When you post a vendor invoice, the system automatically calculates any surcharge that may be required. The surcharge is an additional tax over and above basic withholding tax. The tax authorities require you to show surcharges separately from the basic tax. Surcharges are remitted at the same time as the tax that they apply to.

Surcharges are presently levied on resident vendors at 10% of the tax in question.

In order for this function to work, you must maintain the settings in the CIN Implementation Guide (IMG), by choosing Tax Deducted at Source ® Extended Withholding Tax ® Calculation of Surcharges.

Some tax offices require you to show surcharges separately from the basic withholding tax; others prefer you to combine the two. When you post a vendor invoice, the system either creates one line item or two, depending on your Customizing settings.