1.3.1.3 Features of the Tax Details screen

Table 1-6 Features of the Tax Details screen

Field	Description
Tax Category	You can specify tax category for each tax rule that is linked to a tax scheme. To do this, select the tax category from the drop-down list against each tax rule. However, while processing a contract, you can waive the application only for those tax rules for which you have setup tax categories.
Basis Component	Tax can be applied on the basis of any component that is taxable according to the laws in your country. This component is called the Basis Component. The method of tax application defined for the tax rule is applied on this component. Note: Typically the event is FLIQ for fee components and LIQD for interest components. Example Tax can be applied on the LC amount, the commission or charge component. These are called the Basis Component. The method of tax application defined for the tax rule is applicable on this component.
Event for tax application	You should specify the event upon which the tax is to be applied. For example, if you specify that the tax be to be applied at the time the commissions are collected from the customer, then the entries for tax are passed when the commission is paid.
Type of Tax - withholding or expense type	The type of tax, decides the bearer the tax. It could be the bank or the customer. A customer bears withholding type of tax and the tax component is debited to the customer’s account. The bank bears an expense type of tax and the tax component is booked to a tax expense account. Example For an LC it is always the bank, which bears the tax. Hence, a tax that is levied always falls under an Expense type. The tax is debited from an expense account and put in a tax payable account, from where it is subsequently paid to the government. Note: The tax details specified for a product are automatically applied on all contracts involving the product. However, while processing a contract, you can waive the application of all or specific tax rules for the contract.