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Tax deducted at Source at a higher rate from 1st October 2009 when PAN number of the supplier is not available. (Doc ID 888071.1)

Last updated on MARCH 14, 2024

Applies to:

Oracle Financials for India - Version 11.5.10.0 to 12.1 [Release 11.5 to 12]
Information in this document applies to any platform.
Information in this document applies to any platform.

Details

As per the section 206AA of the Income Tax Act, (introduced in the Finance Bill 2009), Tax deducted at Source (TDS) has to be deducted at a higher rate if the PAN number of the supplier is not available while assessing the TDS.

As per the latest regulation, TDS @ 20% need to be deducted if the supplier PAN Number is not available.

Actions

Solution:
This requirement could be met by configuring the TDS solution appropriately. The suggested approach is described below.

Implementation:
For handling the above regulatory requirement, Oracle suggests one of the following approaches could be used:

Approach A: (For cases where Customer wants to handle issue through setup modification and not allow monitoring at end user level).
1. Create Tax Code with 20% for applicable TDS Section, preferably for all TDS sections.
2. Attach the 20% Tax Code defined above on the Vendor Additional information for defaulting on the transactions for those vendor’s where PAN Number is not provided.
3. Once the vendor provides the PAN Number, use the “India - Pan number Update” concurrent to update the PAN Number for this vendor.
4. Immediately after you run the above concurrent program, change the tax code from 20% to the normal rate.
5. Transactions carried out after the receipt of PAN Number will start attracting the normal Tax code rate.

Approach B: (For cases where Customer wants to allow monitoring at end user level and does not prefer a setup modification).

1. Attach the Normal Tax Code for defaulting on the transactions.
2. The user has to manually change the Normal Tax Code and attach the 20% Tax code on the transactions.
3. Once the vendor provides the PAN Number, use the “India - Pan number Update” concurrent to update the PAN Number for this Vendor.
4. Setup changes other than running the concurrent are not required in this approach.
5. User can stop manual change to the normal Tax code and use the defaulted rate once PAN Number is received from the vendor.

Download Details:
Not applicable. Needs only a setup modification.

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