI-AA).

Features
Country-Specific Functions
Country Version India comes with a report for calculating depreciation on asset blocks (asset groups) as required by law for calculating a company's taxable income.

Country Template
The country template for India comes with the following settings: Chart of depreciation Depreciation keys as per the income tax laws

For more information, see the following documentation.

Year-End Income Tax Depreciation Report

Use
You use this report to calculate the depreciation on your assets and any capital gains or losses according to the Income Tax Act. To access the report, from the SAP Easy Access screen, choose Accounting Financial Accounting Fixed Assets Information System Reports on Asset Accounting Taxes Country Specifics India Year-End IT Depreciation Report.

Prerequisites
You can use the Customizing settings delivered by SAP in order to configure Asset Accounting (FI-AA) with respect to the income tax depreciation area and so that the report works correctly. For more information about what settings to make, see the Release Note structure under FI Release Notes from Country Version India Add-On Customizing Settings for Income Tax Act.

Features
Selection

Enter the asset numbers of your group assets and other selection data as required.

Output
The system: Calculates the depreciation on each asset block Calculates any capital gains or losses

If you deselect Test Run, the system also: Posts the depreciation to the income tax depreciation area Stores the capital gains amounts from the report in a table for your future reference.

Calculation of Depreciation
Use
The program calculates the depreciation on each asset block according to the Income Tax Act.

Features
Depreciation of Asset Blocks
The Income Tax Act requires you to depreciate all assets in blocks (in the SAP System, called asset groups). In other words, you do not calculate the depreciation on each individual asset. Instead, an asset group has its own net book value. The asset blocks net book value increases when you add assets to it and falls when you sell or retire assets. You also calculate depreciation on the blocks net book value. The depreciation rate depends on the asset block and is prescribed by the government. Since an asset block may exist for a very long time, as you add new assets to it, it has an unrestricted useful life. For example, assume your company has four trucks. At the beginning of fiscal 20X1, the trucks have a total net book value, for income tax purposes, of INR 300,000. At the end of the year, with no acquisitions and no retirements, the net book value has not changed. The total depreciation on all of the trucks is 10% of INR 300,000, or INR 30,000. The total net book value of the block at the beginning of 20X2 is therefore INR 270,000.

New Assets Held for Less Than 180 Days

If you purchase an asset less than 180 days before the end of the fiscal year, you are only entitled to depreciate it at half of the normal rate of depreciation. To continue the example, on 1 June 20X2 you sell a truck for IN 30,000. On 31 March the following year, instead of posting INR 3,000 depreciation, you can only post half of that, INR 1,500.

The system handles this requirement by taking half the acquisition cost and calculating depreciation on that.

Asset Retirements
When you retire an asset, you are not entitled to calculate any depreciation on it in that fiscal year at all.

Calculation of Capital Gains or Losses on Sales of Assets

Use
The system automatically calculates any gains of losses on sales of assets according to the Income Tax Act. Any gains or losses have to be taxed.

Features
If you sell an individual asset from a block, the value of the asset block goes down by the sale price. For example, assume that you have an asset block of trucks. On 1 April 20X2, the trucks total net book value is INR 270,000. On 1 February 20X3 you sell one of the trucks for INR 50,000. At the end of the year, the net book value before depreciation is therefore INR 220,000.

Capital Gains
If the sale of an asset causes the value of the asset block to fall below zero, the amount below zero constitutes a capital gain under the terms of the Income Tax Act. For example, on 1 April 20X3 the trucks total net book value is INR 198,000. On 1 December you sell a truck for INR 210,000. On 31 March 20X4 the system determines the asset blocks net book value as: INR 198,000 INR 210,000 = INR 12,000 This makes a capital gain of INR 12,000, which the system stores in a table for your future reference. The following year, the net book value of the asset block is set to zero.

Capital Losses
If you sell all the assets in a block, but the block still has a net book value, the system posts this value as a capital loss. For example, if you have a block with only one asset valued at INR 12,000, and you sell it for INR 10,000, the net book value of the block is still INR 2,000, even though there are no assets in it. The system stores the capital loss amount in a table for your future reference.