Tax Configuration and Customisation Scenario for a Cement Industry

[Former Member]

Dear All,

Good day to all of you.

I am working on one Roll Out Implementation for a Cement Industry. I want to configure and customize the Tax scenario. Please find enclosed below the requirement description.

The Company is selling the Bag of Cement for 100 Riyals. User will enter this price manually in Sales Order. As per my discussion with FI and Sales Team they have 3 kind of Sales Taxes. The price is inclusive of Tax as per the requirement.

Here I need to deduct these 3 taxes from this price and capture it in sales order. The 3 Taxes are

A. 10% Sales Tax on Clinker.

B. 5% Sales Tax on Gypsum.

C. 1% Sales Tax on Limestone.

In SD we charge Tax always on basic price i.e 100 Riyals and 10% Tax MWST on this is 10 Riyals. My value of the document is 110 Riyals.

In this requirement they want Tax to deduct from the 100 Riyals which is inclusive of Taxes.

I need to define 3 Tax codes as per requirement but in SAP SD Pricing Procedure we only have one tax i.e MWST and the nature is positive.

Could you tell me the details configuration and customization I need to do capture all above 3 taxes and they should be deducted from 100 Riyals as price is inclusive of Taxes.

Your solution will be helpful to me to start my requirement.

Thanks and Regards,

Parag.

[Former Member · Accepted solution]

Take the value from the condition record ie 100 Rs

manipulate this value and default the manipulated value using routines.

Use this formula

Condition amount from condition records * 100 / (100+ tax rate of Clinker + tax rate of gypsum + tax rate of Limestone )

In your case tax rate of clinker is 10 , tax rate of gypsum is 5 and tax rate of limestone is 1 . If you want only gypsum and limestone you can take only these two

So the value comes out to be 100 * 100 / 116 = 86.2069

So Your ZR00 is 86.2069

On this your apply tax rates of 10 % , 5% , 1% and route them to respective accounts through account keys .

ZROO 86.2069

10% on 86.2069 8.620689655

5% on 86.2069 4.310344828

1% on 86.2069 0.862068966

Total tax 13.79310345

Total Value is 100

[Former Member · Accepted solution]

HI Srinivasa,

Can you go step by step. I am not clear with your explanation sir.

ZR00 100 AED gross price.

Gross Price 100

ZSW1 Deduct Sales Tax 5% -5 AED.

ZSW2 Deduct Sales Tax 1% -1 AED

Net Value i.e Actual Price. 94 AED.

ZWT1 Sales Tax 1 5%

ZWT2 Sales Tax 2 1%

I want to caluclate this value on 100 AED and not on 94 which I am unable to do so.

Gudie me my Invoice Value should be 100 out of which 94 should pass to 1 G/L and 5 AED and 1 AED to other two G/L's

Enclosed is my pricing procedure.

Why did you calculate 8.866 I am not able to understand. Explain me.

11 0 ZR00 Sales Price- ETA

20 0 Gross Price

31 1 ZWS1 Sales Tax 1 20

31 4 ZWS2 Sales Tax 2 20

40 0 Total deduction 30 39

107 0 Net Value

111 0 ZWT1 Sales Tax 1 11 10 16 MWS

112 0 ZWT2 Sales Tax 2 11 10 16 MWS

120 0 Total Tax 110 119

150 0 ZA39 Copy final value 107 107 X 1 2 ERL

940 0 VPRS Internal price B 4

950 0 Profit Margin 11

[Former Member]

Hi Prag

I am working on Cement Industry Implementation Project . Can you please help me how to configure Pricing Procedure as Pricing is changing after billing .Please give your contact number.

sapsd2490

[Former Member]

Further Calrification needed for how to pass Actual Value to Net value in Sales Order. As it is taking only Gross Value.

[Former Member]

Dear Parag

The following is the reverse and forward calculation ...for your case......... ..... Hope you got the logic.

116--

---

100--

---

A

Clinker 10--

---

8.62069----- (condition amount * Clinker Tax Rate )/ (100+CLINKER TAX)

Gypsum 5--

---

4.310345--- (condition amount * Gypsum Tax Rate )/ (100+GYPSUM TAX)

Limestone 1--

---

0.862069--- (condition amount * Limestone Tax Rate )/ (100 + LIMESTONE TAX )

Total tax------ 13.7931------- B

Basic price- 86.2069----- A MINUS B = D

Clinker 10%--

---

8.62069---- E

Gypsum 5%--

---

4.310345--- F

Limestone 1%--

---

0.862069--- G

13.7931------- EFG = H

100----

---

D+H = I

[Former Member]

Hi Srinivasa,

Please could you clearify this again. I have got the Logic. I didnt got what is 116.

Also please could you specify whether which price will hit the G/L. My Invoice value will be 100 which Customer will pay me.

Then all my postiive calcualtions of Taxes will hit the Accounting.

Clinker 10%--

---

8.62069---- E

Gypsum 5%--

---

4.310345--- F

Limestone 1%--

---

0.862069--- G

What about the Actual Price Basic Price "Basic price- 86.2069----- A MINUS B = D"

Thanks & Regards,

Parag.

[Former Member]

Hi Srinivasan,

I have corrected the calculations

-

---

100----

---

A

Clinker 10--

---

10----- (condition amount * Clinker Tax Rate )/ (100)

Gypsum 5----

---

5 -

---

(condition amount * Gypsum Tax Rate )/ (100)

Limestone 1--

---

1--- (condition amount * Limestone Tax Rate )/ (100)

Total tax------ 16------- B

Basic price- 84----- A MINUS B = D

Clinker 10%--

---

10---- E

Gypsum 5%--

---

5--- F

Limestone 1%----

---

1 -

---

G

16------- EFG = H

100----

---

D+H = I.

The Accounting Entries after Invoicing will be.

Customer Acct---> -100 Riyal.

Actual Price --> 84 Riyal

Tax 1 --> 10 Riyal

Tax 2 --> 5 Riyal

Tax3 --> 1 Riyal.

Please correct me if I am wrong.

Regards,

Parag.

[Former Member]

Dear All,

Good Day,

I have created a test scenario in Sand Box by designing the Pricing Procedure with reverse calculation for all 2 Taxes as per my scenario. I have the reuqirment for only 2 Taxes. Please find enclosed screen shot below.

ZR00 Sales Price- ETA 100.00 AED 1 BAG 100.00 AED 1 EA 1 BAG 0.00

Gross Value 100.00 AED 1 BAG 100.00 AED 1 EA 1 BAG 0.00

ZWS1 Sales Tax 1 5.000- % 5.00- AED 0 0 0.00

ZWS2 Sales Tax 2 1.000- % 1.00- AED 0 0 0.00

Total Tax 6.00- AED 1 BAG 6.00- AED 1 EA 1 BAG 0.00

Actual Basic Price Z 94.00 AED 1 BAG 94.00 AED 1 EA 1 BAG 0.00

ZWT1 Sales Tax 1 5.000 % 5.00 AED 0 0 0.00

ZWT2 Sales Tax 2 1.000 % 1.00 AED 0 0 0.00

Total Tax 6.00 AED 1 BAG 6.00 AED 1 EA 1 BAG 0.00

VPRS Internal price 14.69 AED 1 EA 14.69 AED 1 EA 1 EA 0.00

Profit Margin 85.31 AED 1 BAG 85.31 AED 1 EA 1 BAG 0.00

I have entered the Sales Price as 100 AED which is inclusive of Taxes. But in my Sales Order the Net Value is coming 100 AED which is incorrect It should come 94 AED. Please could you let me know whether I need to assign Subtotal so that my Net Value should come 94 AED.

Thanks & Regards,

Parag.

[Former Member]

Hi Srinivasan,

I have entered Gross Price as 100 AED. As per reverse calculcation I have deducted 2 Taxes 5% and 1% respectively to arrive at my Actual Price i.e. 94 AED. Again I have done the forward calculcation to add Tax i.e 5% and 1% respectively Total Tax i.e 6 AED.

Problem I am facing in Sales Order is, my Net Value is coming as 100 AED. But my Net Value is 94 AED. tell me how to pass on this value in the Net Value and also I need to pass this Value to Accounting.

Regards,

Parag.

[Former Member]

Hi Srinivasa,

Can you reply my post, how should I pass the Actual Price I am getting after deducting Taxes to Net Value in Sales Order. It is only taking 100 and tax as 6 so my total value in Invoice is 106.

Regards,

Farhan

[Former Member]

Dear Sir ,

I shall give you a brief picture of forward pricing and Reverse pricing.

FORWARD PRICING : In this pricing the industry would maintain prices for the basic value of the Product . Upon the basic value the system shall compute the discounts , freight and taxes.

That means

If the Rate of a product is 100 Rs ie PROO then the system shall compute discount , Freight , and taxes on it .

For example discount is 10 Rs , Freight is 20 Rs , and tax is 24 Rs means. The total value is 100-102024 = 134.

So you have arrived at the total value 134 when the basic price 100 is given. This 134 is inclusive of Discounts , freight and taxes.

REVERSE PRICING :

Many of the industries follow forward pricing mechanism. However there are some industries like glass industry and cement industry for example which will have their price list being maintained for their products inclusive of taxes.

Ie In an industry with Reverse pricing they would have their price list for one unit as 134 Rs. Hence We have to deduct the taxes , freight , discounts from this to arrive at the actual basic price. ie

134 - (24 tax) - 20 ( freight ) - (-10)discount = 100 Rs .

Why Should they arrive means they have to seggregate it into revenue , freight expenses , discount expenditure and Taxes and route them to respective GL codes.

Now that in your scenario the respective amounts have been deducted and basic price is being arrived on which you have done forward computation.

Pls revert for Clarifications.

[Former Member]

Hello Reazuddin,

Please can you check my pricing procedure callucations I have enclosed in the Post. I want the Actual Price after substracting the Taxes in the Net Value.. In my Sales Order it is taking the Net Value 100 which is inclusive of taxes. Can you help me out and also I need to pass the Actual Pricee which we have arrived after deduction of taxes.

Thanks & Regards,

Parag.

[reazuddin_md]

Dear Parag,

To achieve this, you have to desing backward pricing procedure.

It looks as follows:-

10 -Gross Price- ZPR0

30 -10% Sales Tax on Clinker. ZWS1(-ve value)

40- 5% Sales Tax on Gypsum. ZWS2(-ve value)

50 -1% Sales Tax on Limestone. ZWS3(-ve value)

60 Total tax 304050

70 -Actual Base Price PR00 = 10- 60

80 -10% Sales Tax on Clinker. ZWT1 (+ve value)

90- 5% Sales Tax on Gypsum. ZWT2(+ve value)

100 -1% Sales Tax on Limestone. ZWT3(+ve value)

110 Total tax 8090100

Start designing your pricing procedure. You will come across more scenarios.

Note :Discounts / freights & other conditions have not taken into consideration

Regards,

Reazuddin MD

[Former Member]

To achieve this, you have to desing backward pricing procedure.

It looks as follows:-

10 -Gross Price- ZPR0

30 -10% Sales Tax on Clinker. ZWS1(-ve value)

40- 5% Sales Tax on Gypsum. ZWS2(-ve value)

50 -1% Sales Tax on Limestone. ZWS3(-ve value)

60 Total tax 304050

70 -Actual Base Price PR00 = 10- 60

80 -10% Sales Tax on Clinker. ZWT1 (+ve value)

90- 5% Sales Tax on Gypsum. ZWT2(+ve value)

100 -1% Sales Tax on Limestone. ZWT3(+ve value)

110 Total tax 8090100

Dear Reazuddin,

Thank You very for your kind help. Sorry for the delay in reply.

I had some clarifications if you could clear them.

As per your reply I had to do backward calculation. Please cud u specify this in more details as I need to deduct tax again why i need to add it again?. as per my understanding the tax which is getting added will hit to 3 different G/L's and the Actual Price at step 70 will hit to G/L. Please correct me if my understanding is wrong.

I need to assign 3 tax codes so that they will reflect in Customer and Material Master ?

Also let me know from which condition type shall I copy the ZWS1,ZWS2,ZWS3,ZWT1,ZWT2,ZWT3. I want to capture the standard MWST Tax scenario. Shall I keep the same calculation rule and requirement which is there in MWST standard condition type in Pricing Procedure.

Once again thanks alot for your Kind Help.

Thanks,

Parag.

[reazuddin_md]

Dear Parag,

Below cond types - has to be use as tax cond types -and ZWT1 & T2 & T3 is copy of MWSTwhich you need to declare in customer / material master after assigning to respective country in IMG.

Copy below cond types create by copying from any discount cond type & maintain the percentage which is same as tax code ,

These are -VE values which needs to be deducted from the gross price & should be statistical. These are dummy tax cond types. Doesnt hit any tax G/L accounts.

30 -10% Sales Tax on Clinker. ZWS1(-ve value)

40- 5% Sales Tax on Gypsum. ZWS2(-ve value)

50 -1% Sales Tax on Limestone. ZWS3(-ve value)

as I need to deduct tax again why i need to add it again?.

this is because, in Pricing procedure- one cond type cant be used twice & single cond type cant be act as + ve & -Ve value at the same time.

ZWT1 & T2 & T3 are actual cond types which will have tax codes & hit the tax G/L account.requirement . alt ctype everything should be same as MWST for actual cond types. Dummy cond types doesnt required any routines assigned to it.

Hope - its clear

Regards,

ReazuddinMD

[Former Member]

Hi Reazuddin,

Can you reply me post message.

Thanks,

Parag.