Receivables Receipt Processing with Withholding Tax Amounts
Record and apply receipts that have been reduced by withholding tax amount as determined and calculated by the customer. Close the remaining receivables balance, and reconcile the withheld tax as an advance payment to the tax authorities in India.
Use the Create Receipt and Manage Receipt pages to manually create withholding activities. This process increases the unapplied cash on the receipt and allows you to apply the outstanding withholding balance against sales invoices, thereby reducing the outstanding amount and receivables balance.
Use the Withholding Reconciliation page or the Reconcile Withheld Amounts for Receipts process to reconcile withholding receipts with periodic Form 26AS statements in India.
Record, apply, and account for receipt withholding activities using different solution options, depending on internal business processes or customer communication scenarios for withholding confirmation.
Receipt Withholding - Header Level
Follow these steps:
- Manually create a separate withholding activity for Receipt Withholding type to track amounts withheld on the receipt when there is no customer confirmation of the specific transactions to which the withholding balance should be applied. The withheld amount is recorded for accounting and reconciliation purposes. Both the unapplied withholding balance and the total unapplied balance of the receipt are increased accordingly.
- Manually create withholding activity for Receivables receipt using Edit Receipt page. Apply the receipt balance to specific open receivable transactions when confirmed by the customer. In addition to the applied amount, enter the applied withholding amount on the transaction application line and ensure that the applied amount includes the applied withholding amount.
- Manually apply withholding activity to Receivables transaction using Edit Receipt page. The outstanding withholding balance for the receipt and the amount due on the receivables transaction will be decreased accordingly. Sample Scenario: Use the Receipt Withholding Header Level option to account for and reconcile receipts in India that have only a withholding balance.
Receipt Withholding - Transaction Level
Follow these steps:
- Create withholding activity for receipts when both the withheld amounts and the specific open receivable transactions to which the withholding balance must be applied are confirmed by the customer.
- Use the standard open receivable transaction application process, and in addition to entering the applied amount on the application line, also enter the applied withholding amount. Ensure that the applied amount includes the applied withholding amount.
- Enter applied withholding amount for a transaction application line using the Edit Receipt page. The withholding activity for the receipt is created automatically, linked to the transaction application line, and the receipt’s applied withholding balance is increased.
- Review automatically created withholding activity for transaction application line. Sample scenario: Use the Receipt Withholding Transaction Level option for receipts that were applied to transactions before the withholding balance was confirmed by customer.
Upload of Form 26AS
Use the Upload Tax Credit Statement process to upload Form 26AS entries. Download Form 26AS from the income tax portal and save it in CSV format without password protection before uploading it to UCM. The process will select only entries marked as Status ‘F’ and store the summary amounts of TDS deposited for each customer for the respective financial year.
The Process File Identifier is the Content ID generated when the Form 26AS CSV file is uploaded to UCM.
Receipt Withholding Reconciliation with Form 26AS
Use the Withholding Reconciliation page or the Reconcile Withheld Amounts for Receipts process to reconcile withholding receipts with periodic Form 26AS statements in India.
You can access the page by selecting Manage Withholding Reconciliation for India from the Receipts task list.
The Manage Withholding Reconciliation for India Task List Menu Item page displays the TDS amounts for a customer for a given financial year, along with receipts that have withheld activities and are available for reconciliation.
Use the Reconcile Withheld Amounts for Receipts process to reconcile a large number of receipts simultaneously.
Enable Receivables Receipt Processing with Withholding Tax Amounts
You must create these Receivables Activities:
Receipts Withholding
Use the Manage Receivables Activities page to create withholding receivables activities for each business unit, which facilitates the creation and reconciliation of withholding balances on receivables receipts.
Follow these steps:
- Open the Create Receivables Activity or Manage Receivables Activities page to create new activities.
- Set the Activity Type to:
- Receipt Withholding for withholding creation activity.
- Receipt Withholding Reconciliation for withholding reconciliation with certificate activity.
- Set the GL Account Source field to Activity GL Account.
- In the Activity GL Account field, enter the appropriate general
ledger (GL) account for withholding distributions:
-
Withheld Amount Clearing GL Account for Receipt Withholding activity
A dedicated GL account used to record withholding balances associated with receipts that have not yet been reconciled with Form 26AS certificates.
-
Withheld Amount Prepaid GL Account for Receipt Withholding Reconciliation activity
A dedicated GL account used to record withholding balances associated with receipts that have been reconciled with Form 26AS certificates.
-
- Set the Tax Rate Code Source field to None.
- Mark the activity as Active.
Setups for Withholding Reconciliation
Complete these setups:
Legal entity setup:
Define a Permanent Account Number (PAN) for the legal entity using the FSM task Manage Legal Entity Registrations. The PAN will be used by the process that loads Form 26AS entries to match the legal entity. Ensure the registration is defined for the jurisdiction "India Income Tax".
Define accounting calendar:
Follow these steps:- Use the FSM task Manage Accounting Calendars to define an accounting calendar that aligns with the financial year in India, which starts on April 1 and ends on March 31 of the following year.
- Period names should follow the format YYYY-YYYY+1 (e.g., 2024-2025). to align with the Form 26AS format.
- Associate the calendar with the legal entity using the FSM task Manage Legal Entity Financial Information.
Customer TAN setup:
Follow these steps:- Create a party tax profile for the customer using the FSM task Manage Party Tax Profiles.
- Define the TAN using the FSM task Manage Tax Registrations on the Taxpayer Identifiers tab. TAN can be defined either at the customer (party) or customer site level.