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TDS_194QWebinar.pdf
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• TDS- Regulatory background
• TDS- configuration
• Customizing demo
• Master Data Changes
• Solution demo
• Solution SAP Notes
• Additional information
• Roadmap
Agenda
Effective date – 1st October 2020
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• TDS is effective from 1st July, 2021
• TDS is applicable on Purchase of goods
• TDS to be deducted by buyer whose previous year turn over > 10 crores
• TDS to be deducted only on the extent purchase consideration exceeds 50lacs INR between seller and buyer
• TDS rate is 0.1% if Seller/Supplier has provided PAN
• TDS rate is 5% if Seller/Supplier has not provided PAN
• TDS rate is 5% if Seller/Supplier has not furnished IT returns filed for last 2 years and the total TDS/TCS is equal to or
more than 50000 INR
• TDS to be deducted at the time of invoice or payment whichever is earlier
Legal Changes, Effective Date and Impact
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Withholding tax key
A new withholding tax key to be created for TDS under new provision-
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Creation of new withholding tax types for invoice and payment time posting
Withholding tax type for invoice and payment time
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Assign the newly created withholding tax types to company code
Assign Withholding tax type to Company code
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Activate Extended WHT at company code level
Activating Extended Withholding Tax
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Withholding tax codes
Creation of new withholding tax codes for invoice and payment time posting
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Map Invoice time and Payment time tax types and tax codes
The newly created invoice time and payment time tax types and tax codes are mapped here to ensure
correct calculation of WHT accumulation value at the time of posting the documents
Note:
Ensure that the tax rate and the official withholding tax key that you maintain for the invoice time and
payment time tax types and tax codes are the same.
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Assign G/L accounts to tax types and tax codes
Note: G/L account should be Open Item Managed
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Creation of Section codes and mapping TAN nos
1. Section codes to be created for each location and is used to identify under which tax account
deduction(TAN) number the item was posted
2. Section code and TAN mapping
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If there are multiple section codes with same TAN no then they can be grouped under one section
code group and assigned in Supplier master
Activate Section code Group-
Once the section code group is activated the same should not be disabled
Grouping Different Section codes with Same TAN
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Define a Section code Group and Assign all the section codes with same TAN no to the Section
code group created
Grouping Different Section codes with Same TAN
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Create exemption reason to be used while maintaining TAN based exemption details in business
partner master data
Define Reason for Exemption
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Maintain PAN number of the supplier
Supplier Master
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Assigning withholding tax type and tax code
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Since the effective date of TDS u/s 194Q is in the middle of the FY that is from 01.07.2021 but the
applicability is from 01.04.2021 onwards-
Customers should arrive at the purchase considerationfrom 01.04.2021 till 30.06.2021 and then
update the exemption threshold accordingly.
Example: For Supplier with PAN123 and Buyer with PAN999 if the purchase consideration/value
from 01.04.2021 till 30.06.2021 is 45 Lacs then exemption threshold for this supplier should be
maintained as 5Lacs INR only.
If the purchase value has exceeded 50 Lacs for any supplier PAN the exemption threshold should
not be maintained at all in supplier master
Threshold for each Supplier
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If the purchase value has exceeded 50 Lacs for any supplier PAN the exemption threshold should
not be maintained at all in supplier master
Supplier Master- Threshold is fully crossed
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For Section 194Q, the Exemption Number should be by default maintained as “TDSU/S194Q”.
This is read in code as well so the same naming convention should be used.
Maintain threshold limit of 50 Lacs- Company having Single TAN
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1. For Section 194Q, the Exemption Number should be by default maintained as “TDSU/S194Q”.
This is read in code as well so the same naming convention should be used.
2. If you have multiple TANs then for each section code threshold should be maintained
3. Same tax type and tax code to be used across different section codes
Maintaining Threshold limit of 50 Lacs – Multiple section code and TAN
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Below table is updated when exemption details are maintained in the supplier master
Table- TAN Exemption
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As per the rule, if on a transaction both TDS and TCS are applicable then TDS will take the
precedence-
So if the buyer is liable to deduct TDS and has informed the same to supplier/seller then supplier
should not collect TCS from such buyers.
Below Note is released with resolution to disable TCS at supplier end as buyer will deduct TDS-
3044961 - TCS effective from July 1 2021
How to disable TCS as buyer will deduct TDS?
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SAP Notes-
Below Note has details of all the notes released for TDS so far-
3032781 - Amendment changes to Section 194Q TDS - Updates
3035980 - Tax deducted at source u/s Section 194Q - Budget 2021 Changes
3060210 - Tax deducted at source u/s Section 194Q - PAN level accumulation
3033325 - FAQ on Tax Deducted at Source(TDS) u/s 194Q
3044961 - TCS effective from July 1 2021
3031916 - Amendment to Section 206AB - Updates
.
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1. For every transaction posted section code should be entered for correct updation of
accumulation table.
2. Exemption certificate no should be strictly “TDSU/S194Q” only.
3. While posting invoice payment time tax type and tax code should be removed. Else it will again
lead to TDS calculation while posting outgoing payments
4. If for any supplier PAN, the total purchase value till 30.06.2021 has already crossed 5000000
INR then no need to maintain any entry under TAN exemption in supplier master
Key Points
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Roadmap
Topic Effective Date Expected delivery
TDS adjustment while posting
invoice
01.07.2021 By end of Q3..
Currently the same can be
handled by clearing through F-54
Monthly Liability computation
for TDS
Before 7th, Aug 2021 Before 7th of August 2021
Quarterly Returns for TDS Before 15th Oct, 2021 Once the utility is available in
govt portal
MIS- Utility report By end of Q1, 2022