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Withholding Tax in Supplier Invoice

Discussion in 'Oracle Financials' started by akhayasahu1985@gmail.com, Jun 14, 2015.

  1. akhayasahu1985@gmail.com

    akhayasahu1985@gmail.com Active Member

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    Need your suggestion for the below scenario:-

    I want to withheld tax @ 10% on an Invoice and the Invoice value is 100.
    So my tax amount is 10 and remaining 90 (100-10=90) I will pay to Supplier.

    I want to create a DFF in the Invoice Distribution line @10%.

    When I validate this Invoice, it should generate 3 Invoices.
    One Standard Invoice for Supplier 100, one Invoice for Tax Authority 10 and One credit note for Withholding tax 10.
    So while paying to Supplier, we will apply the Credit note to the Supplier and we will pay net amount 100-10=90 to the Supplier.
    and we will pay 10 to the Tax authority.

    I want to setup the above requirement.

    Kindly suggest the setups.

    Thanks and Regards,
  2. psravan

    psravan Active Member

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    Hi Akshay,

    Please create Withholding Tax Group and Tax codes then create one tax authority supplier. Under supplier click on tax detail link then enable check box Allow with holding tax.

    Navigation: Payables--> Setup-->Tax-->Withholding-->Groups
    Payables--> Setup-->Tax-->Withholding-->Codes

    Please try above setup.

    Sravan P
  3. rocky494

    rocky494 Active Member

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    Withholding Tax is a System created Invoice. System will hold the tax portion of the invoice before making the payment to the supplier. Below are the mandatory steps to achieve withholding tax functionality.

    1. Enable Withholding Tax at the Payable Options Level
    2. Create a Special Calendar for Withholding Tax
    3. Create 'Tax Authority' as a Supplier
    4. Create Withholding Tax Code (here we give 10% Rate)
    5. Create Withholding Tax Group
    6. Assign Withholding Tax Group at Payable Options Level
    7. Assign Withholding Tax Group at Supplier Level (Normal Supplier level, not at Tax Authority Supplier level)

    Now create a Standard Invoice and Validate it, you will see the withholding Tax automatically deducted in the invoice.

    Now go to Find Invoices screen and select "Tax Authority" Supplier and click on Go, you will see an invoice automatically created for 10% of the Invoice amount you have created earlier.

    Hope this helps you.