Holdback (without taxes) on PO invoice?

Question

hi all, i have a requirement where business holds back 10% (without taxes) and pays 90% (with taxes) to the vendor.
Any help on how to accomplish this would be great! The invoice is broken down as follows:
PO Invoice with original contract: 197,299.00 + HST
invoice 1:           $133,250.70
less 10% holdback:     $13,325.07     
Sub-total:           $119,925.63
HST@13%:          $15,590.33
INVOICE TOTAL:          $135,515.96
invoice 2:          $19,145.10
less 10% holdback:     $1,914.51
Sub-total:          $17,230.59
HST@13%:          $2,239.98
INVOICE TOTAL:          $19,470.57
........................... and so on
at the end, the last invoice is the HOLDBACK only is received:
holdback invoice:     $197,229.00
HST@13%:          $2,563.98
INVOICE TOTAL:          $22,286.88
Issues:
-cannot simply use payment terms at invoice level since taxes would be calculated on holdbacks as well but we don't want taxes calculated till the end (when holdback invoice is posted)
-The last holdback invoice creates double liability in the vendor account since there are holdbacks already posted from previous invoices.
-One option is to break PO in 2 line items. Original Amt. and Retention Amt and do a MIGO and MIRO for each line item for all invoices. Original Amt. line is set with tax H1 and Retention line with no taxes (V0)
This posts invoice with 2 line items. Orig. amt is paid but retention item is blocked (i use block indicator in split payments tab of MIRO to do this)
At the end, I have a bunch of holdbacks sitting without Taxes and I am unable to add tax to them (unless i do a manual invoice for just the taxes which is not feasible) this could work if system could automatically calculate different lines for taxes based on amount.
thanks!

Answer 1

Dear Sridevi ,
You need to maintain condition record in TCode MEK1 . The rate will  flow in. You shall find that when you click on the taxes tab (in Invoice tab of item line) . In the output also you will find the taxes flowing. The need to maintain conditions in MEK1 is for posting in GRN while doing MIGO.
Hope it solves your problem.
Regards
Nandini