How to Work with TCS in the India Localization of SAP ...

User Guide | PUBLIC2021-10-09

How to Work with TCS in the India Localization of SAP Business One

© 2

021 S

AP S

E or

an

SAP affi

liate

com

pany

. All r

ight

s re

serv

ed.

THE BEST RUN

Content

1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2 Enabling Withholding Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

3 Settings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.1 Setting TCS Accumulation Base. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93.2 Defining TCS Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.3 Mapping TCS Codes to Business Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4 Marketing Documents for A/R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

5 Incoming Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

6 Marketing Documents for A/P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2 PUBLICHow to Work with TCS in the India Localization of SAP Business One

Content

Document History

The following table provides an overview of the most important document changes.

Version Date Description

1.0 2021-10-20 First version

How to Work with TCS in the India Localization of SAP Business OneDocument History PUBLIC 3

1 Introduction

This how-to guide helps you to work with Tax Collected at Source (TCS) requirements under Sec 206C (1H) in the India localization of SAP Business One and SAP Business One, version for SAP HANA.

TCS is a legal requirement in India. Finance Bill 2020 has inserted a new provision - Sec 206C (1H) which extends the TCS provisions for the seller of goods. The new provision provides that if a seller (being a person whose turnover in the previous financial year exceeds 10 Crores) makes a sale of “goods” whose value, either individually or in aggregate exceeds 50 Lacs, the seller shall collect tax at source at specified rates on the value of sale consideration exceeding 50 Lacs from the buyer.


Introduction

2 Enabling Withholding Tax

You need to enable withholding tax at the company level before you can use the TCS functionality.

From the SAP Business One Main Menu, choose Administration Setup Financials G/L Account Determination

To enable TCS for A/R and A/P transactions, select the Withholding Tax checkbox both under the Sales tab, Tax subtab and also under the Purchasing tab, Tax subtab.

You can set all items as withholding tax/TCS liable by default.

From the SAP Business One Main Menu, choose the Administration System Initialization General SettingInventory Items subtab, and select the Withholding Tax checkbox.

How to Work with TCS in the India Localization of SAP Business OneEnabling Withholding Tax PUBLIC 5

Alternatively, you can set the withholding tax/TCS liable in the item master data of the relevant items.

From the SAP Business One Main Menu, choose Inventory Item Master Data . Find the relevant item and, in the General tab, select the Withholding Tax Liable checkbox.


Enabling Withholding Tax

Eventually, the item’s withholding setting can be defined in the document creation and this will determine whether the TCS will be calculated in this document for the item or not, regardless of what the setting in the item master data is.

Create a new A/R or A/P invoice, select the business partner and the item, and in the item’s row, select Yes or No in the WTax Liable column.

How to Work with TCS in the India Localization of SAP Business OneEnabling Withholding Tax PUBLIC 7


Enabling Withholding Tax

3 Settings

Settings in SAP Business One allow TCS functionality to operate and conform to the legal and reporting requirements of the tax authorities in India for Sec 206C (1H).

3.1 Setting TCS Accumulation Base

You can choose at which stage the tax will be applied; in the invoice creation or in the payment creation.

From the SAP Business One Main Menu, choose Administration Setup Financials TDS Financial Year Master .

In the Financial Year Master - Setup Tax window, TCS Accumulate Base column, choose Accumulate Based on Invoicefrom the dropdown list, or Accumulate Based on Payment for a specific financial year.

CautionYou should define this setting at the beginning of the financial year. However, if you choose to change the based method at any time, the accumulation amount for all business partners will be cleared.

How to Work with TCS in the India Localization of SAP Business OneSettings PUBLIC 9

3.2 Defining TCS Codes

From the SAP Business One Main Menu, choose Administration Setup Financials Tax TCS Withholding Tax .

In the TCS Withholding Tax - Setup window, define all the settings, during which you must define the following:

● Cumulative Threshold: currently it is 50 lacs.

NoteTCS will only be applied when the accumulate amount of all A/R invoices or payments of a specific business partner in the specific financial year, exceeds the defined cumulative threshold of the withholding tax code, defined for the specific business partner.

● Interim Accounts: These G/L accounts will be debited/credited at the time of recording TCS on an A/R invoice or A/P invoice.

3.3 Mapping TCS Codes to Business Partners

1. From the SAP Business One Main Menu, choose the Business Partners Business Partner Master Data Accounting Tax subtab.

2. Choose the ellipsis button next to the WTax Codes Allowed field.3. In the WTax Codes Allowed window, select the TCS codes you want to make available for this specific

business partner.


Settings

How to Work with TCS in the India Localization of SAP Business OneSettings PUBLIC 11

4 Marketing Documents for A/R

If you chose to accumulate the amount for TCS based on invoices for the financial year, the TCS will be applied when you create an A/R invoice or an A/R down payment invoice, or an A/R down payment request (journal posting at time of incoming payment against the down payment request) for the relevant business partner and only when the accumulate amount of all A/R invoices or A/R down payment invoices (against which payment is received,) or A/R down payment requests (against which payment is received) of this specific business partner in the specific financial year, exceeds the defined cumulative threshold of the related withholding tax code.

Procedure

1. Create an A/R invoice.2. To select TCS codes applicable at the document level, right-click the general area of the invoice and choose

WTax Table. The available TCS codes are based on the TCS codes mapped to the business partner master data.

3. In the Withholding Tax Table window, you can view and change the default withholding tax codes.

NoteYou cannot select TCS withholding tax and payment category withholding tax at the same time, and you can only select one TCS withholding tax in one document.


Marketing Documents for A/R

4. Add the invoice.

Results

● The withholding tax amount in the invoice will be calculated based on the settings of the selected TCS code and be displayed in the WTax Amount in the invoice’s header.

● If the cumulative threshold for the specific customer has not been exceeded, the withholding tax amount in the invoice will be zero.

● If the invoice amount achieves the cumulative threshold, a system message will be displayed specifying that the withholding tax will be calculated.

● The withholding tax amount is posted to an interim account, set in the TCS Withholding Tax - Setup window, and when the invoice is paid, the interim account will be cleared, and the withholding tax amount will be posted to the payable account.

● SAP Business One reconciles the documents postings automatically, including the tax amounts.

In the following scenarios, the invoice amount will be deducted from the accumulative amount of the specific business partner, as long as the threshold amount was not exceeded:

● when cancelling the A/R invoice● when copying the A/R invoice to a credit memo● when adding a stand-alone credit memo

How to Work with TCS in the India Localization of SAP Business OneMarketing Documents for A/R PUBLIC 13

5 Incoming Payments

If you chose to accumulate the amount for TCS based on payments for the financial year, the TCS will be applied when you create a payment for the relevant business partner and only when the accumulated amount of all the payments of this specific business partner in the specific financial year exceeds the defined cumulative threshold of the related withholding tax code.

Procedure

1. Create an incoming payment.2. Choose the invoice (A/R Invoice or A/R Down Payment Invoice or A/R Down Payment Request) you wish

to pay and choose the payment means.3. Add the payment.

Results

● If the payment amount achieves the cumulative threshold for the specific business partner, a system message will be displayed: “Payment amount has exceeded the TCS cumulative threshold”.

● Manually create an A/R invoice for this TCS amount.


Incoming Payments

● NoteFrom now on, when the incoming payments cumulative threshold is already exceeded, the TCS will be applied when you create an A/R invoice for this business partner based on invoices amount cumulation, as described in the Marketing Documents for A/R [page 12] section.

How to Work with TCS in the India Localization of SAP Business OneIncoming Payments PUBLIC 15

6 Marketing Documents for A/P

When you buy goods or services from your vendor and TCS was collected from you, the TCS amount should be recorded by you in the A/P invoice.

Procedure

1. Create an A/P invoice.2. To select TCS codes applicable at the document level, right-click the general area of the invoice and choose

WTax Table. The available TCS codes are based on the TCS codes mapped to the business partner master data.

3. In the Withholding Tax Table window, you can view and change the default withholding tax codes.

NoteYou cannot select TCS withholding tax and payment category withholding tax at the same time, and you can only select one TCS withholding tax in one document.

4. Add the invoice.

Results

● SAP Business One does not track any accumulation of TCS amount on the purchase documents.● It is recommended to choose the relevant TCS code in each A/P invoice and not set a default in the

vendor’s master data.● TCS is also supported in A/P down payment request (when you pay the request) and in A/P down payment

invoice documents.● TCS is not supported in stand-alone A/P credit memo.


Marketing Documents for A/P

Important Disclaimers and Legal Information

HyperlinksSome links are classified by an icon and/or a mouseover text. These links provide additional information.About the icons:

● Links with the icon : You are entering a Web site that is not hosted by SAP. By using such links, you agree (unless expressly stated otherwise in your agreements with SAP) to this:

● The content of the linked-to site is not SAP documentation. You may not infer any product claims against SAP based on this information.● SAP does not agree or disagree with the content on the linked-to site, nor does SAP warrant the availability and correctness. SAP shall not be liable for any

damages caused by the use of such content unless damages have been caused by SAP's gross negligence or willful misconduct.

● Links with the icon : You are leaving the documentation for that particular SAP product or service and are entering a SAP-hosted Web site. By using such links, you agree that (unless expressly stated otherwise in your agreements with SAP) you may not infer any product claims against SAP based on this information.

Videos Hosted on External PlatformsSome videos may point to third-party video hosting platforms. SAP cannot guarantee the future availability of videos stored on these platforms. Furthermore, any advertisements or other content hosted on these platforms (for example, suggested videos or by navigating to other videos hosted on the same site), are not within the control or responsibility of SAP.

Beta and Other Experimental FeaturesExperimental features are not part of the officially delivered scope that SAP guarantees for future releases. This means that experimental features may be changed by SAP at any time for any reason without notice. Experimental features are not for productive use. You may not demonstrate, test, examine, evaluate or otherwise use the experimental features in a live operating environment or with data that has not been sufficiently backed up.The purpose of experimental features is to get feedback early on, allowing customers and partners to influence the future product accordingly. By providing your feedback (e.g. in the SAP Community), you accept that intellectual property rights of the contributions or derivative works shall remain the exclusive property of SAP.

Example CodeAny software coding and/or code snippets are examples. They are not for productive use. The example code is only intended to better explain and visualize the syntax and phrasing rules. SAP does not warrant the correctness and completeness of the example code. SAP shall not be liable for errors or damages caused by the use of example code unless damages have been caused by SAP's gross negligence or willful misconduct.

Bias-Free LanguageSAP supports a culture of diversity and inclusion. Whenever possible, we use unbiased language in our documentation to refer to people of all cultures, ethnicities, genders, and abilities.

How to Work with TCS in the India Localization of SAP Business OneImportant Disclaimers and Legal Information PUBLIC 17

www.sap.com/contactsap

© 2021 SAP SE or an SAP affiliate company. All rights reserved.

No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP SE or an SAP affiliate company. The information contained herein may be changed without prior notice.

Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors. National product specifications may vary.

These materials are provided by SAP SE or an SAP affiliate company for informational purposes only, without representation or warranty of any kind, and SAP or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP or SAP affiliate company products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.

SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. All other product and service names mentioned are the trademarks of their respective companies.

Please see https://www.sap.com/about/legal/trademark.html for additional trademark information and notices.

THE BEST RUN

https://www.sap.com/about/legal/trademark.html

How to Work with TCS in the India Localization of SAP ...

Documents

Transcript of How to Work with TCS in the India Localization of SAP ...