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Configurations required –

1. Withholding tax key is maintained for TCS.

2. Withholding tax types are maintained for TCS on base, surcharge, ECS and SECess.

Since this withholding tax is configured with Base amount as Modified net amount, the
base for the withholding tax will be the net amount (i.e., not inclusive of the tax condition
values.) In case you wish to add some tax condition values to the base for TCS
calculation, you will need to maintain the posting key assigned to the tax condition type
in the pricing procedure along with the combination of the withholding tax code assigned
to the TCS related condition type at the following location:

SPRO -> Financial Accounting (New) -> Financial Accounting Global

Settings (New) -> Extended Withholding Tax -> Withholding Tax Base

Amount -> Define processing key for Modified Net Amount

By doing so, the condition values of the tax condition types assigned for these processing
keys will also be included in the base for the withholding tax calculation.

3. Create the access sequence for withholding tax for TCS in SD –

Copy the existing access sequence J1AW and create the new access sequence J1IW with
the following accesses:

4. Create condition types corresponding to Tax collected at Source in SD –

5. Withholding tax types must be assigned to condition types maintained in SD for TCS.

6. Define Withholding tax codes for TCS. –

Set the withholding tax rate as per requirement here.

7. Since posting will happen from SD as well as from FI with the TDS code, off-setting
concept posting is used for the TCS tax types. The GL accounts are assigned as below –

Note:

Same G/L account should be maintained for transaction key WIT based

tax line item and the SD-FI condition based tax line item.

A different G/L account has to be maintained for the transaction key OFF

based line item.

8. Pricing procedure changes. The condition types corresponding to TCS will have to be
adding to the pricing procedure as shown below –

The condition types for TCS (JTCS, JTEC AND JTSE) are to be defined as statistical in
the pricing procedure. The system calculates the values in SD but doesn’t post them
directly from SD. Posting would take place with the condition type assignment to TCS
withholding tax types. (as configured earlier in step 5)

9. We will need to define a new condition type and add this to the pricing procedure to
post to the FI. This condition type will be manual and can be manually filled at the time
of creation of sales order. This can also be copied from the statistical TCS condition types
in the pricing procedure.

For example, the screen shot below shows how to create the condition type corresponding
to TCS which would be posted to FI:

This condition type JWTS will have to be added to the pricing procedure. This is not
maintained as statistical and has a corresponding accounting key –

Similar condition types will have to be created and added to the pricing procedure for
ECS on TCS and SECess on TCS.

10. The accounts for withholding tax to be paid must be maintained for the TCS
withholding tax type and TCS withholding tax code combination as given below -