3796564 - Lower TDS deduction rate is not applied during supplier invoice posting

• The system calculates withholding tax using the standard TDS rate instead of the lower deduction/exemption rate maintained for the supplier.
• The TAN-based exemption certificate is not determined during supplier invoice posting.

SAP S/4HANA Cloud Public Edition

1. Open the supplier invoice in Manage Journal Entries.
2. Review Withholding Tax Items: system calculates TDS at 2% under WHT Type/Code D1.
3. Check the supplier’s TAN-based exemption details: a valid certificate exists with a lower effective rate and the accumulation is below the threshold.
4. Review accumulation details at document level: values are below the exemption threshold.
5. Compare with other invoices of the same scenario where the lower rate is correctly applied to confirm the behavior is specific to this document.

The Section Code was not specified during invoice creation (for example, via Create Supplier Invoide(MIRO)). Without a Section Code, the system did not determine the applicable TAN-based exemption certificate, so TDS was calculated at the standard rate (2%).

1. Reverse or cancel the incorrect invoice that posted TDS at 2%.
2. Repost the invoice and ensure the correct Section Code is maintained during invoice creation.
3. After posting, verify that the system determines the TAN-based exemption certificate and that TDS is calculated at the applicable lower rate (for example, 0.50%).
4. Repeat for any other affected documents where the Section Code was not maintained.

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