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What is the difference between Withholding Taxes and Extended Withholding Taxes?
Please read this for the same. I have mentioned prominant difference between the two.
Withholding Tax
Classic Withholding Tax (All release)
Extended Withholding Tax (from release 4)
S.No
Individual Function
Classic
Extended
Yes
Yes
Yes
Yes
TDS basis
Max 1
Several
- Net amount
Yes
Yes
-Gross amount
Yes
Yes
-Tax amount x
Yes
Rounding rule
Yes
Accumulation
10
11
Certification Numbering
12
Calculation Formula
Yes
Yes
Yes
Yes
Yes
Yes
Withholding tax is calculated and posted to the appropriate withholding tax accounts at different stages,
depending on the legal requirements in each country. As a rule, withholding tax is posted at the same
time that the payment is posted, in other words the outgoing payment (Accounts Payable) or incoming
payment (Accounts Receivable), is reduced by the withholding tax amount.
In certain countries, such as Brazil, the Philippines, and Spain, withholding tax can or must be posted
when the invoice is posted. This means that the amount receivable or payable is reduced by the
withholding tax amount.
Extended withholding tax supports both concepts.
The key concept in extended withholding tax is the distinction between withholding tax type and
withholding tax code. While withholding tax types represent basic calculation rules, specific features of
these rules - in particular the percentage rate are represented by the withholding tax code. You can define any number of withholding tax codes for a
given withholding tax type.
If a particular transaction requires more than one kind of withholding tax, this is covered in the SAP
System by defining more than one withholding tax type.
When entering a line item, you can enter withholding tax data for each of these withholding tax types.