GST: TDS rounding for foreign services
(Doc ID 2760429.1)
Last updated on JUNE 12, 2023
Applies to:Oracle Financials for India - Version 12.1.1 and later
Information in this document applies to any platform.
For foreign services where Tax deducted service (TDS) tax category with Stranded rate,Edu-Cess and Surcharge, observed that the generated TDS amounts are not rounded as per rounding setup defined at regime or first party registration.
This is required for all transactions which deal with foreign remittances.
As per law, it depicts that "Under TDS section 194J, as per consumer / IT act 1961 requirement payment should be paid in rounded amount & separately for Stranded rate , Edu-Cess & Surcharge".
Steps for replication (with an example)
1. Create 3 different tax types.
a. For TDS
b. For Surcharge
c. For Cess
2. Apply TDS defined for section 194J along with the tax types defined over the standard invoice which is raised for amount 654,321.00.
3. Validate .
4. Find that the generated TDS SI has item lines which are NOT rounded and still with decimal values.
They are generated with amounts as
TDS Standard invoice - 9814.85
Surcharge - 392.59
Sec cess - 76.56
5. Rounding defined at regime and First party level but it is not considered.
While making payment to income tax authorities under this Section 194J in the income tax site / form there is no provision to enter decimal value .
Hence this is expected to be rounded. As these fall under under foreign remittances, entities shall track these under a separate account and hence all are to be created under separate tax type.
Expectation is such that the generated TDS CM and SI where item / distribution lines must be rounded off to nearest rupee.
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