Tax Determination

[Former Member]

Hi,

In customer master we define the country and also define the weather the customer is liable to pay tax or not.Here also we mentation what are the diff tax condition types applicable for the customer. But i am confused what is the requirement to maintain the tax related information in material master record.As tax is determined based on the customer region.Please clarify.

Regards

Debasish

[former_member315051 · Accepted solution]

Hi

Tax will be determined based on the Country,Region of the ship to party ,Shipping point , Plant , Customer Tax classification, Material Tax classification.

Based on this combination we maintain the UTXJ Condition records with tax code, then system will determint the taxes.

Make sure that all master data have been maintained (J1ID)

Regards

Ramesh.

[Lakshmipathi]

Dear Debasish

Yes based on the combination of customer (ship to party) and material only, you would be maintaining tax code in UTXJ which will determine as to how your tax should be in sale order.

thanks

G. Lakshmipathi

[Former Member]

Hi,

Here is complete process for tax determination.

You specify the valid tax types in transaction OVK1. More than one tax type can be defined for a country by defining the sequence.

The SAP System determines the taxes automatically within pricing.

In the standard SAP R/3 System, the elements of tax calculation are predefined (for example, tax condition type "MWST" for taxes on sales and purchases).

Assign the plant for Tax Determination in OX10, using the country key, the SAP System recognizes which tax type is valid for a plant and thus which taxes are relevant when creating an SD document.

Define the Customer Taxes in OVK3, you will maintain the tax code in Customer Master.

Define the Material Taxes in OVK4, which will then be maintain in Material Master.

For example :-

MWST GST 0 Tax Exempt

MWST GST 1 Liable for Taxes

Now, you define the Tax Determination in VK12.

VK12 - Domestic Taxes/Export Taxes

Condition Type MWST

Customer Taxes Material Taxes Rate Taxes

0 0 0 %

0 1 0 %

1 0 0 %

1 1 9 %

In this example, if both the Customer Master and Material Master Tax code is 1, Tax will be included when you create the Sales Order.

Tax Code in Customer Master / Sales Order

How can we maintain the Tax Code (Tax code - which we maintain in MWST Condtion Records) in Customer Master or in Sales Order?

There are few points which I would like to remind you:

1) MWST is a tax condition which is applied to customer to whom we are selling. The rate of tax is depend on various parameteres, whether is fully liable for tax or expemted (in case of Defence Customer)

2) There are few parameteres which we apply tax condition. Whether customer is tax liable? Whether material is tax exempted?

For example, if you are selling a goods which are free for tax to any customer, put the Tax Indicator (at MMR as '0'). If your

material is tax liable pur the Tax Indicator (at MMR as 1). If your customer is not liable for tax at all (like the case of Indian

Defence organisations) put the Tax Indicator (at CMR as 0) or 1 in case fully tax liable.

3) Now, at VK11 you need to mainatain your pricning conditions with all the combinations like:

1 0

1 1

0 1

0 0

4) While maintaining your Material Master Records or Cusotmer Master Records, you must identify, which are tax liable and which are tax exempeted.

5) In anycase, as a SAP standard Best Practises, while processing a sales order, you must retrieve a Tax condition record from SAP database only and not entered Manually. Accordingly, at V/06, the MWST condition Defintions, the field for 'Manual Entries', it would be marked as - D (Not possible to process Manually).

Due to this setting, normally, you cannot maintain Condition tax code during sales order processing. And in Cusotmer Master, you can only maintain Tax Indicator and not Tax Code.

6) In case your client insists for Manual entry of Tax code during Sales Order processing, you can change the field at point 5) above to C-Manual entry is priority instead of D.

Rgds

San

[former_member217082]

Hi debhasish

We maintain tax relevance in CMR and MMR and we maintain the condition record based on the key combination of the CMR and MMR. But the importance of MMR tax is that wheather that material is relevant for tax or not. like Excise tax etc

Regards

Srinath

[Former Member]

Dear Srinath,

As per your post i can conclude that in CMR we maintain Tax for VAT or CST etc which are related to region only and in Material Master we maintain weather the material is exciseable or not.So based on these two parameters and region the system determines Tax.

Please correct me if i am wrong.

Thanks & Regards

Debasish

[former_member217082]

Hi debashish

If CIN is implemented then we need to think considering all those parameters.But if CIN is not implemented then those all things are not taking place .But in general we put tax to customer on the goods we are selling that is the reason the tax will come which he has to pay in sales order and billing documents.Secondly in MMR also we maintain tax in the same way wheather that material is eligible for tax or not. With The combination of CMR and MMR taxes maintained we maintain condition record.and that will trigger in the sales order .and already our friend San has given by example

Regards

Srinath

[Lakshmipathi]

Dear Debasish

Several parameters influence the tax amounts and tax rates determination. The most important ones include:

- Delivering country (origin)

- Tax class of the ship-to partner

- Tax class of the material being shipped

- Tax calculation date

- Jurisdiction code from ship-to-party (customer)

- Jurisdiction code from ship-from address (plant)

- Point-of-order acceptance

- Point-of-order origin

SAP defaults the ship-from jurisdiction maintained on the plant as the point-of-order acceptance, and defaults the ship-to jurisdiction maintained on the customer as the point-of-order origin.

thanks

G. Lakshmipathi

[Former Member]

Hi,

Basically tax is determined thru customer master, material master & counntry.

Rgds

San