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India Localization Tax Deduction at Source

 Objective
Objective of this presentation is to provide details of functional
implementation of India Localization TDS Functionality.
 Tax Deduction at Source (TDS)
Overview

TDS Setups

Threshold Transition

Defaultation of TDS tax onto Invoice Distribution DFF

Generation of TDS invoices

Prepayment Application

Prepayment Unapplication

Cancellation of Invoice

eTDS Flat File Generation

TDS Related Reports

 TDS Overview
Vendor Goods or Services Organization Statutory Authority

Payment after Payment of deducted

deducting tax tax

Issues TDS Submits TDS data in

certificate for the prescribed eTDS
deducted tax format

Tax Deduction at source (TDS ) is the amount withheld as per the

Income Tax Act, for an invoice transaction.

An organization must deduct TDS on specified transactions.

The TDS rates and event where TDS need to be deducted are notified in
the Income tax Act.

There are different sections for different nature of payments. Rate of TDS
vary from one section to other
TDS Setup Organization TAN
Navigation India Local Payables > India Localization > India
TCS/VAT/Service Tax > Setup > Regime Registration
Navigation India Local Payables > India Localization > India
TCS/VAT/Service Tax > Setup > Regime Registration
 TDS Setup Defining a TDS Tax

Navigation-India Local Payables:Set up:Tax:Taxes

Vendor Name defined for the tax code is the Statutory Authority to whom Organization will
Deposit TDS amount deducted from vendor.
Section type and section code are mandatory.
Original tax percent is defined for a reduced rate tax and is optional.
Tax rate is inclusive of surcharge and cess percentages, So a tax rate of 1.12 with cess as 0.02
and surcharge 0.1 means a basic rate of 1.
TDS Setup Defining TDS Year

Navigation India Local Payables -> Setup -> Others -> TDS Year Info
Option to round to nearest Ten Rupees
 TDS Setup Vendor Additional Information

Navigation : India Local Payables:Suppliers:Additional Information

The TDS vendor type of the vendor is captured, PAN no is an important
attribute for threshold calculation.
Default Section and Tax are important attributes for tds defaultation.
Applicable Sections are displayed based on the threshold setup
 TDS Setup Threshold

Navigation : India Local Payables:Setup:Tax:India Threshold Setup

Threshold is defined for each section by TDS vendor type.
Thresholds applicable to specific vendors are defined as exception setups and Vendors are assigned
manually to this setup
 TDS Setup Threshold Overview
Case details: Threshold limits are as follows:
Single Invoice Rs. 20,000.
Aggregate of all Invoices Rs. 50,000.
TDS Rate 2%
Tax will be deducted as following:

Invoice# Invoice Invoice Invoice TDS on TDS at

/Serial# 1 2 3 Amount Invoice
No
Case I 17000 17000 17000 All 2
Case II 17000 21000 12000 2/All 2/3
Case III 17000 21000 11000 2 2
Case IV 17000 17000 20000 All 3
In case of Case 2, TDS will be first deducted on Invoice 2 on Rs. 21,000 @ 2% i.e. Rs. 420 will be
deducted. Later at Invoice 3, TDS would be deducted on full Rs. 50,000 @ 2% i.e. Rs. 1,000, but in this
case Rs. 420 is already deducted. Now TDS of Rs. 580 will be deducted. Rs. 420 is considered as Tax
Paid Till Date.
 TDS Setup Threshold Group

Navigation : India Local Payables:Setup:Tax:India Vendor Threshold Grouping

 TDS Setup Threshold Group

Threshold should not be modified manually, the facility is given mainly for
uploading threshold data at the time of migration.
 TDS - Defaultation of TDS tax

TDS applicable on an invoice is captured in the GDF of invoice distribution in AP

workbench.
GDF Title Invoice Distribution. Context India Distributions.
Table ap_invoice_distributions_all, Columns by segment are,TDS Tax :
Global_attribute1, WCT-Tax : Global_attribute2, ESI Tax : Global_attribute3
TDS is processed only for distributions with line type Item, Miscellaneous and PPV Line
TDS cannot be processed on invoice that is raised for paying TDS to tax authorities.
 TDS Defaultation Logic
Start

No Default Tax Default Section

No
User input Name defined in defined in
in GDF? supplier additional supplier additional
info ? info ?

Yes
Yes Yes

Default the derived TDS tax

Derive tax from default
Section based on threshold.
First Cumulative, if cumulative
not reached then Single

The TDS Tax Id gets defaulted in GLOBAL_ATTRIBUTE1 field of AP Invoice

Distribution
The TDS Tax ID gets defaulted in GDF on Saving of Invoice.
 TDS TDS Invoice Generation

On Validation of an Invoice TDS Invoices gets generated.

A Credit Memo for the Vendor and a Standard Invoice for the Statutory Authority
gets generated.
TDS invoices are imported through Payable open interface and optionally
validated upon import as per the setup in Supplier Additional Information.
Scope of India Localization here is to populate the Interface tables.
AP_INVOICES_INTERFACE
AP_INVOICE_LINES_INTERFACE
AP_INTERFACE_REJECTIONS
 TDS Prepayment Application/Unapplication
At the time of prepayment application if tds for the same section is deducted both on
standard invoice and prepayment, then as per the current functionality a reversal invoice is
created at the rate applicable on Standard Invoice or prepayment whichever is lower.
Eg. Prepayment (MAR) Rs.1000 @ 5% = Rs. 50
Std. Invoice (APR) Rs. 2000 @ 10%= Rs. 200
RTN Invoice(Application)- Rs. 1000 @ 5% = Rs. 50.
At the time of application, a distribution of type PREPAY gets inserted in the standard
invoice with a ve amount.

Base application does not maintain any link between the distributions of the standard
invoice and the PREPAY distributions as prepayment application is not by distribution

This link is important for comparing the TDS section on the invoice and the prepayment.
Table JAI_AP_TDS_PREPAYMENTS maintains this link on a FIFO basis giving preference
to linking distribution with same section when possible.

If a prepayment is unapplied, whatever action was taken at the time of apply

gets reversed.

Prepayment Application results in decrease in threshold amount and Unapplication will

result in increase in Threshold Amount.
 TDS Invoice Cancellation.

A check has been been introduced to prevent the base invoice of Vendor from
being canceled if the TDS invoice for Statutory Authority it has already been
paid.

On Cancellation of Base Invoice of Vendor, TDS invoices(SI + CM) will also get
cancelled.

At Cancellation, the TDS threshold amount will get reduced.

 TDS - Certificates & eTDS - Payment DFF

TDS Certificates prints the payment information.

Additional information required for TDS certificates is captured India
TDS Challan form.
 TDS - Certificates Steps to Generate eTDS Certificates
1. Run India - Process TDS Payments

2. Run India - Program to Generate eTDS Quarterly Certificates 26Q

OR
3. Run India - Program to Generate eTDS Quarterly Certificates 27Q
 TDS Certificates India - Process TDS Payments

This Concurrent fetches all the payment records that belong to the
Specified Criteria and inserts them into the jai_ap_tds_payments table.
Regenerate Option Default value for this is set to No. If this option
is set to Yes, then the program will reprocess the payments made to
TDS Authority for which no TDS certificate is generated using India -
Generate TDS Certificate concurrent.
 TDS eTDS Generate eTDS Quarterly Certificates

Report Name : JAIETDSQ.rdf

Generates a Flat File that contains the Quarterly Returns which belongs to sections not
covered by 27Q. (Report Name JAINETDSQ.rdf)
The File Structure, validation utility and Sample file can be obtained from
http://tin.nsdl.com/Downloadsannreturns.asp
Action parameter :
F -> The flat file as per the format is generated
H -> The Flat File is presented in a Readable format with Headings for the fields.
V -> The data in the Customers instance is validated and the errors are reported so that
the Customer can fix them before proceeding to generate the flat file
 TDS eTDSGenerate eTDS Quarterly Certificates 27Q

Report Name : JAINE27Q.rdf

Generates a Flat File that contains the Quarterly Returns belonging to the following Section
Codes : SEC. 194(E),SEC. 195,SEC. 196(A),SEC. 196(B),SEC. 196(C),SEC. 196(D)
Action parameter :
F -> The flat file as per the format is generated
H -> The Flat File is presented in a Readable format with Headings for the fields.
V -> The data in the Customers instance is validated and the errors are reported so that
the Customer can fix them before proceeding to generate the flat file
 TDS TDS Reports

Following is the list of TDS Reports

India - TDS Prescribed Rate Report : JAINITCP.rdf

India - TDS at Lower Rates Report : JAINITCL.rdf
India - TDS Related Invoices : JAINOTDS.rdf

Navigation Path
India Local Payables -> View -> Reports
THANKS