MM CIN Service Tax - Reverse Tax Mechanism

[former_member229982]

Hi,

I am trying to address Service Tax - Reverse Tax Mechanism via Tax code Route.

For this I have created six condition types (three conditions for 75% of service tax charged by vendor in invoice & three conditions for 25% of service tax to be paid by the company itself).

Agaist the first three conditions, Account key only has been maintained and for the last three conditions, both Account key and Accrual key has been maintained.

Accordingly I desire the following entry:

Expense                    Dr. 20000

Service Tax input      Dr.   1800

S Tax ECS input       Dr.      36

S Tax SHEC input    Dr.       18

Service Tax Deff.      Dr.     600 (Accrual)

S Tax ECS Deff.       Dr.       12 (Accrual)

S Tax SHEC Deff.    Dr.       6 (Accrual)

Vendor                    Cr. 21854

S Tax Payable        Cr.     636 (Accrual)

However I am getting the follwing entry despite maintaining an Accrual key:

Expense                    Dr. 20000

Service Tax input      Dr.   1800

S Tax ECS input       Dr.      36

S Tax SHEC input    Dr.       18

Service Tax Deff.      Dr.     600 (Accrual)

S Tax ECS Deff.       Dr.       12 (Accrual)

S Tax SHEC Deff.    Dr.        6 (Accrual)

Vendor                    Cr. 22472

Please suggest.

Regards,

Sumit

[kailas_ugale · Accepted solution]

Hi,

check SAP Note:-  1736781-service tax legal changes.

Regards

Kailas Ugale

[former_member229982 · Accepted solution]

Thanks. Will apply and see.

Regards,

Sumit

[Former Member · Accepted solution]

Hi,

  please gothrough this link.

http://www.sapfunctional.com/FI/ST/Index.htm

[former_member229982 · Accepted solution]

I have applied the note and it is working fine.

Now what I want to know is that,

i) How to transfer the amount lying in Service Tax Receivable account automatically to Servie Tax Input account on payment of Service Tax under Reverse Charge Mechanism.

ii) We have created 3 condition types for service tax receivable which is cenvatable. What about cases where service tax receivable needs to be inventorised and not eligible for cenvat? Do we need to create additional 3 condition types and assign inventoried accounting key?

Regards,

Sumit

[Former Member · Accepted solution]

Hi,

Assuming that you have created 9 tax conditions ( 2*3 positive + 1*3 negative). For service tax charged by vendor will be available for credit thru your normal business transaction & same with service tax (which is not charged by vendor but you are liable to pay to Govt. and avail credit for the same).

For this use J2IUN and give g/l accounts assign to abatement tax conditions.

Regards,

[Former Member · Accepted solution]

HI,

For the conditions which you to be inventorised, you need to use different account key that will inventoried the serice tax. Also see that the conditions used for inventories values need to be maintained as non cenvatable,

[sreeharli_tokala]

HI sumit,

to my client now i want to do reverse tax mechanism. can you please give me the configuration documents . and give me the suggestions how to start this concept. i'm new to taxation part.

if you have any document to full fill my requirement please send me @ sreehari.tokala@gmail.com

Thanks & Regards,

Sreehari.

[Former Member]

Hi Sumit,

This is a Service Tax Abatement issue w.e.f. 01.07.2012.

This is a legal change and SAP had already provided the solution for it. Please search with term abatement, I'm sure you will get answer. If not, we will try to resolve.

Regards,