Extended Withholding Tax 
Use
One of the ways of handling withholding tax in Country Version India (CIN) is to use the generic Extended Withholding Tax solution.
This documentation describes only the aspects of the Extended Withholding Tax solution that are particular to India. For the generic documentation, see
Extended Withholding Tax.
Prerequisites
In order to work with Extended Withholding Tax, you must make the appropriate settings:
- In the standard Implementation Guide (IMG), by choosing Financial Accounting ®
Financial Accounting Global Settings ®
Withholding Tax ®
Extended Withholding Tax
- In the CIN IMG, by choosing Extended Withholding Tax
Features
Day-to-Day Activities
CIN complements the Extended Withholding Tax solution with special functions for:
- Automatically calculating
surcharges and
tax due dates when you post vendor invoices
Clearing invoices against down payments so that any tax withheld on the down payment is set off against the tax required to be withheld on the invoice
Clearing the tax withheld on invoices against the tax withheld on transactions in clearing accounts
Recording
withholding tax certificates that your customers have submitted as proof of tax that they have withheld on payments to you
Correcting errors that you might make while posting a vendor invoice – or down payment or credit memo – by making a
journal voucher (JV) entry
Periodic Processing
As far as periodic processing is concerned, CIN offers a number of reports to cope with such local features as:
Withholding tax on interest payments made to customers for deposits that they have made
Usage of remittance challans when you remit withholding tax (both for when you
deposit the tax at a bank and for
confirmations of receipt of such deposits, as sent to you by your bank)
Printout of
withholding tax certificates with multiple line items for your vendors
Printout of withholding tax certificates for interest payments for your customers
Calculation of
taxes on clearing accounts, that is, on business transactions that your vendors have performed but have not yet submitted an invoice for
Identifying customers that have not yet sent you a withholding tax certificate for tax that they have withheld from you
CIN also offers a
Withholding Tax Information System for reporting purposes.Finally, one of the most important features of CIN is that it allows you to define a withholding tax entity at a level below the company code, which in other countries is the legal entity for reporting withholding tax. Under the Companies Act, however, a single legal entity may comprise several tax withholding entities, each of which is identified by a separate tax deduction account number (TAN). This of course has implications for the capture and reporting of withholding tax data. This reporting entity is represented in the SAP System using the
business place object.