Withholding Tax on Interest Payments to Customers 

Use

India’s income tax laws require you to withhold tax on interest payments made to customers on any deposits that you have presented to you.

To do so, use the Balance Interest Calculation program, which calculates the interest and the amount of tax to be withheld.

Prerequisites

You have made the Customizing settings for interest calculation in the standard Implementation Guide (IMG), by choosing Financial Accounting ® Accounts Receivable and Accounts Payable ® Business Transactions ® Interest Calculation.

Features

Output

There are two types of output. The system either creates a batch input session, which you can process, or it displays the details of the interest to be posted, which you can post manually.

In both cases, you must ensure that each customer line item contains a business place.

The system creates the accounting documents with the following line items:

It copies the business place from the customer line item to the tax item, and calculates the due date according to the settings for the business place.