TAX

[Former Member]

HI ALL,

How tax is determined by the system automatically?

regards,

vas..

Message was edited by:

v.s.vas.

[Former Member]

The system automatically determines the amount of tax and how the tax is distributed among jurisdictions. Several factors influence tax determination such as the origin and destination of goods and the material/customer taxability.

In a sales transaction, the ship-to location determines the jurisdiction code. In a purchasing transaction, the location where consumption occurs determines the jurisdiction code.

Other factors that influence the tax rate include:

Customer taxability

Some customers such as non-profit organizations may be tax exempt.

Material taxability

Country of departur i.e PLANT and

Country of distinaton i.e SHIP TO PARTY

[Former Member]

hi Vas

to determine Tax automatically maintain Tax condition Record at Level: Tax classification of the Customer, Tax classification of theMaterial, Region of the plant and Region of the material.

EX: for CST- condition Type JIVC

in Customer Master TAX classfication for JIVC- 1 (Full tax) [sales area Data Billing Tab]

in Material Master TAX classfication for JIVC- 1 (Full tax) [ basic data 2]

Region of the customer say - 13 for Maharastra (general data address Tab)

Region of the plant say- 01 for Andhra Pardesh ( region in plant master)

now the condition record for JIVC thru VK11

tax cl. of Customer- 1

Tax cl of Material- 1

Region of customer- 13

Region of plant - 01

tax record to be maintained is 4%

like wise maintain record in different combination of customer and plant

do not maintain CST record for Similar region and for VAT maintain record for similar regions only.

[Former Member]

REFER BELOW REWARD IF HELPS

DEFINE TAX DETERMINATION RULES

You specify the valid tax types in transaction OVK1. More than one tax type can be defined for a country by defining the sequence.

The SAP System determines the taxes automatically within pricing.

In the standard SAP R/3 System, the elements of tax calculation are predefined (for example, tax condition type "MWST" for taxes on sales and purchases).

Assign the plant for Tax Determination in OX10, using the country key, the SAP System recognizes which tax type is valid for a plant and thus which taxes are relevant when creating an SD document.

Define the Customer Taxes in OVK3; you will maintain the tax code in Customer Master.

Define the Material Taxes in OVK4, which will then be maintaining in Material Master.

For example: -

MWST GST 0 Tax Exempt

MWST GST 1 Liable for Taxes

Now, you define the Tax Determination in VK12.

VK12 - Domestic Taxes/Export Taxes

Condition Type MWST

Customer Taxes Material Taxes Rate Taxes

0 0 0 %

0 1 0 %

1 0 0 %

1 1 9 %

In this example, if both the Customer Master and Material Master Tax code is 1, Tax will be included when you create the Sales Order.

Tax Code in Customer Master / Sales Order

How can we maintain the Tax Code (Tax code - which we maintain in MWST Condition Records) in Customer Master or in Sales Order?

There are few points, which I would like to remind you:

1) MWST is a tax condition, which is applied to customer to whom we are selling. The rate of tax is depend on various parameters, whether is fully liable for tax or exempted (in case of Defense Customer)

2) There are few parameters which we apply tax condition. Whether customer is tax liable? Whether material is tax exempted?

For example, if you are selling goods, which are free for tax to any customer, put the Tax Indicator (at MMR as '0'). If your

material is tax liable pur the Tax Indicator (at MMR as 1). If your customer is not liable for tax at all (like the case of Indian

Defense organizations) put the Tax Indicator (at CMR as 0) or 1 in case fully tax liable.

3) Now, at VK11 you need to maintain your pricing conditions with all the combinations like:

1 0

1 1

0 1

0 0

4) While maintaining your Material Master Records or Customer Master Records, you must identify, which are tax liable and which are tax exempted.

5) In any case, as a SAP standard Best Practices, while processing a sales order, you must retrieve a Tax condition record from SAP database only and not entered Manually. Accordingly, at V/06, the MWST condition Definitions, the field for 'Manual Entries', it would be marked as - D (Not possible to process Manually).

Due to this setting, normally, you cannot maintain Condition tax code during sales order processing. And in Customer Master, you can only maintain Tax Indicator and not Tax Code.

6) In case your client insists for Manual entry of Tax code during Sales Order processing, you can change the field at point 5) above to C-Manual entry is priority instead of D.

[Former Member]

Hi,

as for any other price condition you use a condition type (see T-code OVK1) which is inserted in the pricing procedure of your document. Once you have customized the pricing procedure and the condition type you also have to create the relative condition record (T-code VK11).

regards,

Gianluca.

[Former Member]

Go through this

Sales tax is a state government revenue. There are two types of sales taxes, Local sales tax & central sales tax. Local sales tax is intra state whereas CST is inter state.

Example of LST : Point of sale i.e. delivering plant & ship to party are within the same state. The rates are defined by the respective state governments.

Example of CST : The Delivering plant & Ship to party geographic locations are 2 different states. At the point of sales from one state, the ST goes to that state govt. & consignment is despatched to the Ship to party. Once that consignment is received at the ship to party state, sales tax will be levied once the sales is registered there. For this case, the LST that is applicable by the Ship to party further will not be applicable in all probability to be captured in SAP.

Stock transfer : This does not attract any sales tax. The consignment is transferred from one D plant to another D plant irrespective of inter/intra state sales. The invoice that is accompanied with the consignment thus shall not have any final value. It's a zero value invoice, but the basic prices needed to be mentioned.

The selling organisations normally needs to register with the sales tax authority of the respective state to have a warehouse or D plant to avoid the double taxation for their dealers/distributors.

Now, the pricing procedure that is there in 4.7 is Factory sale with formula-JFACT, in which the CST condition type is JIN1 & the LST is probably JIN2. There may be surcharge cond types as well which will calculate the amount on either JIN1 or JIN2.

For config :

1.SPRO > S&D > Basic fn. > Pricing > Pricing control > Define & assign Pric. procedure > Maintain Pric proc.

2. The tax rates are normally driven from the Tax classification of Customer & Material access. To do this config, S&D >Basic fn. > Taxes. You need to include the condition type for country IN in 'Define tax determin rule'.

3. Same path : But go to Tax relevancy of master records where you configure the condition type & options of rates that will flow to these masters. One needs to understand here properly as u need to have unique combinations for picking the sales tax rates. I will try to demonstrate the smallest example. Let's say, the LST rates are 2%,4% & 0%. I will have two options for material master here. 1 for taxable & 2 for not taxable.

For customer master, I will have 1-LST 2%, 2-LST4% & 3-LST0%. When I create master records for LST thru VK11 for JIN2, I will chose the access where the combinations of customer & material tax classifications are available. If this access does not exist create it under an access sequence. But normally this is standard. The condition records will look like,

Cust-Tax classi. Material tax claasi. Rate Tax code

1 1 2% A1

2 1 4% A1

3 1 0% A1

Remember, rates are flown from the tax codes. Tax codes can be created thru T code FTXP. This is normally a FI job.

Regards

AK

[Former Member]

hi,

You specify the valid tax types in transaction OVK1. More than one tax type can be defined for a country by defining the sequence.

The SAP System determines the taxes automatically within pricing.

In the standard SAP R/3 System, the elements of tax calculation are predefined (for example, tax condition type "MWST" for taxes on sales and purchases).

Assign the plant for Tax Determination in OX10, using the country key, the SAP System recognizes which tax type is valid for a plant and thus which taxes are relevant when creating an SD document.

Define the Customer Taxes in OVK3, you will maintain the tax code in Customer Master.

Define the Material Taxes in OVK4, which will then be maintain in Material Master.

For example :-

MWST GST 0 Tax Exempt

MWST GST 1 Liable for Taxes

Now, you define the Tax Determination in VK12.

VK12 - Domestic Taxes/Export Taxes

Condition Type MWST

Customer Taxes Material Taxes Rate Taxes

0 0 0 %

0 1 0 %

1 0 0 %

1 1 9 %

In this example, if both the Customer Master and Material Master Tax code is 1, Tax will be included when you create the Sales Order.

Tax Code in Customer Master / Sales Order

How can we maintain the Tax Code (Tax code - which we maintain in MWST Condtion Records) in Customer Master or in Sales Order?

There are few points which I would like to remind you:

1) MWST is a tax condition which is applied to customer to whom we are selling. The rate of tax is depend on various parameteres, whether is fully liable for tax or expemted (in case of Defence Customer)

2) There are few parameteres which we apply tax condition. Whether customer is tax liable? Whether material is tax exempted?

For example, if you are selling a goods which are free for tax to any customer, put the Tax Indicator (at MMR as '0'). If your

material is tax liable pur the Tax Indicator (at MMR as 1). If your customer is not liable for tax at all (like the case of Indian

Defence organisations) put the Tax Indicator (at CMR as 0) or 1 in case fully tax liable.

3) Now, at VK11 you need to mainatain your pricning conditions with all the combinations like:

1 0

1 1

0 1

0 0

4) While maintaining your Material Master Records or Cusotmer Master Records, you must identify, which are tax liable and which are tax exempeted.

5) In anycase, as a SAP standard Best Practises, while processing a sales order, you must retrieve a Tax condition record from SAP database only and not entered Manually. Accordingly, at V/06, the MWST condition Defintions, the field for 'Manual Entries', it would be marked as - D (Not possible to process Manually).

Due to this setting, normally, you cannot maintain Condition tax code during sales order processing. And in Cusotmer Master, you can only maintain Tax Indicator and not Tax Code.

6) In case your client insists for Manual entry of Tax code during Sales Order processing, you can change the field at point 5) above to C-Manual entry is priority instead of D.

pls reward points if the answer is helpful

Regards,

Govind.