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02 - Process Document - ECC

Maintain tax details and exemption certificates for suppliers in their master data. For suppliers with PAN, enter their PAN number and maintain TAN-based exemption details. For suppliers without PAN, the tax rate is 5% instead of 10%. Exemption thresholds apply to the total purchase amount from a supplier each financial year and determine whether TDS applies to invoices. Documents must include the section code to allow TDS amounts to accumulate properly.

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Pãśhãh Šháìkh
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68 views5 pages

02 - Process Document - ECC

Maintain tax details and exemption certificates for suppliers in their master data. For suppliers with PAN, enter their PAN number and maintain TAN-based exemption details. For suppliers without PAN, the tax rate is 5% instead of 10%. Exemption thresholds apply to the total purchase amount from a supplier each financial year and determine whether TDS applies to invoices. Documents must include the section code to allow TDS amounts to accumulate properly.

Uploaded by

Pãśhãh Šháìkh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Maintain withholding tax type, tax code and Rec.

ty in supplier master data and TAN exemptions


details as below.

Assign Tax Type and Tax code (Both Invoice and Payment)

Note: Create vendor master data and save the changes, then go to change
transaction and Maintaining PAN level TAN based exemption in CIN tab.

Scenario 1: Vendor with PAN.

Assign PAN as shown below.


Maintaining TAN based exemption details as shown below.

NOTE: Dummy Certificate Number (TDSU/S194Q) should be


maintained for 194Q tax type and tax code (should not maintain any
other certificate number). Exemption rate should be 100%. Maintain
Exemption reason as 4Q which has created based on customizing
document. Maintain Withholding tax type and code which has
assigned to supplier master in above steps.
Only for current FY-
Based on the purchase consideration that has happened from 01.04.2021 till 30.06.2021
Exem Threshold value should be maintained.
For example- if the total purchase value from supplier between 01.04.2021 to 30.06.2021 is
43 Lakhs INR then you will have to maintain exemption amount as 7 Lakhs (5000000 –
4300000) INR in supplier master for that supplier.
So if you post an invoice or advance payment of 3 lakhs on 01.07.2021 for that supplier no
TDS will be computed.
If you post another invoice for 5 lakhs on 02.07.2021 for the same supplier then TDS will be
computed for 1 lakhs as the threshold limit of 50 lakhs will exceed.

Section Exemption Exm. From date To date Reason Tax Tax Threshold Currency
code number % Type code
IN47 TDSU/S194Q 100 01.07.2021 31.03.2022 4Q 4Q 4Q 700000 INR
IN47 TDSU/S194Q 100 01.07.2021 31.03.2022 4Q 5Q 5Q 700000 INR

From next FY onwards threshold should be maintained as 50 Lakhs INR.

Documents should look like below.

Note: While posting the document, it is mandatory to provide section code otherwise
accumulation will not work.

Case 1: Below threshold.

Document with amount 100000


Below 5000000 threshold Limit. As it is completely inside the threshold TDS amount is 0.

Case 2: Partially exempted and partially outside the exemption.

Document with amount 6000000 so it comes under partially exempted and partially outside the
exemption limit.

6100000(current 6000000 + previous 100000) – 5000000 = 1100000 * 0.1 = 1100.


So TDS amount is 1100

Case 3: Completely Outside threshold limit.

Document posted with 1000000 so TDS is 1000000 * 0.1 = 1000.

Scenario 2: Vendor without PAN.

PAN number can be blanked for 194Q vendor (If PAN number is not available then tax rate would be
5%).
All other steps are same as PAN scenarios.

Note: Certificate number (TDSU/S194Q) should be maintained in exemption


details, otherwise you cannot save the exemptions details for non-PAN scenarios.

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