Material/ customer tax classification

[Former Member]

Hello,

There could be some material on the above topic on this site but I have my own questions as follows.

The Material tax classification and customer tax classification is defined in material/customer master. My questions are:-

1a) If we have defined only one tax classification indicator in material master and customer master. Why in sales order we have at item level two fields(taxm1 and taxm2) for material tax calissification (item level- billing doc tab) .what is the purpose? where the data is copied into these fields ? I think the data from material master is copied into this first field ? what about the 2nd field ??

1b) Similarly at header level of sales order , we have two fields for customer tax classification ? why ? Can we change it manually.

2) can we maintain in material master three tax classfication indicators(let's say 1,2,3 ) for the same country and same tax category. if yes, then how can all the material tax classification indicators as above will be copied into sales orders and how the condition records for tax conditon type will be found ?

3) In one of our sales order, the material tax classification at item level are 1 and 2 (taxm1, taxm2). But in the material master the tax classifcation is only 2. There is no manual changes in sales order. Then how come system has not copied tax classifcation 2 in the first TAXM1 field ?

I do not have the test system to test. So would request colleagues to advice.

regds

[Former Member]

hi,

Taxation Explain with an example

I'm assuming that, the country is India and based on its requirement:

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.

[Former Member]

hi,

Tcodes To Configure The SAP SD Sales Tax Determination

Sales Tax Determination

OBQ1 - Maintain/Create Condition Type

Double click on the Condition Type for more control

OBQ3 - Tax Pricing Procedures

OBQ2 - Tax Access Sequences

OBBG - Assign Tax Country to calculation procedure

OVK3 - Define the Customer Tax category

OVK4 - Define the Material Tax category

OVK1 - Define Tax determaintion rules

Define the links between the Tax Country and Tax conditions type

OVK6 - Assign delivery plants for Tax determination (locally which Tax country category to use)

VK13 - Maintain Tax Condition Rate (e.g. 1%, 2% etc...) by Tax Country

SM31 - Table View V_T001 - Maintain default country, currency for Company Code.

Material and Customer Tax Master Maintenance must be equal

e.g. 0 = tax 1 = no tax both Material and Customer master must be 1 and 1

Search for the Tax Classification field

MM02 - Sales Organization data

XD02 - Tick Billing

regards,

balajia

[Former Member]

hi,

(1)(a).Usually at sales document level this is for the purpose of changing it manually , if you have one tax classification for both customer and material master.

(1)(b).Yes at transaction level for changing it manually SAP has given the possibility.

(2).With different condtion types you can maintain n number of tax classifications. With condition records it will flow from master data to sales document level.

(3).Please check the condtion records with the combination whether the combination records exists or not.

regards,

balajia