Gross-Up Handling for Withholding Tax (TDS) in AP

We have a requirement to handle withholding tax (TDS) gross-up scenarios in AP to meet India statutory compliance requirements under Section 195 of the Income Tax Act.

There is already an Enhancement Request ENH 25077174 – Gross Withholding Tax for this requirement. We would like to understand if any of the projects have implemented a workaround or identified a better solution to handle such scenarios.

Requirement:

As per Indian Income Tax – Section 195, when payments are made to non-residents and the contract specifies that the supplier should receive the agreed amount net of tax, the tax liability must be borne by the payer.

In such cases, TDS must be calculated on a grossed-up amount rather than the base invoice value. This is a statutory requirement wherever contracts are net-of-tax.