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author's profile photo Former Member
Former Member

New Entry for Service Tax in SAP Business One

Hi Experts ,

Generally while applying Service Tax in AP Invoice the Whole Tax Amount + Base Amount is Credited to Vendor , this is general Scenario.

But now government has released a notification stating that several Services included in notification should pay Service tax on Ration Basis.

Example for Legal Fees :

Below entry is general Standard Entry in Sap Business One for Service tax entry

General Scenario

Suppose the Charges for Legal Is Rs.1000/-

i am creating AP Invoice Service Type document and selected the relevant "Legal Fees" ledger account and also the Service Tax Code with 12.36%

The following is the entry.

Account Debit Credit Vendor
1123.6 Service Tax Ecess Input 2.4
Service Tax HCess Input 1.2
Service Tax Input 120
Legal fees 1000

1123.6 1123.6


Now according to New Service Tax Notification the service tax for Legal Fees has to be paid fully by Service Receiver.

so the Accounting Entry should be like below

Account Debit Credit Vendor
1000 Service tax Paid ( Expense Account ) this is clubbed value of Cess & Hcess 123.6
Service tax Payable ( Liability Account ) this is clubbed value of Cess & Hcess
123.6 Legal Fees 1000

How this can be Achieved in SAP Business One.

Awaiting Your response Experts

Krishna Vamsi

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1 Answer

  • author's profile photo Former Member
    Former Member
    Posted on Mar 13, 2013 at 01:56 PM

    Hi Krishna,

    This is very much possible is SAP Business One.

    What you can do is the following:

    • For the Tax type "Service", set the rate as 12.36
    • Create a new tax type called "Service Reversal" or what ever you want to call it, map the account which has to be credited and set the rate as 12.36.
    • The formula of Service would be based on Total but the formula of the new tax type i.e. Service Reversal should be BaseAmount = -(Total)
    • Create a combination of Service and Service Reversal Tax type.
    • Create a tax code with the new combination just created (one mentioned above)
    • Use it in AP Invoice and you would get the desired result.

    Thanks,

    Joseph

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