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Mar 25, 2009 at 01:01 PM

VAT & Service Tax

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Hi Gurus

We are on 4.7 in a Production Environment. We are using TAXINJ as our tax procedure. We have a new scenario in MM.

We are doing an asset procurement using MM. We have an asset whose base value is Rs. 10,000 on which VAT of 4% is applicable (VAT amount = Rs. 400). We would like to capitalize VAT hence, we would not require VAT amount to be hitting the GL account. We have created a condition type in MM pricing for VAT without any account key. Because of this condition type, the new asset value is Rs. 10,400 (Rs. 10,000 Base Value + Rs. 400 VAT).

There is a Service Tax component which has to compute Service Tax on the base value of asset i.e Rs. 10,000. We have created a tax code using transaction FTXP which calculates the tax & posts the value to a GL account i.e. for the service tax condition type in tax procedure, we have assigned an account key to which we have assigned a GL account.

The problem is that the base amount on which the service tax is getting calculated is Base Value + VAT i.e Rs. 10,400 & not on Rs. 10,000. This is because we have created VAT condition type in MM Pricing procedure.

Can anyone help me resolve how to compute correct tax?

Regards