I would like to know the steps involved in calculation of withholding income tax in case of making advance payment to supplier/vendor in ERP LN FP5.

Even though we have done some testing. But it is found that system is not showing any tax code with category = Withholding income tax in session "Bank Transactions - tfcmg2100s000" and "Payment Advice-tfcmg1501m000" . Due to this, we are unable to deduct withholding tax while making advance payment.

There is not a problem with Withholding tax/social contribution with regards to Advance Payments, for the simple reason that that functionality is not available for Advance Payments. Withholding tax/social contribution is only applicable for purchase invoices/credit notes.

In FP7+the functionality of Withholding tax on advance payments will become available.

Regards,
Michiel