16.1.1 Specify Accounting Entries for KEST Computation

KEST is a scheme of levying withholding tax on the income earned by the customers of your bank. This type of withholding tax is applicable only on incomes earned from securities. Some of the customers might directly pay the KEST amount to the Government. Under such circumstances, your bank need not calculate the KEST amount.

The system generates the accounting role KEST_GL and the amount tags KEST_BSINT_AMT and KEST_DEAL_AMT for tax on bought sold accrued interest and tax on deal nominal amount respectively. At the time of defining a deal product, you need to specify the accounting entries that need to be passed for KEST calculation. The accounting entries will be different for the sell and buy legs of a security deal. You will have to define the following accounting entries to process KEST:

Table 16-3 Accounting Entries table

Accounting Role	Amount Tag	Debit/Credit Indicator
Sec Settlement	KEST_BSINT_AMT	Dr
KEST_GL	KEST_BSINT_AMT	Cr
Sec Settlement	KEST_DEAL_AMT	Dr
KEST_GL	KEST_DEAL_AMT	Cr

The accounting entries for the buy leg of a security deal will be:

Table 16-4 Accounting Entries - Buy leg

Accounting Role	Amount Tag	Debit/Credit Indicator
Sec Settlement	KEST_BSINT_AMT	Cr You need to credit the customer account as the customer earns theKEST amount.
KEST_GL	KEST_BSINT_AMT	Dr
Sec Settlement	KEST_DEAL_AMT	Cr
KEST_GL	KEST_DEAL_AMT	Dr

These accounting entries have to be maintained for the event MSTL (Money Settlement of Securities Deal).