How to configure multiple tax scenarios for contracts??

[Former Member]

Dear Gurus,

My client has house, provided to its employee during the employment as well as after retirement, During service there is no leviability of Service Tax for such accomodation contracts.

Post retirement for 6 months the accomodation is provided on same grounds (thus not taxable) and then at commercial rates (at this moment the amount is chargeable to Service Tax).

I have configured Tax Type as MWST and two tax groups FULL (with Service tax code assignment as per prescribed rates) and NONE (without assigning any service tax code - as there is no service tax code with 0 of tax rate in India) and have also checked this group as tax exempt.

When I am trying to assign ths tax type MWST and condition NONE in posting parameters in RE contract, system is giving following error message:

Postings: Data for sales tax is inconsistent for MWST/NONE (Message no. RETMFI065)

Please suggest how to configure an exempt tax code as well as non exempt tax code and apply them in same contract.

Regards

Rohit

[Former Member]

Rohit,

Please check your Tax Code assignement for the Tax Type and Tax Group. Also, at times the Vendor/Customers in master data are liable for Tax withholdings if there are any so this gives an confilict.

Tax config in REFX is not very complicated, Tax codes are configured in FI and in REFX we assign the tax codes to the tax Group/Types, make sure you have assigned correct Tax codes per country.

You can assign any number of Tax Group/Type combination to a contract, use the Time dependent Posting paramters functionality. split or extend the posting term for new period with different Tax values. example Posting term 10 with Tax exempt till 01/01/2011 and from 02/01/2011 (dd/mm/yy) with x% tax values. posting term 10 will be assigned to the respective condition and if you see the cash flow it should show correct values and in simulate posting you should see tax item too.

Let me know if you more questions.

Jag

[Former Member]

Thanks for the response Jag,

Truly the configuration for RE tax are pretty simple. However, my querry is that we dont have a ZERO rate of service tax code in India. Thus there is nothing with me (in terms of tax code defined in FI) that can be assigned to the Tax Type & Tax Group combo in "Assign Tax Code Screen" in RE-FX.

If I leave it blank system gives me error that settings are incomplete. Can someone suggest how to configure tax exempt scenario in REFX??

Regards

Rohit

[Former Member]

Looks like your FI team needs to create a 0 Tax or Tax exempt tax code for your specific usage. I know you may not have already but they can create one for you in that Country procedure which you can assign to the Tax group/TYpe and you are good to go.

Rest is just assigning the time dependent Tax group and Type to the same posting parameter.

Thanks

Jag