Scenario We got a scenario where we have to calculate the withholding tax over a specific vendor on the basis of below mentioned rules.
If Cumulative Amount of Invoices raised by vendor is less than 1,00,000 then tax to be deducted is 4% & once the vendor raised us invoices more than 1,00,000 then 10% is to be calculated on additional Amount.
For Ex :
Case A
Vendor raised Invoice 1 ( Amount 1,00,000)
System will calculate 4% of 1,00,000
Case B
Vendor raised invoice 1 ( Amount 1,50,000)
System will calculate 4% of 1,00,000 & 10% of 50,000
Case C
Vendor Raised Invoice 1( Amount 50,000) , Invoice 2 ( 25,000) , Invoice 3 (1,00,000)
System will calculate
For Invoice 1 : 4% of 50,000
For Invoice 2 : 4% of 25,000 ( Cumulative 75,000)
For Invoice 3 : 4% of 25,000 & 10% of 75,000
Proposed Solution :
Create a separate Withholding tax type for exemption purposes with configurations mentioned in screenshot.
Note : Tick Acc. wtax to max. & insert accumulation type per yr ( in case this cumulative exemption is to be maintained for a yr)
Create a separate Withholding tax code against this tax type.
Note : do not maintain any withholding tax rate & activate w.tax form.
Now maintain formula for withholding tax calculation
Enter the Tax type & tax code combination with an effective validity date ( from which accumulation actual takes place)
Select the line item & double click Formula for calculating .
Save & Enter this tax type & Tax code in the vendor master for which this exemption rate is to be maintained.
Note : System will only accumulate from the date it is maintained in vendor master. Old Entries would not be considered in accumulation of invoices amount.
Hope this document will help you 