In Many countries Withholding tax is liable on some or all sales activities. Some of these countries have legal requirement to show Withholding Tax in Sales output. Such requirement makes it compulsory to catch withholding tax in sales transaction and print on Invoice output.

Withholding tax is a government requirement for the payer of an item of income to withhold or deduct tax from the payment, and pay that tax to the government.

For example, In Thailand it is legal requirement to capture withholding tax for Standard Credit Memo if use in sales promotions. Thailand also requires to capture Withholding Tax in Rebate settlement.

In Indonesia it is legal requirement to capture withholding tax in Rebate credit settlement.

This document mainly focus on challenges faced  in my busines  scenario  to implement  Withholding Tax and solution used.

Hope this document will be helpful for community. If find useful then please dont forget to like and give your valuable rating for this knowledge share.

Possible standard scenario to catch  Withholding Tax  :

1.   1.  WHT during Payment (FI Method):

WHT tax line determined in sales document and FI captures WHT at the time of Payment posting.

In this case  WHT calculated amount will not show in Invoice Pricing  or at the time of Invoice account determination.

‘WHT’ amount will be calculated at the time of Payment posting in FI.

1.   2.  WHT during Invoice Posting (SD Method):

WHT tax determined in sales document and posted during Invoice account determination.

In this case WHT amount will not show up in Invoice Pricing condition.

While Invoice posting WHT amount calculated  as per record maintained by Finance at Customer master and Tax Code level and posted. 

WHT calculated amount will show in Invoice account determination.

In this document I will discuss Scenario 2 (SD method).

WHT during Invoice Posting (SD Method):

SAP treats Withholding tax differently than Standard tax and this makes many normal SAP scenario not working in case of Withholding tax.

Some of challanges  faced  and recommendations listed below.

Challenges & Recommendation:

  • Price Fields like Material Tax Classification, Customer tax classification are not allowed to use in case of Withholding Tax. SAP do not support these price fields in case of Withholding tax.
  • Price Type which works smoothly in case of Standard tax like MWST do not consider Withholding Tax as Tax condition. For Example Pricing Type ‘G’ do not consider withholding Tax as tax and not redetermine it in invoice. This creates issues of redetermination of Withholding Tax in Invoice. That’s why I recommend to not use such fields in Withholding Tax conditions which requires redetermination for Example Invoice Type.
  • In sales Withholding Tax condition behave different than normal price or Tax condition. SAP do not show value carried by Withholding Tax in sales document. So in case if it is require to show withholding tax condition in sales price tab then dummy conditions may be use to copy withholding tax condition to display value in sales document.
  • SAP do not consider value which is maintained in withholding tax condition record (Tcode VK11) in Invoice posting.
  • SAP post value based on condition record maintained at FI taxcode level. If withholding Tax condition in sales order determines and matches  withholding  Tax type as maintained at Customer Master FD01 then SAP post value as maintained at FI relevant Tax code level
  • Normal Rebate Pricing procedure do not treat Withholding Tax same as Standard tax. You will find various issue if trying to use same pricing procedure which worked well with Standard Tax.
  • SAP strongly recommend separate withholding tax conditions in pricing procedure for each Tax Type. It means if business require more than 1 withholding tax type than this will require same number of Withholding tax conditions.
  • This will also impact in Rollout where Global template in pricing procedure is being use. This will require changes in Global pricing procedure template for example Indonesia and Thailand will require 2 withholding tax conditions one for each country in procedure.

Configuration:

Withholding Condition Type setting V/06:

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Access Sequence: SAP recommend Country and ‘J_1ATXREL’ (Tax Rel Classification) field in Access. J_1ATXREL is FI field of Tax code  To fetch FI Tax Code in SD pricing, it is require to create new requirement. This requirement needs to be assign at Access level. Check SAP Note : 178824 for further details.

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Pricing Procedure: Assign this new condition in Pricing procedure as a statistical condition.

FI Settings (T Code SPRO):

Create New Withholding Tax Type

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Assign Withholding Condition Type to Tax Type:

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Create Tax keys : Thsetting is is require to maintain Tax classification field in condition record maintenance

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Tax Type and tax code activation at Customer Master Company Code Level (FD03)

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Maintain Condition record in VK11:

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Withholding Tax in sales Order:

Note there is no value populating in Withholding tax sales order.

You may use Condition Exclusion to disable Standard tax.

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Capturing Withholding Tax in Rebate:

To capture Witholding Tax in rebate settlement it is require to make pricining procedure as special by activating tick in customization. SAP do not treat Witholding Tax same as standard tax. So in normel scenario witholding tax will not work same like Standard Tax. This creates issue when implementing Global template. You need to create seperate pricing procedure for such countries and mark it special in configuration.

Printing Withholding Tax in Output:

There are 2 options to fetch withholding Tax value in output:

1. Addition of dummy condition in pricing procedure to copy withholding tax value and then printing it. This may create issue if in case by mistake Condition record at VK11 and FI Tax code level are not same.

2. Using FI table. I used this method to fetch withholding tax from FI table to Invoice output. If your business support, you may try Table ‘WITH_ITEM’ or “BSEG’ to fetch Withholding tax value and print it in output.

/wp-content/uploads/2014/10/c1_559505.png

Hope this document will be helpful for community. If find useful then please dont forget to like and give your valuable rating for this knowledge share.

Regards

Neeraj

Further Helpful Reading:

SAP Note: 178824

SAP Note: 66152 – Rebate credit memo: additional condition types

URL:

https://help.sap.com/saphelp_globext607_10/helpdata/en/d1/634ebcee4811d5b720006094b9ec21/content.htm?frameset=/en/03/4c7e74ff8e11d5b724006094b9ec21/frameset.htm&current_toc=/en/3f/26893ac81aa374e10000000a11402f/plain.htm&node_id=93

http://help.sap.com/erp_hcm_ias_2012_03/helpdata/en/75/dd0538efcddf3ae10000009b38f8cf/frameset.htm

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13 Comments

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  1. Narendra Konnipati

    Hi Neeraj,

    I got a requirement to implement TDS process and then implemented with help of your post but got some strange issue.Kindly help on below issue.

    Issue1:though we have not activated CIN, system is showing excise invoice posted in document flow.

    1.PNG

    Note1: If I see document flow from VA02 over view then I am unable to see the excise and if go in side of document and I am able to see the excise numbers.

    FYI,kindly see the below snap shot.

    Issue2: From VK11 taxes came automatically into sales order but while creating invoice with ref of that order,tax is not coming.

    2.PNG

    3.PNG

    Kindly see at your side also whether these side effects came or not.

    BR’s,

    KNR

    (0) 
    1. Neeraj Lal Post author

      Hi Narendra,

      Process which I discussed we are using for Thailand, Indonesia legal requirement for WHT in Credit Memo, Rebate settlement . Its working fine.

      Looks like you are trying to use it for India Tax scenario, SAP has localization for India legal requirement .

      Regarding Withholding Tax, Its FI which controls WHT%, SD just indicates that WHT require or not in SD scenario.

      It means if SD document has WHT condtion which has same tax type and Tax code as in  Customer master -Company code data and FI setting then FI will post WHT. Posted amount will be same which is maintained at FI tax code level irrespective of amount maintained at SD condtion record.

      Please check SAP Note “178824” for details

      • Can you please share WITX (Withholding Tax) what amount its carrying. You may check condtion base in Condtion detail screen.
      • In our business scenario if WHT is there then we donot require MWST. so we are using exclusion to deactivate MWST if witholding tax is active.
      • Can you please share condtion detail screen  of Invoice so we can see reason.  SAP treats WHT differently than normel tax. It means if you have price type which redetermines tax in normel condtion in Invoice, same will not work for WHT. This may create issue of WHT redetermination in Invoice.

            Please check price type you are using in Copycontrol and advice.

      • Please share Account details screen, also WHT tab in Account document.

      Regards

      Neeraj

      (0) 
      1. Narendra Konnipati

        Hi Neeraj,

        Thank you so much for your valuable comments.Kindly see the below answers to your queries.

        • Can you please share WITX (Withholding Tax) what amount its carrying. You may check condtion base in Condtion detail screen.

        Pls see the below snap shot condition detail of sales order.It is carrying the WHT percentage from WHT code from FI level to accounting.

        Note: Actually,I have maintained condition record with WTH code but it didnt come automatically in sales order,I have entered manually condition type and entered WHT Z1.Before entering WHT,I have checked analysis that why WHT dint come automatically into sales order ,system is showing tax classification as nil.Hence ,it didnt come automatically. Donno,how to fulfill this WHT condition in sales order to get it automatically.

        1.PNG

        • In our business scenario if WHT is there then we donot require MWST. so we are using exclusion to deactivate MWST if witholding tax is active.

        But in Indian scenario,we want WHT as well as Tax conditions.In this case,how can we achieve the process.Does SAP has provided any oss note for Indian WHT scenario?,If yes kindly let me know to implement it.

        • Can you please share condition detail screen  of Invoice so we can see reason.  SAP treats WHT differently than normal tax. It means if you have price type which redetermines tax in normal condition in Invoice, same will not work for WHT. This may create issue of WHT re-determination in Invoice.

        Yes it is treating WHT than normal tax.System is not considering or checking tax part when WHT is present.You can see my previous post two snap shots also.

        • Please check price type you are using in Copy control and advice.

        We are using G-Copy pricing elements unchanged and redetermine taxes in copying control.

        Kindly let me know if you need any another details.

        BR’s,

        KNR

        (0) 
        1. Neeraj Lal Post author

          Hi Narendra,

          I am not sure if you are using Tax classification from Material and customer master or field which I mentioned above i.e.  ‘J_1ATXREL’.

          Please note WHT do not support material tax classification and Customer tax classification which works fine with MWST.

          In case of WHT, SAP recommond  ‘J_1ATXREL’ which is tax code maintained by FI in customer master. For fetching this you need to assign routine at access sequeance. Please check screen shot for details where 923 routine assigned at access. You will find code in Note “178824”.

          what message you are getting in Invoice for standard tax ‘MWST’? can you share MWST analysis tab from Invoice.

          Regards

          (0) 
        2. Neeraj Lal Post author

          Hi Narendra,

          In addition to above, I checked my setting and finding we are getting both MWST and withholding tax in our invoice. we are excluding MWST.

            But I find in screenshot which you shared no standard tax is getting copy in your invoice.

          Please check your MWST settings.

          /wp-content/uploads/2014/10/c1_567423.png

          (0) 
            1. Neeraj Lal Post author

              Hi Narendra,

              In sales order looks like you maintained condtion record at 0020 (Customer /Material).

              but in Invoice screen which you shared showing  005 access sequence….

              Do there is any reason of highlighitng 005 access in invoice.

              What message you are getting at 0020 access in Invoice?

              Regards

              Neeraj

              (0) 
              1. Narendra Konnipati

                Hi Neeraj,

                At 20 access also,it is showing the message as condition record missing.

                The tax VAT is not coming and If I click on button”Update”  and then tried with C,G and K but didnt get tax.

                1.PNG

                BR’s,

                KNR

                (0) 
                1. Neeraj Lal Post author

                  Hi Narendra,

                  can you check pricing date. I find in invoice screen shot ‘Serv rend date date’ is 30/09/2014 but in sales order screen shot it is 21/10/2014 …

                  Regards

                  (0) 
                  1. Narendra Konnipati

                    Hi Neeraj,

                    Thank u so much for your help in this.I have checked ,it is working fine but what about excise invoice issue?.Because,we have not activated excise but system is showing excise invoice posted in document flow.Do we have any solution to avoid this?

                    BR’,

                    KNR

                    (0) 
                    1. Neeraj Lal Post author

                      HI Narendra,

                      Please check your setting…Looks like something in your CIN setting causing this.

                      I don’t think that this withholding setting is causing excise invoice in your document flow.

                      I can only tell that in my business its working fine without any such issue.

                      May be you can try to create OSS message to SAP with details..

                      Regards

                      Neeraj

                      (0) 
  2. Janna B

    Hi

    I have made customization for w/t tax for Thailand, as per SAP help document.

    http://help.sap.com/saphelp_470/helpdata/en/9b/bc4b11efc211d5b722006094b9ec21/content.htm

    In our case we need to set one of the w/t tax codes, according to material. (2 different tax codes, and in some cases no condition should be set at all)

    I haven’t installed any notes and didn’t develop new pricing requirements.

    I have 2 problems:

    1) items that I haven’t set a pricing condition for them at all, the invoice yet appears in table WITH_ITEM with empty values. Not sure it is problem

    2) lines that should appear in WITH_ITEM, appear there as 2 lines and w/o tax code. It happens in one sales specific sales order type. What could be the reason?

    I wish I read your document earlier (for example, I wouldn’t try to add tax classifications to pricing tables of w/h tax. I tried and, of cause, didn’t succeed)

    (0) 
  3. Gobinda P

    Hi Experts,

    Can any body  please share  condition based withholding tax configuration ?

     

    Thank you in advance.

     

    regards

    Gobinda

    (0) 

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