Tax Procedure in India

[Former Member]

Hi All,

There is a requirement to changes in taxes for Indian states Kerala & Gujarat. Post India Budget 2008-2009, the state governments have proposed a few changes to the taxes . There has been a requirement from the State Governments of Kerala and Gujarat, for imposing Social Security Cess on VAT( kerala) & Additional tax( Gujarat) on Base amount applicable from 1st April 2008 and . The details of the same are as below:

As per clause 6 the Kerala Finance Bill, 2008, a Social Security Cess has been imposed on

at the rate of 1% on VAT Payable.

In the State of Gujarat, Here are the changes as per the Bill. As per the Bill the total tax including additional tax, in case of goods attracting 4% will be 4% VAT + 1% Additional Tax and therefore total tax will be 5%. In case of goods attracting 12.5% the rate would be 12.5% VAT + 2.5% Additional Tax and therefore total tax would be 15%.

To meet this requirement at FI side following is been carried out:

1. Two new conditions will be added to the Tax procedure( TAXINJ):

a. ZSSC u2013 Itu2019s a new condition proposed for Kerala tax changes which represents the Social Security Cess calculating on VAT in Kerala. This will be applied on VAT (JIP5). This new condition needs be added in the Pricing procedure from PUR.

This ZSSC tax condition which will be created in FI will post to G/L account -1337027.

b. ZADT u2013 Its new condition proposed for Gujarat Additional tax. This will be applied on the value on which VAT (JIP5) is calculated. This new condition needs be added in the Pricing procedure from PUR.

This ZADT tax condition which will be created in FI will post to G/L account -1337032.

3. Tax codes needs to be created for respective states. Respective changes needs to be done in pricing procedure by PUR.

My question is what need to be done at Purchasing level for Input tax. All I understand is we need to do the testing once tax code is changed. There is no Change at Pricing Procedure level at Purchasing. Please advice what all should be covered in testing ? Do I need to cover all purchasing documents and PO processes like consignment, Subcontracting, Contract,SA etc,

Thanks.

Shalini

[Former Member · Accepted solution]

Hi,

If u modified the TAXINJ procedure as per the requirement means .

on which amount VAT @ kerala state needs to be calculated?

on which amount VAT @ Gujarat state needs to be calculated?

this is importent from TAXINJ procedure point of view.

Secondly ,

In TAXINJ Tax code is important u should have diff tax code (u allready have it)

Testing point of view:

U should run a domestic procurement cycle and check the account enties at the time of MIGO & MIRO (important).

I think this would be enough.

regards,

SNB

[Former Member · Accepted solution]

Hi SNB,

Can you please be more elaborative on what needs to be done at MM level.FI and SD are working on Tax procedure.

As per my understanding there is no config setting that needs to be done at Pricng procedure level from MM side. Only testing is required.

My question is do we require to test all purchasing documents? further in PO do we require to test all document types that the business is using .

Thanks.

Shalini

[Former Member · Accepted solution]

Dear Shalini,

Tax Procedure is at country level not at document type level.

tax procedure has nothing to do with the diff documents.

just check about all the taxes are calculated properly and flows properly to respective G/L s as well as Registers(excise registers)

regards,

sujit

[Former Member]

Hi Shalini,

Have you added the condition types in the taxprocedure you are following:

Ex: TAXINN in this add the condition types according to the budget requirements.

And also try to include the same in the pricing procedure.

then go to FTXP and create the tax codes accordingly. And also check the calculation formulas are correct.

Then go to Excise Defaults : LG-Tax on Goods Movement-India...

And check there also.

Because you need to check will that social security cess is linked to CENVAT utilisation or not.

Then accordingly add in the excise defaults.

Revert back for any clarifications.

BEST REGARDS

SRI