SAP

FICO
Introduction: To create a n analysis of Financial d a t a and make
understandable/ ac c ur at e reports of all the financials in SAP.

FI:Finance- It is the External Accounting a n d it includes approximately 95-

97% d a t a of all SAP Modules. Rest of the 3% of FI includes Journal vouchers,
Depreciation a n d all other related entries which is not related to any
department of the organization.

CO: Controlling- It is the Internal Accounting a n d it used for analysation of

costing of the business or of the manufacturing of the specifi c product to
make it a profi table business.

Type of Modules
Functional- M M (Materials Management)
SD (Sales &
Distribution) PP
(Production Planning)
H C M (Human Capital
Management) FI (Finance)
Technical- IT

Type of Company
User Company- End users
IT Company- Implementation User

Type of Roles
Users- Core Users
End Users
Consultants-
Functional
Technical

Type of Projects
Implementation- Green Field
Migration- Brown Field- From
ECC to S4Hana
Rollout
Suppor
t
 Basic Configurations in
T Codes
SAP
SPRO- for Configuration Data
Easy Access Screen- End Users

1. Company Code:

Description: To create a C o m p a n y a n d its unique c o d e in SAP. (First

Step to start working in a company).
T Code: OX02
Path: SPRO – Ref. IMG. – Enterprise Structure – Financial Accounting –
Edit, Copy, Delete, C h e c k C o m p a n y C o d e - New Entries

■ Fill the details in the a b o ve screen to create a new c o m p a n y c o d e

a n d save the d a t a by CTRL+S.

Note: / O – For New Screen

/N – For exit the Current Screen

2. Fiscal Year

Description: To set a n d d e c i d e a period for preparing/maintaining the

Financials of the organization.
T Code: OB29
Path: SPRO – Ref. IMG – Financial Accounting –- Financial Accounting Global
Settings – Fiscal Year – Maintain Fiscal year Variant
Standard fiscal year Variants
are
➢ K4 = CALENDAR YEAR
➢ V3 = April to March
➢ V9 = October TO
September
➢ V6 = July to June
➢ WK = Calendar Weeks

STEP 1:

■ We c a n c o p y the Fiscal year by F6 a n d mention the unique FV no. to

remember a n d c a n create a new Fiscal year by F5.

STEP 2: Assign Company code to a Fiscal year variant

Description: Assign C o m p a n y c o d e to your Fiscal year variant. (So that the
financials will maintain for the fi nancial year fixed in the Fiscal year variant).
T Code: OB37

3. Posting Period variant

Description: To d e c i de the periods of posting for the e n d user.
Path: SPRO – Ref. IMG – Financial Accounting –- Financial Accounting Global
Settings- Document – Posting Periods

Step 1: Define Variant for open posting periods

Description: To create a variant for posting periods
T Code: OBBO
■ Create a new variant by naming the variant with the C o m p a n y code.

Step 2: O p e n a n d Close posting periods

Description: To d e c i de the opening a n d closing period for posting the
entries.
T Code: OB52
 ■ Mention the starting posting period a n d ending posting period in
the table shown a b o v e a n d save.

Step 3: Assign Variants to C o m p a n y C o d e

Description: Assign the variant to the C o m p a n y C o d e to set the posting
period of the c om pany
T Code: OBBP
■ Assign the variant to your c o m p a n y c o d e a n d save.

4. Business Area
Description: To defi ne the Business are a of the company.
T Code: OX03
Path: SPRO – Ref. IMG. – Enterprise Structure – Financial Accounting – Defi ne
Business Area – New Entry (F5)
■ Define the Business area of your c o m p a n y a n d save (CTRL+S).

5. Field Status Variant

Description: To control the line items of your company.

Step 1: Define Field Status Variant

T Code: OBC4
Path: SPRO – Ref. IMG. – Financial Accounting (New) – Financial Accounting
Global Settings (New) – Ledgers – Fields – Define Field Status Variants.
 ■ Create New Field Status by F5, a n d fill the required details
shown below.

Step 2: Assign C o m p a n y C o d e to Field Status Variant

T Code: OBC5
Path: SPRO – Ref. IMG. – Financial Accounting (New) – Financial Accounting
Global Settings (New) – Ledgers – Fields – Assign C o m p a n y C o d e to Field
Status Variant
■ Assign your C o m p a n y c o d e to the Field status variant created in
First step.

6. Tolerance Group
A. Tolerance group for Employees or users
Description: Tolerance are used to maintain upper limits for below
1 Upper That
transactions. limit the
for amount
user c a nthat a user c a n post to a
post:
. document. Upper limit for line item amount.
2 Maximum cash discount that a user c a n grant
. or take. Maximum allowed payment diff erence
3 gain or loss.
.Null Tolerance Groups
4 Tolerance group always maintained at c o m p a n y c o d e level. If any
.tolerance group maintain without providing group number or value is
called as Null Tolerance group.
The properties maintained under this groups are by default applicable
to all the users authorized for this c o m p a n y code.

T Code: OBA4
Path: SPRO – Ref. IMG. – Financial Accounting (New) – Financial
Accounting Global Settings (New) – Document – Tolerance Groups –
Define Tolerance Groups for Employees
 ■ Create new Entry by F5, a n d fill the details as mentioned above.
■ If w e want to set the amount for selected employee or group of
employees, then w e have to mention a group in the a b o v e table.

B. Assign User/ Tolerance Groups

Description: Assign the Tolerance Groups m a d e in first step to the
employees.
T Code: OB57
Path: SPRO – Ref. IMG. – Financial Accounting (New) – Financial Accounting
Global Settings (New) – Document – Tolerance Groups – Assign User/
Tolerance groups
■ Assign the Tolerance Groups m a d e in first step to the employees.

C. Tolerance Groups for GL Accounts

Description: It is used to maintain the diff erence of Balance of GL
Accounts either on Debit or Credit side.
T Code: OBA0
Path: SPRO – Ref. IMG. – Financial Accounting (New) – General Ledger
Accounting (New) – Business Transaction – O p e n Item Clearing – Clearing
Diff erences – Define Tolerance Groups for G/L Accounts.
 ■ Create new entry by F5, a n d fill the required details mentioned a b o v e
to set the maximum amount of adjustment in the GL accounts.

7. Chart of Accounts
Description: It is the list of G/L Accounts. We will control the parameters
related to GL Accounts creation at C O A level.

A. Define Chart of Accounts

Description: To defi ne the list of Chart of Accounts a n d the Length of the
GL Account Number.
T Code: OB13
Path: SPRO – Ref. IMG. – Financial Accounting (New) – General ledger
Accounting (New) – Master Data – G/L Accounts – Preparations – Edit of
Chart Accounts List

■ Fill the required details in the p a g e mentioned a b o v e a n d provide

length of G/L Ac c ount number in the a b o v e page.

B. Assign Company Code to Chart of Accounts

Description: To Assign the C o m p a n y c o d e to the Chart of Accounts
T Code: OB62
Path: SPRO – Ref. IMG. – Financial Accounting (New) – General ledger
Accounting (New) – Master Data – G/L Accounts – Preparations – Assign
C o m p a n y C o d e to Chart of Accounts
■ Assign the C o m p a n y c o d e to the Chart of Accounts.

C. Define Account Group

Description: To defi ne the group a n d the number of accounts lie in the
respective group.
T Code: OBD4
Path: SPRO – Ref. IMG. – Financial Accounting (New) – General ledger
Accounting (New) – Master Data – G/L Accounts – Preparations – Define
Ac c ount Group

■ Define all the 4 Groups (Assets, Liabilities, Expenses, revenues) a n d

mention their series of number of accounts as per mentioned in the
a b o v e page.

D. Define Retained Earnings Account

Description: Retained Earnings A / C is a nature of reserves GL A/C. Which
captures the previous year carry forward profit a n d loss result in the current
year.
Note: We must maintain this GL A / C before creation of another GL A/C.
T Code: OB53
Path: SPRO – Ref. IMG. – Financial Accounting (New) – General ledger
Accounting
(New) – Master Data – G/L Accounts – Preparations – Define Retained
Earnings Account.

■ Fill the details in the column mentioned above. We will defi ne the
number of Ac c ount after preparing the GL Accounts.
 8. Posting Keys
Description: List of keys a n d their nature (Either Debit or Credit) used for
recording and posting entries in SAP.
T Code: OB41
Path: SPRO → SAP Reference IMG → Financial Accounting → Financial
Accounting Global Setting → Document → Line Item → Controls → Define
Posting Keys → Execute.
■ It shows the default nature a n d keys for recording a n d posting entries.
We c a n c h a n g e the nature accordingFixed
to the company.
Keys Customer Vendor GL Assets Dr. Cr.
01-09 Yes Yes
11-19 Yes Yes
21-29 Yes Yes
31-39 Yes Yes
40 Yes Yes
50 Yes Yes
70 Yes Yes
75 Yes Yes
81-99 Materials

9. Account Types
Description: Ac c ount Types are used to Identify a n d control nature of
Business transactions.

S: General
Ledgers A: Assets
D:
Customers
K: Vendors
M: Materials
+: All
T Code:
OB52 (For
Ac c ount
type of
Posting
periods)
■ It helps to identify the nature of business transactions in the particular
period. For instance, while selecting the posting keys, it identifies the
nature of transaction of
posting keys.

10. Document Type

Description: Document Types are used to identify the nature of your business
transactions. We have ‘ N ’ No. of standard SAP delivered document type
which c a n be used for our Business transactions. Upon requirement w e c a n
defi ne new document type to differentiate or identify transactions.
While posting documents as per the nature of Business transactions w e
must refer respective document type.

✓ SA – GL ACCOUNT DOCUMENT
Examples for Document Types:

✓ A A – ASSET ACCOUNTING
✓ AF – DEPRECIATION
✓ KR – VENDOR INVOICE
✓ KG – VENDOR CREDIT MEMO
✓ KZ – VENDOR OUTGOING PAYMENT
✓ DR – CUSTOMER INVOICE
✓ D G – CUSTOMER CREDIT MEMO
✓ DZ – CUSTOMER INCOMING PAYMENT

T Code: OBA7

Path: SPRO – Financial Accounting (New) – Financial Accounting Global

Settings (New) – Document – Document Type – Define Document Type for
Entry view

■ We c a n c he c k the document type a n d select the number

range for our document for posting.

11. Reconciliation Account

Description: It is a GL Account. The reconciliation a c c o u n t will b e

assigned to the ledgers so that the itemized report c a n b e extracted
through ledgers and ac c um ul ate d b a l a n c e c a n b e reported.
■ We c a n use the reconciliation a c c o u n t for Vendor Master data,
Customer Master Data, Employee payables a n d other accounts for
which a reconciliation report is required.
 12. Open Item Management
Description: It helps to specify the items of accounts as ope n or cleared.

It is a prerequisite if you n e e d to c h e c k which business transactions still

n e e d to be cleared.

Note: Accounts with O p e n item m anage m e nt must have line

item display activated.

We c a n use ope n item m anage m e nt on Bank clearing accounts, Vendor

accounts, Salary clearing Accounts.

13. Post Automatically only

Description: It is selected when w e d o not want to post tax manually.

■ At the time of passing the entry, w e have to done the entry of GST
along with the invoice. If w e selected post automatically only, the
tax calculation c a n be don e by the system.

14. Line Item Display

Description: Selection of this indicator, the business c a n view in detailed
itemised report on GL’s A/c. It helps to view the open, closed, overdue items
separately to understand the report.

15. Currencies
Description: Currency key is used to defi ne the transaction value of the
document as per the type of currency used for the vendor or customer.

The transactions posted other than c o m p a n y c o d e currency are called as

Foreign Currency transactions. To meet statutory reporting requirements like
Financial statements. All foreign currency transactions must b e valuated or
translated to Local currency or c o m p a n y c o d e currency.

While posting of a document, w e refer following currencies:

✓ Document Currency/Transaction Currency: The currency which is
used to post the document is called as Document currency or

✓ Local Currency: Currency of the c o m p a n y c o d e is called as local

transaction currency.

currency. If document currency is other than c o m p a n y c o d e currency

the transaction must

✓ Reporting Currency: The currency in which the document is

b e translated into local currency.

reported is called Reporting Currency.

16. Types of Dates

Description: Different Types of dates are defi ned in the SAP system to
understand the scenario as well as the document.

There are different types of currency used in the SAP system at different
levels. These are the following:
 ✓ Document Date: The date on which the document is issued.
✓ Invoice Date: The d a t e on which the Invoice has be e n issued. The
document d a t e a n d invoice date are the same but used in

✓ Posting Date: The d a t e on which document is posted in books of

different scenarios.

accounts is known as the posting date. It c a n b e same with the

document date if the invoice is entered in books of accounts on

✓ Entry Date: It is the system generated d a t e a n d time at which the

the same date in which it is issued.

document is
17 entered in books of accounts.
Miscellaneous TopicsIt c an ’t b e edited or c h a n g e d as it
. records the real-time at which document
A. Check Box- The Interface of the SAP is entered
system atinwhich
Financial
we c an
Accounts.
select one or more tabs, those interfaces are usually known as
C h e c k Box.
For Instance, In the document Type (KR- Creditors)- While
creating the Vendor, w e c a n allow more than one ac c oun t
types to b e aff ected by the same i.e Assets, Creditors, Material,
General Ledger.

B. Radio Button: The screen in which w e c a n choose only one

option and the system doesn’t allow us to choose more than
one option.

For Instance, In the Posting Key (40- GL Account- Debit), this ledger
c a n aff ect only GL Accounts, not any other Ac c ount groups.

18. Vendor Master Data

Description: It includes the steps or process to create a Vendor master d a t a
a n d other required information related to Vendor.

A. Vendor Master Data

Description: It helps to create the master d a t a for the Vendor of your
c o m p a n y code.
T Code: OBD3
Path: SPRO – Financial Accounting (New) – Accounts Receivables & Accounts
Payable – Vendor Accounts – Master D ata – Preparations for creating vendor
master d a t a – Define Ac c ount Group with screen layouts (Vendors)
 ■ Here w e create new Vendor master d a t a of our c o m p a n y c o d e
for further process.

B. Create Number Ranges for Vendor A/c

Description: To create a number range for the Vendors. The number of

Vendors will lie between those numbering which were set in the number
Range for Vendor A/c.
Number range is created at client level where all the c o m p a n y c o d e
c a n use the same number range or assign the same number range to
their vendor a / c group.
T Code: XKN1
Path: SPRO – Financial Accounting (New) – Accounts Receivables & Accounts
Payable – Vendor Accounts – Master D ata – Preparations for creating vendor
master d a t a –
Create Number Ranges for Vendor Accounts

C. Assign Vendor A/c group to Number Range

Description: To Assign the Number Range for Vendor A/c. Vendor will b e
created under the assigned number range a n d up to the limit of number
range.
T Code: OBAS
Path: SPRO – Financial Accounting (New) – Accounts Receivables & Accounts
Payable – Vendor Accounts – Master D ata – Preparations for creating vendor
master d a t a –
Assign Number Ranges to Vendor Ac c ou nt Groups
 D. Reconciliation A/c for Vendor
Description: To create a Reconciliation A / c for Vendors so that w e c a n get
a detailed report of e a c h a n d every Vendor at the month e nd or year end.
T Code: FS00

■ Create reconciliation a / c for vendor a n d fill the required details as

per details mentioned above.

E. Creation of Vendor A/c

Description: To create a Vendor A / c before posting any document of
the same vendor.

T Code: FK01
 ■ Fill the required details in the a b o v e p a g e a n d assign the vendor
reconciliation
A / c to the Vendor A/c.

19. Customer Master Data

Description: It includes the steps or process to create a Customer master
d a t a and other required information related to Customer.

A. Creation of Customer Master Data

Description: It helps to create the master d a t a for the Customer of your
c om pany code.
T Code: OBD2
Path: SPRO – Financial Accounting (New) – Accounts Receivables &
Accounts Payable
– Customer Accounts – Master D ata – Preparations for creating
Customer master data
– Defi ne Ac c ount Group with screen layouts (Customer)

■ Here w e create new Vendor master d a t a of our c o m p a n y c o d e

for further process.

B. Create Number Ranges for Vendor A/c

Description: To create a number range for the Customers. The number of
Customers will lie between those numbering which were set in the number
Range for Customer A/c.
Number range is created at client level where all the c o m p a n y c o d e c a n
use the same number range or assign the same number range to their
Customer a / c group.
T Code: XDN1
Path: SPRO – Financial Accounting (New) – Accounts Receivables &
Accounts Payable
– Customer Accounts – Master D ata – Preparations for creating Customer
master data
– Create Number Ranges for Customer Accounts

C. Assign Customer A/c group to Number Range

Description: To Assign the Number Range for Customer A/c. Customer will
b e created under the assigned number range a n d up to the limit of
number range.
T Code: OBAR
Path: SPRO – Financial Accounting (New) – Accounts Receivables &
Accounts Payable
– Customer Accounts – Master D ata – Preparations for creating Customer
master data
– Assign Number Ranges to Customer Ac c ount Groups
 D. Reconciliation A/c for Customer
Description: To create a Reconciliation A / c for Customers so that we
c a n get a detailed report of e a c h a n d every Customer at the month
e n d or year end.
T Code: FS00

■ Create reconciliation a / c for customer a n d fill the required details as

per details mentioned above.

E. Creation of Customer A/c

Description: To create a Customer A / c before posting any document of
the same customer.

T Code: FD01

■ Fill the required details in the a b o v e p a g e a n d assign the

customer reconciliation A / c to the Customer A/c.
 F. Creation of Tolerance Group for Customers
Description: To create tolerance group for customer so that the diff erence
between payment a n d invoice c a n b e set off automatically up to the
extent permissible.

T Code: OBA3

■ Creation of tolerance group allows the customer ledgers to b e set off

up to the diff erence permissible under the tolerance group of
customers.

G. Payment Terms
Description: To set the payment terms for customer as well as for the
Vendors a n d to put certain limit or conditions on the customer as well as
vendor.

T Code: OBB8
 ■ Create new Payment terms or conditions or w e c a n choose the
specifi ed limits saved on the SAP system a n d w e c a n assign the
payment terms to the customer a n d vendor at the time of creation of
their ac c ount or w e c a n edit it later by FK02 (Edit Vendor Data), FD02
(Edit Customer Data).

20. GST Configuration

A. Condition Type
Description: To maintain all types of GST (Like Input, Output, RCM) for further
assigning to the c o m p a ny code.

T Code: OBYZ

Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global

Settings (New) – Tax on Sales/Purchases – Basic Settings – C h e c k Calculation
Procedure.

■ M a ke new Entries of Taxable Amount a n d other GST Heads a n d fill the

required details as following:
➢ For Taxable Amount
Condition Class- A (Discount or
surcharge) Calculation Type- B (Fixed
Amount)
Condition Category- K (Base amount
excluding Tax)

Tick on Header Condition a n d Item

Condition.

➢ For other GST Heads

Condition Class- D (Taxes)
Calculation Type- A
(Percentage) Condition
Category- D (Tax)

Tick on Header Condition a n d

Item Condition.
 B. Procedures

(i) Assign Country to Tax Procedure

Description: To defi ne the Tax Procedure (We generally use TaxINN). We
c a n create new tax procedure specifi ed for our company.
T Code: OBBG
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) – Tax on Sales/Purchases – Basic Settings – Assign Country to
Calculation Procedure.

• We will assign our Tax procedure to the country in which c o m p a n y c o d e

is defined.

(ii) Check Calculation Procedure

Description: It is used to control d a t a a n d specify the calculation of GST

from Taxable Amount a n d the assigning of ac c oun t key to the particular GST
heads so that it c a n be used while generating or booking the invoice in the
SAP.

T Code: OBYZ
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) – Tax on Sales/Purchases – Basic Settings – C h e c k Calculation
Procedure.

■ In the a b o v e Image, You c a n see that w e have created some steps

(72,73,74,75), a n d w e have mention the condition type as well as
mention the step of Taxable amount in other GST heads in the field
(From) so that all the GST will b e calculate on the basis of Taxable
amount.
■ We also mention the ac c oun t key so that it c a n b e used while
generating
invoice. This a c c o un t key will b e created in the further steps. We will
assign the keys after creating the same in the next step.
 C. Creating Tax Code
Description: It is used to create the C o d e (2 Digit- Alphanumeric), which
is used to mention while generating the Invoice or booking of any
invoice in the SAP.

It is diff erentiated for different Tax slabs as well as for Interstate or

Intrastate.

T Code: FTXP
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) – Tax on Sales/Purchases – Calculation – Define Tax C ode s for
Sales a n d Purchases.

■ We will create Tax Codes a n d mention the Slab rate a n d type of GST in
the description. In the next row, w e mention the Tax Type whether it is Input
Tax (V) or Output tax (A) a n d save with Ctrl + S. You n e e d not to enter any
percentage in the next screen as it will b e assigned in the further steps.

D. Creation of Account key and Assignment with GL Accounts

(i) Check and Change Settings for Tax Processing

Description: To create a n Ac c ou nt Key for all the Tax Type which is used while
assigning the calculation procedure. It is further used to mention the GL
accounts in which the b a l a nc e will b e transferred.
T Code: OBCN
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global Settings
(New) – Tax on Sales/Purchases – Basic Settings – C h e c k a n d c h a n g e settings
for Tax processing.
• We will create a Ac c ount Key a n d mention the description, Tax Type
a n d the posting Indicator.

(ii) Define Tax Accounts

Description: To specify the accounts to which the different tax types are to
b e posted. SAP determines these accounts for automatic postings.
T Code: OB40
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) – Tax on Sales/Purchases – Postings – Define Tax Accounts.
■ After entering in the screen, w e will choose the Ac c ou nt key which w e
have c re ated in the previous step a n d mention the Tax C o d e a n d the
GL a c c o un t in which the b a l a n c e will b e transferred of the same tax
type.

Note: In C a s e of creation of New Ac c ount key, w e h ave to mention the

posting keys (button shown on the a b o v e image), i.e 40 for Debit a n d 50 for
credit.

E. Extend Tax codes on Condition Type

Description: To defi ne the percentage of calculation of Tax codes a n d
extend the same with the Condition type of the same c o m p a n y code.
T Code: FV11

■ We h ave entered in this interface by mentioning the Condition Type. In

the above image, w e c a n see that w e have mentioned the tax c o d e
a n d defi ne the percentage of calculation so that it c a n b e calculated
on the same percentage while generating the invoice. Rest of the
details will b e automatically fetched by the system when you press Enter.

21 TDS/Withholding Tax
. Configuration

✓ C he c k Withholding Tax Countries

❖ List of Configuration Steps:

✓ Define Offi cial Withholding Tax Keys

✓ Define reasons for exemption
✓ Define withholding tax for Invoice

✓ Define withholding tax for Payment

Posting

✓ C he c k Recipient Types
Posting
 ✓ Define Withholding Tax Codes
✓ Assign Withholding Tax Types to C o m p a n y

✓ Activate Extended Withholding Tax

Codes

✓ Assign Accounts for Withholding Tax

✓ Assign Withholding Tax Co d es in Vendor Master
✓ Posting Vendor Invoice (FB60)

A. Check Withholding Tax Countries

Description: To defi ne country in the SAP in which your c om pany c o d e is
situated so that you c a n make necessary tax entries.
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) – Withholding Tax – Extended Withholding Tax – Basic Settings –
C h e c k Withholding Tax Countries.

▪ Create the country in the withholding tax countries by clicking “Ne w

Entries(F5)”.

B. Define Official Withholding Tax Keys

Description: To defi ne the offi cial Key of every TDS section (eg. 194J, 194I), so
that it will further assign to our withholding Tax codes.
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) – Withholding Tax – Extended Withholding Tax – Basic Settings –
Define Withholding Tax Keys.
 ▪ In the a b o v e image, w e c a n see that all the TDS section keys are
created. We c a n create further new keys by clicking the “Ne w Entries
(F5)” a n d mention the Section a n d Description for the TDS deduction.

C. Define Reasons for Exemption

Description: To defi ne the reasons for exemption of TDS deduction for
some vendors who have provided us the TDS Exemption Certificates.
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) – Withholding Tax – Extended Withholding Tax – Basic Settings –
Define Reasons for Exemption.

▪ We c a n create new Exemption entries by mentioned the c o d e for

exemption reason a n d the description (for the reason).
 D. Define Withholding Tax for Invoice posting/ payment posting
Description: Tax c o d e for Posting of Invoice a n d payment for the same TDS
Section c o d e is always b e different. We h ave to create two tax c o d e for
e a c h section (One for Invoice posting a n d second for Payment posting). 4 Tax
c ode s will b e created for the same TDS section in the c as e if same TDS is
applying to “Companies” as well as “Other than Companies”.
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) – Withholding Tax – Extended Withholding Tax – Calculation –
Withholding Tax Type – Define Withholding Tax Type for Invoice Posting/
Payment Posting.

 M a ke New entries in both the types (For Invoice Posting a n d Payment

Posting), a n d mention the withholding tax type a n d description. M a ke
sure that the calculation of TDS is should b e set on the Gross amount.
 Repeat the same process but different tax type for the same TDS
section for payment posting.

E. Check Recipient Types

Description: To defi ne the Withholding tax type, whether it is applicable to
companies or other than companies.
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) – Withholding Tax – Extended Withholding Tax – Basic Settings –
C h e c k Recipient Types.
  In the a b o v e image, w e c a n see that every tax type is defi ned that
whether it is related to companies or other than companies. It must b e
created for e a c h and every tax type.

F. Define Withholding Tax Codes

Description: To defi ne the Withholding tax c o d e which is further used for
Invoice posting a n d to defi ne the percentage for calculation of TDS amount.
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) – Withholding Tax – Extended Withholding Tax – Calculation –
Withholding Tax c o d e –
Define Withholding Tax Codes.
  In this process, withholding tax c o d e will b e created (can b e same as
tax type or different) which is used for posting a n d invoice a n d for
payment also. In this process, Percentage will b e defi ned for the
calculation of TDS.
 In the A bo v e Image, w e c a n see the configuration for the Tax Type, w e
have mentioned the Tax c ode , Offi cial Withholding Tax key, Description,
Percentage of base amount in which TDS is calculated (it should b e
100% as TDS always be calculated on the 100% value of the Base
amount), Withholding Tax rate (Percentage in which TDS is calculated),
posting indicator (It should b e 1- Standard Posting: Bank/ Vendor/
Customer Line item bec aus e it is the line items).
 Repeat the same process for the withholding Tax type for Payment
Posting.

G. Assign Withholding tax types to Company Codes

Description: To assign the tax types to the c o m p a n y codes. We have to
assign every tax type to our c om pany c o d e individually.
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global Settings
(New) – Withholding Tax – Extended Withholding Tax – C o m p a n y C o d e – Assign
Withholding Tax
Types to C o m p a n y Codes.

 As mentioned above, w e have to assign every tax type to our

c om pany individually as shown in the a b o v e image. We have to
mention the recipient type that whether this type is for companies
or other than companies.
 Repeat the same process for every withholding tax type.

H. Activate Extended Withholding Tax

Description: To activate the Extended Withholding Tax procedure on our
c om pany code.
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) – Withholding Tax – Extended Withholding Tax – C o m p a n y
C o d e – Activate Extended Withholding Tax.

 Put tick in the front of your c o m p a n y c o d e a n d save the screen.

I. Assign Accounts for Withholding Tax

Description: To assign the GL ac c oun t (Liability GL of TDS) to the
withholding tax type a n d key so that the amount will b e transferred to the
GL Account.
Path: SPRO – Financial Accounting (New) – Financial Ac c ount Global
Settings (New) –
Withholding Tax – Extended Withholding Tax – Posting – Accounts for
Withholding Tax – Define Accounts for withholding tax to b e paid over.
  This window is open after mentioning the Chart of accounts of the
c om pany c ode , a n d w e have to mention the tax type, tax c o d e a n d
GL ac c ount in which liability will b e transferred or paid.
 In the Rules, Tick should b e mention of Tax Type a n d tax c o d e so
that GL a c c o un t c a n b e referred easily.

J. Assign Withholding Tax codes in Vendor master

Description: To assign the tax codes to the vendor master d a t a so that
TDS should always b e d e du c t e d automatically while creating a n invoice
in SAP.
T code: FK01 (while creating new Vendor), FK02 (To edit the Existing
vendor data).

 In the Tab of Withholding tax Accounting, w e have to mention the

Withholding Tax country, a n d all the details of related TDS like Tax type,
tax c ode, tick on the liable a n d the type of reconciliation (whether it is
c o m p a ny or other than company).
 We have to mention the PAN number in the a b o v e column “CIN
Details”.

Note: If “CIN Details” button is not showing then follow the T Code-
OMT3E and mention your user id a n d just star (*) in the USER SCREEN
REFERENCE.
 K. Posting a Vendor Invoice
(FB60)

 While booking a n invoice in FB60, both tax c ode s showing in the

tab of withholding tax type, w e have to delete the tax c o d e of
payment a n d just simulate to c h e c k the entry, a n d save.