tax determination

[Former Member]

Hi All,

Have a doubt with tax determination...

Can anybody explain what will happen in the following scenarios

1) customer is tax exempt and material is taxable

2) customer qualifies for full tax and material is not taxable

3) customer and material both qualify for tax

4) customer and material are both tax exempt..

Thanks

Deepak

[Former Member]

closing thread as per rules of engagement

[Lakshmipathi]

Dear Deepak

Simple logic is you need not bother about material whether it is taxable or not. Just see whether customer is taxable and if so, even if the material is not taxable, you have to charge.

thanks

G. Lakshmipathi

[Former Member]

Dear Deepak,

In VK11 --> Condition Type: UTXJ

Maintain entry for

Combination1: Sales Org and Taxclass1-Cust."1 - Taxable"

0--

---

Taxable Exempt

---

%--01.01.2009

---

31.12.9999----A0

2--

---

Taxable ServiceTax

---

%--01.01.2009

---

31.12.9999----AA

Combination2: Sales Org and Taxclass1-Cust."0 - Tax Exempt"

0--

---

Taxable Exempt

---

%--01.01.2009

---

31.12.9999----A0

2--

---

Taxable ServiceTax

---

%--01.01.2009

---

31.12.9999----AA

Now Coming to your query:

1) customer is tax exempt (In XD02>Sales Area Data>Biiling Documents> Tax Clasification as "0") and material is taxable (In MM02>Sales:Sales Org1>Tax Data>Tax Classification as "2")

Output: No Tax

2) customer qualifies for full tax (In XD02>Sales Area Data>Biiling Documents> Tax Clasification as "1") and material is not taxable (In MM02>Sales:Sales Org1>Tax Data>Tax Classification as "0")

Output: No Tax

3) customer (In XD02>Sales Area Data>Biiling Documents> Tax Clasification as "1") and material (In MM02>Sales:Sales Org1>Tax Data>Tax Classification as "2") both qualify for tax

Output: Taxable

4) customer (In XD02>Sales Area Data>Biiling Documents> Tax Clasification as "0") and material (In MM02>Sales:Sales Org1>Tax Data>Tax Classification as "0") are both tax exempt..

Output: No Tax

Best Regards,

Amit

[Former Member]

Dear Amit,

I have been trying to see the effect of taxable and tax exempt on the final output.

What i have observed is that the final output is being affected by the tax classification of the material and is independent of the classification of the customer.

I mean when the cust and the material both are taxable then the output is taxed.

when the cust is exempt and the material is taxable then also the output has tax...

can u plz explain this.

Regards

Deepak

[Former Member]

Dear Deepak,

To your statement:

when the cust is exempt and the material is taxable then also the output has tax...

Check with Condition record for Condition Type in VK11/ 12

For Combination:

Sales OrgTaxclass1-cust as "0 - Exempt"Taxclass - material as "2 - Taxable"

You might have maintained as:

2--

---

Taxable ServiceTax

---

%--01.01.2009

---

31.12.9999----AA

Instead, maintain as

2--

---

Taxable ServiceTax

---

%--01.01.2009

---

31.12.9999----A0

Best Regards,

Amit.

Note: If any of the Factor, i.e. Customer or Material, is Tax Exempt; Output must be No Tax.

Reason:

1. Your Customer is, say Govt. Customer. Now, whether your Material is Taxable or not, as a Govt. Law, you have not to put tax on to Sales to this Govt. Customer.

2. Your Customer is, say Corporate; but your are selling him Educational Material, which is Tax Exempt. In such Case, you will not put tax on to sales.

[Former Member]

Hello Freind,

3rd and 4th point is very simple and straight as based on condition records tax is calculated and if exemption is there for both then there will be zero tax.

But if customer is taxable and material is tax exempt and vice versa based on the condition records maintained in VK11 will determine the same.