TDS or Withholding tax:

TDS is simply tax deducted at source. As per Income tax act Persons responsible for making payments are required to deduct TDS at prescribed
rates.
 TDS on posting the invoice
 TDS on making the payment (including the Advance payment)
The following are the tax rates taken:
S.No Section Nature of payment TDS rate for TDS for
Person company
1 192 Salaries Average Average
2 194I Rent on Plant & Machinery 2% 2%
3 194I Rent on building 10% 10%
4 193 Interest on securities 10% 10%
5 194 Dividends 10% 10%
6 194A Interest otherthan interest on securities 10% 10%
7 194c Payment to contractors 1% 2%
8 194H Commission or brokerage 5% 5%
9 194J Professional Charges 10% 10%

Configuration in SAP:
Step1: Maintain calendar Year
Path: IMG- SAP Netweaver- General Settings- Maintain calendar
Taken “IN” as calendar year
Step2: Check with holding tax countries
Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Basic settings- Check with
holding tax countries
Purpose: Needed for printing the withholding tax form as per the countries specific legal requirements.

Step3: Define With holding tax keys

Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Basic settings- Define with
holding tax keys
Purpose: This is an official description of a with holding tax code, as laid down by a countries National tax authorities. The with
holding tax keys corresponds to the with holding tax laws according to which tax is with held.
Step4: Define reasons for exemption
Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Basic settings- Define reasons for
exemption
Optional step

Step5: Check income types

Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Basic settings- Check income
types
For example 194J- Professional charges
194C- Contract income etc

Step6: Define Business Places

Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Basic settings- india- Define
business places
Tcode: SM30 (J_1BBRANCV)
Step11: Define section code
Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Basic settings- india- Define
section code
Step7: Assign section code to business place
Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Basic settings- india- Assign
section code TAN & CIT Address Mapping

Tcode: SM30 (V_SECCODE)

Section Code, TAN, and CIT Address Mapping

Step8: Assign factory calender to business place

Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Basic settings- india- Assign
factory calender to business place
Step9: Assign factory calender to Section code
Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Basic settings- india- Assign
factory calender to Section code

Step 10: Maintain tax due dates

Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Basic settings- india- Maintain tax
due dates
Step12: With holding tax type for invoice posting

Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax-Calculations- with holding tax
type- Define with holding tax type for invoice posting
 Withholding tax type at the time of invoice
N1 TDS on salaries
N2 TDS on Professional charges
N3 TDS on Rent
N4 TDS on contractors
N5 TDS on interest
N6 TDS on commission

Step13: With holding tax type for Payment posting

Path: IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax-Calculations- with holding tax
type- Define with holding tax type for Payment posting
Step14: Define exchange rate type for with holding tax-Optional
IMG- Financial accounting-FA Global settings- with holding tax- Extended with holding tax-Calculations- with holding tax type-
Define Exchange rate type for with holding tax.
partners
Step15: Define rounding rule for with holding tax type.
IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax-Calculations- with holding tax type-
Define Rounding rule for with holding tax type.

Step16: Assign condition type to with holding tax type

IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax-Calculations- with holding tax type-
Assign condition type for with holding tax type
This will do in MM module and in SD module in case of TCS
Step17: Define with holding tax codes
IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax-Calculations- with holding tax type-
Define with holding tax codes
Step18: Check receipient types
IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Basic settings- Check receipient types
Step19: Define formulas for calculation of with holding tax
IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax-Calculations- with holding tax code-
Define Formulas for calculation of with holding tax

New entries

Step20: Portray dependencies between with holding tax types

IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax-Calculations- with holding tax type-
With holding tax base amount- Portray dependencies between with holding tax types
Not required at this stage

Step21: Assign with holding tax type to company code

IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax-Calculations- with holding tax type-
Company code- Assign with holding tax type to company code
 N : Invoice
O :Payment

Step22: Activate extended with holding tax

IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax-Calculations- with holding tax type-
Company code- Activate extended with holding tax
Step23: Create GL account of TDS Payble-194J-FS00
S.No TDS Payable GL Accounts TDS Receivable GL Accounts
1 TDS on salaries 145010 TDS on salaries
2 TDS on Professional 145020 TDS on Professional charges
charges
3 TDS on Rent 145030 TDS on Rent
4 TDS on contractors 145040 TDS on contractors
5 TDS on interest 145050 TDS on interest
6 TDS on commission 145060 TDS on commission

Account group: Current liabilities (For TDS Receivable Current Assets)

Select Only balances in local currency
Select Open item management
Select Line item display
Sort key 001
Field status group: G001

Step23: Assignment of Accounts for automatic posting

IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Postings- Accunt for with hold tax-
define account for with hold tax paid over
Select checkbox with hold tax type and tax code (OBWW)
Step24: Maintain Company code settings
Path: IMG- Logistics general- Tax on Goods Movements- India- Basic Settings- Maintain Company Code Settings
For Creation Excise year
Step25: Specify Documents types for remittance challan
IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Postings- India- Remittance challan-
Document types- Specify document types
Step26: Maintain No. Groups for Remittance challan
IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Postings- India- Remittance challan-
Document types- Maintain No Groups

Step27: Assign No ranges to No groups

IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Postings- India- Remittance challan-
Document types- Assign No. ranges to No. Groups

Step28: Maintain No. ranges for Remittance challans

IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Postings- India- Remittance challan-
Document types- Maintain No. ranges.
Step29: Maintain No. groups and SAP Script forms
IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Postings- India- With hold tax
certificates for vendors and customers- Maintain No. groups and SAP Script forms
J_1IEWT_CERT

Step30: Assign No. group to business Place

J_1IEWTNUMGR (SM30)
Step31: Assign No. group to section code
J_1IEWTNUMGR_1 (SM30)
Step32: Assign No. ranges to No. groups (TDS Cert)
IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Postings- India- With hold tax
certificates for vendors and customers- Assign No. ranges to No. groups

Step33: Maintain No. ranges for SAP Script forms (TDS Cert)
IMG- Financial accounting- FA Global settings- with holding tax- Extended with holding tax- Postings- India- With hold tax
certificates for vendors and customers- Maintain No. groups and SAP Script forms

Step34: Create the vendor account

Accounting- Financial accounting- accounts payable- master records- Maintain centrally
Give the with holding tax keys
Step35: Create Remittance challan Tcode: J1INCHLN

Path: Accounting- Financial accounting- accounts payable- Withhold tax- Extended withhold tax- Remittance of with hold tax- Create
remittance challan

Step36: To insert business place/ section code after posting document Tcode: J1INPP

Step37: To get CIN Details tab in Vendor creation Tcode: OMT3E

Step38: To Enter Bank Challan Tcode: J1INBANK

Step39: Maintain Acknowledgement Number Tcode: SM30

J_1IEWT_ACKN
Step40: Maintain Acknowledgement Number Tcode: SM30
J_1IEWT_ACKN_N

Step41: Maintain Script forms for certificates Tcode: SM30

J_1IEWT_CERT

Step42: To Print TDS Certificates Tcode: J1INCERT