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VAT Configuration

former_member222120
Participant
0 Kudos

Hi SAP Experts,

Greetings to all...
I wanted to know how to configure the VAT in the system. I know that we are not supposed to ask basic questions over here but from the past few days I have serached in sdn and couldnt find any doc that will help me to configure the vat in the system.

Thanking you in advance,
Regards,
UK.

Accepted Solutions (1)

Accepted Solutions (1)

kailas_ugale
Active Contributor

Hi,Read SAp Note:- 822347

ymptom

 

Tax configuration for condition based tax procedure - TAXINN

Other terms

 

VAT, CIN,TAXINN, Tax Procedure, Tax Conditions

Reason and Prerequisites

 

Legal Change
The customers who have already made the relevant changes for VAT 2003
would only have to make the changes accordingly.

Solution

 

For VAT 2005, SAP recommends all customers to look into this note only.

Initial Settings:

 

    • Tax procedure for country India is "TAXINN".  If you are using any other Tax procedure similar to TAXINN , use the same in place of TAXINN  in the recommended configuration settings.

  Glossary

 

    • CG - Capital Goods
    • RM - Material other than Capital Goods
    • CIS - Client Independent Setting

  Overview

A Set of New Tax condition types have been introduced for Purchase and Sales Process. These new condition types should be used from 1st of April 2005.

 

    • Define the tax conditions  that are currently Non deductible as VAT Non deductible . This will enable you to address the transition to VAT at a later point of time. This would help in reporting Taxes on Sales/Purchases for the Tax Year 2005.

    • For Inbound transactions five new Tax condition types have been introduced:

                      JVCS: A/P CST Non Deductible under VAT 

                    JVRD: A/P VAT RM Deductible 

                    JVRN: A/P VAT RM Non Deductible 

                    JVCD: A/P VAT CG Deductible 

                    JVCN: A/P VAT CG Non Deductible 

    • Each of the condition type mentioned above should be assigned to a separate Transaction/Account Key and a separate G/L account. This will help in the period end processing where indvidual taxes need to be clearly identified & reported. For e.g. a separate treatment may be required for taxes on interstate sale, that could vary from state to state.


Note: Certain settings have to be available on the production system when you start the transaction for the Tax Year 2005. Those settings are highlighted with "TY2005" and you should capture these in separate request.

Configuration Steps:

    1. Create Tax Conditions Types for Sales/Purchases (CIS):

           IMG - Financial Accounting - Financial Accounting Global Settings - Tax on Sales/Purchases - Basic Settings- Check Calculation Procedure - Define Condition Types (OBQ1) 

      a) Create Condition Type JVCS: A/P CST Non deductible under VAT as a copy of JIPC for 'TAXINN'

                    Maintain Condition Category as 'D'-"Tax. 

                    Maintain the Access sequence as 'JST1'. 

      b) Create Condition Type JVRD: A/P VAT RM Deductible as a copy of  JIPC

                    Maintain Condition Category as 'D'-"Tax".Ensure the Access sequence "JST1" 

      c) Create Condition Type JVRN: A/P VAT RM Non-Deductible as a copy of JIPC

                    Maintain Condition Category as 'D'-"Tax".Ensure the Access sequence 

                    "JST1" 

      d) Create Condition Type JVCD: A/P VAT CG Deductible as a copy of  JIPC

                    Maintain Condition Category as 'D'-"Tax".Ensure the Access sequence 

                    "JST1" 

      e) Create Condition Type JVCN: A/P VAT CG Non-Deductible as a copy of JIPC

                    Maintain Condition Category as 'D'-"Tax".Ensure the Access sequence 

                    "JST1" 


Note: Ensure that all the existing Condition Types  used in Tax procedure TAXINN have the following attributes. These settings are required to work without any Jurisdiction Code. These changes are applicable from 1st April 2005.  This is over and above the new condition types created. "TY2005"
                    Access Sequence    : JST1 

                    Condition Category : D 

    2. Define New Transaction Key for the new TAX Conditions:(CIS)

           IMG > Financial Accounting > Financial Accounting Global Settings > Tax on Sales/Purchases > Basic Settings > Check and Change Settings for Tax Processing (OBCN) 

                    Akey    Description              Tax Type  Non Deduct   Posting Ind 

    • JP4: A/P CST Non Deductible            2          X        3
    • JP5: A/P VAT RM Deductible            2                    2
    • JP6: A/P VAT RM Non Deductible        2          X         3
    • JP7: A/P VAT CG Deductible            2                    2
    • JP8: A/P VAT CG Non Deductible        2          X         3
    3. Define G/L Accounts:

           IMG > Financial Accounting > General Ledger Accounting > G/L Accounts Master Records > G/L Account Creation and Processing > Edit G/L Account (Individual Processing) > Edit G/L Account Centrally (FS00) 

           For SAP R/3 4.0B: IMG > Financial Accounting > General Ledger Accounting > G/L Accounts Master Data > G/L Account Creation > One Step Manual/Automatic (Alternative 3) > Alternative Methods to Create GL Accounts > Create GL Account Manually (FS01) 

                    Create new Tax G/L Accounts for all new Tax transaction keys created above. 

    4. Define Tax Accounts:

           IMG > Financial Accounting > Financial Accounting Global Settings > Tax on Sales/Purchases > Posting > Define Tax Accounts (OB40) 

                    Assign appropriate G/L Accounts to the Transaction keys. 


Note:The changes to the tax procedure would be applicable from 1st April 2005.

    5. Change TAXINN procedure:

           IMG > Financial Accounting > Financial Accounting Global Settings > Tax on Sales/Purchases > Basic Settings > Check Calculation Procedure > Define Procedure (OBQ3) 

    • Select Procedure TAXINN.Add JVCS, JVRD,JVRN, JVCD, and JVCN in  TAXINN immediately after JIPC.

    • Assign Transaction/ Account Keys and Alternative Calculation type as follows
                      JVCS - JP4  (ST inventory - India) 

                    JVRD - JP5  (ST setoff - India) 

                    JVRN - JP6  (ST inventory - India) 

                    JVCD - JP7  (ST setoff - India) 

                    JVCN - JP8  (ST inventory - India) 

New Pricing Conditions in SD. 

    • The following condition types have to be created.

                    JIVP: A/R VAT Payable 

                    JIVC: A/R CST Payable 

    6. Define Condition Types:

           IMG > Sales and Distribution > Basic Functions > Pricing > Pricing Control >  Maintain Condition Types (V/06) 

           Create Condition Type JIVP: A/R VAT Payable as a Copy of JLST & Maintainthe same attribute as in JLST. 

           Create Condition Type JIVC: A/R CST Payable under VAT as a Copy of JLST & Maintain the same attribute as in JLST. 

    7. Define New Transaction Key for the new TAX Conditions:(CIS)

           IMG > Financial Accounting > Financial Accounting Global Settings > Tax on Sales/Purchases > Basic Settings > Check and Change Settings for Tax Processing (OBCN) 

                    Akey    Description              Tax Type  Non Deduct   Posting Ind 

    • JN6: A/R VAT Payable                  1                    2
    • JN7: A/R CST Payable under VAT        1                    2

    8. Define G/L Accounts:

           IMG > Financial Accounting > General Ledger Accounting > G/L Accounts Master Records > G/L Account Creation and Processing > Edit G/L Account (Individual Processing) > Edit G/L Account Centrally (FS00) 

           For SAP R/3 4.0B: IMG > Financial Accounting > General Ledger Accounting> G/L Accounts Master Data > G/L Account Creation > One Step Manual/Automatic (Alternative 3) > Alternative Methods to Create GL Accounts > Create GL Account Manually (FS01) 

                    Create new Tax G/L Accounts for all new Tax transaction keys created above. 

    9. Define Tax Accounts:

           IMG > Financial Accounting > Financial Accounting Global Settings > Tax on Sales/Purchases > Posting > Define Tax Accounts (OB40) 

                    Assign appropriate G/L Accounts to the Transaction keys. 


Change SD Pricing Procedure(s): Applicable from 1st April 2005

           IMG > Sales and Distribution > Basic Functions > Pricing > Pricing Control > Define and assign Pricing Procedure > Maintain Pricing Procedure (V/08) 

           Select the relevant SD Procedure. Add JIVP, JIVC after JLST.

Regards

Kailas Ugale

Former Member
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This message was moderated.

Answers (3)

Answers (3)

BijayKumarBarik
Active Contributor
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Hi,

Concept behind VAT: VAT which is a sale tax behave differently as per business where some time VAT added inventory account (we can say as non-deductable) and other side VAT can be used for Set-Off or Receivable (We can say as Deductable).

You can have two VAT condition types namely as ZVIN (VAT inventoried) & ZVST( VAT Set-Off). Assign NVV key to condition type ZVIN and assign ZTV key {create an accounting key ZTV in t.code: OBCN and keep Posting indic.  2  } to condition type ZVST in tax procedure in OBYZ t.code and  assign to G/L account (VAT receivable) to ZTV accounting key in t.code: OB40.

You should have two separate tax codes(FTXP), one as VI (for VAT inventoried) and another one VS(VAT Set-Off) .Maintain condition record in t.code: FV11 with condition types ZVIN for tax code VI and maintain tax rate and with condition types ZVST for tax code VS and maintain tax rate.

Do transactions for each tax code for creating PO, GR and finally do invoice, you will have difference on accounting entries in each case. 

NOTE:

VAT which are inventoried will affect in MIGO transaction adding VAT amount to Inventory Account and VAT which are Set-Off, it will affect in MIRO transaction by having VAT amount posted to separate G/L account other then G/L for  vendor, GR/IR, excise G/L(if there).

Regards,

Biju K

bsivasankarreddy_reddy
Active Contributor
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hi

vat maintain at different level , what is your tax calculation procedure , taxinj or taxinn

in taxinj , you maintain at formula based it is fixed at ftxp and ftxa, and also maintain condition records for customer tax of UTXJ  Based on customer requirement , check the ovk1, ovk2, ovk3,ovk4 ,

this all tax related ,

taxinn maintain the condition for each types , it is a condition based , so you  maintain records at FV11,  fv11,

Former Member
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Hi,

In OBYZ we will create the condition type and include the same in the taxxinn procedure and in SPRO-LG-Tax on Goods Mvt- India- Basic Settings-Determination of Excise Duty-main defaults

Also --> Condition-Based Excise Determination - Classify conditins (maintain your condition as VAT)

In easy access in FV11 maintain your VAT % against the tax code created

Regards

Ayyallas