How withholding taxes are paid in actual practice to the Government (The Government A/c is not maintained in WH TAX but credited to GL A/c) Govt is not a vendor.
(1) At the time of invoice processing the vendor a/c is credited with net amount and the with holding tax is credited to GL a/c.
(2) There is no Vendor code for Govt.
(3) The Bank in which payment of W tax is deposited, is created as vendor - like - HDFC Bank A/c Income Tax.
(4) Amount to be paid is established and credited to Vendor A/c (as in 3 above) by clearing TDS Liability A/c.
Anil Gurjar
Witholding Tax as may know is a Statutory requirement and hence is considered as a statutory vendor, but for which we donot open any vendor record, instead it is paid to the Govt. every following month by the 7th using a simple process "Create Remittance Challan" @ t.code J1INCHLN, follwed by Bank Remittance challan @ t.code J1INBANK
The process starts as -
1. Vendor send you a bill of Rs.I against services/products/etc.
2. You book that invoice @ FV60
Expenses accounts Db. Rs. I
Vendor Cr. Rs.(I-tds-ECESS)
TDS Cr. Rs. tds
Ecess Cr Rs. ECESS
3. Thereafter if there are any down payments then you clear those @ F-54
4. Post the invoice @ FBV0
5. Make the payments using F-53 or F-58 as per the client requirements.
IMP: In this whole process your make the payments to Vendor with the amount less by TDS & Ecess which is your statutory deductions. And these statutory deductions in turns become your liabilities which you pay off every month closing!! As discussed above.
