TAX on Order will not be charged to customer

[former_member211526]

Hi experts,

Need help in setting up the scenario.

Background: I have a requirement where tax is incurred on the transaction but it should not be charged to the customer. Its a free of charge order but we have to pay taxes on this transaction to tax authorities. Customer will not pay the taxes as its a free of charge transaction.

How do i set up the system for this ? Pricing wise I can have taxes calculate before R100 discount. But how will this amount post to accounting ?Plus it should post to an account in such a manner that it will not be due from customer.

When I create a Free of charge invoice with R100 discount nothing is due from the customer. If I charge taxes on this transaction then Taxes are due from customer. Which is not what we want.

Any help is appreciated !

Regards,

Ron

CIN, CST, Tax, pricing, SD, FI

[former_member186385]

Hi,

You can set that tax  condition type as statistical and assign G/L account to hit to accounting

regards,

santosh

[former_member184065]

Dear,

You can set that tax  condition type as statistical and assign G/L account to hit to accounting.

Could you please let me know more info on that statement.

Can Statistical Condition Types hit Accounting ?

Thanks,

Naren

[former_member211526]

I think statistical condition is only used to calculate, display and use it for custom purposes and they dont play a role in posting to accounting.

Anybody ? Any other tips ??

[Shiva_Ram]

Try with the statistical condition with accrual account column. Sometime ago similar issue was discussed in the forum.

Regards,

[former_member184065]

Dear,

Please do what Siva Ram sir said.It is possible to post when you make condition types with Accrual Check Mark in V/06 .

Let me know,If you have any doubts on this.

Thanks,

Naren

[ajitsingh6]

Hi Ron,

In standard accounting when we credit one G.L., we need to debit other one. In this case you are crediting Tax G.L. against which you need to debit Customer Reco Account only thing you can do either ask finance people to write off the debited amount.

Regards,

Ajit K Singh

[stefan_upmeierzubelzen]

Hi Ron,

as it is free of charge: what should be the basis for the tax? Which countries are affected (sending, recieving the goods).

I have the feeling that your are asked to implement a "trick" and not a correct business case.

Could you give me more background information to find a SAP standard solution?

Best regards

Stefan

[former_member184065]

Dear,

Nice Query ,exactly I had same doubt in my mind also.

Thanks,

Naren

[jignesh_mehta3]

Hello Ron,

Since the transaction is Free of Charge, then there will be no posting in Accounts from Invoice. Means there will be no basis for charging Taxes.

Can you kindly explain the business process in detail?

Thanks,

Jignesh Mehta

[former_member211526]

I will try using accruals and see what happens. Thanks !

This is a valid scenario which needs to be set up per suggestions from the tax director. This is a " on behalf of another company" scenario where one company1 is fulfilling order on behalf of other company2 for free of charge.

So company1 now have to pay taxes to authorities which will be reimbursed ultimately by company2.

Thanks for looking into this.

[stefan_upmeierzubelzen]

Hi Ron,

from your details I understand the the full process looks like below

Company 2 has a sales order with a customer

Company 2 places a purchase order at Company 1 to fullfill the sales order with the customer

Company 1 sends an invoice to Company 2 including VAT.

Company 1 has to pay VAT to the sales authorities

no tricks and no accruals needed ...

Best regards

Stefan

[jignesh_mehta3]

Hello Ron,

You cna refer to below document on ho to post Statistical condition value to Accounts:

http://scn.sap.com/docs/DOC-29788

Thanks,

Jignesh Mehta

[Former Member]

Hi,

You can use below solution for your requirement.

ZPIT condition - Price inclusive Tax

ZPNV condition - Price Net Value

Maintain your pricing procedure as below

Step          Condition type              account Key

10                ZPIT                         No account key

20                ZPNV                       Account Key ERL ( It will have a calculation routine to                                                                    automatically calculate ZPIT minus tax)

30                MWST                     Calculate tax on subtotal calculated based on ZPNV  as base                                                    price condition(account key MWS)

This way you will let users enter price inclusive of taxes in the sales order, but will calculate and segregate the Price net value and taxes to be posted separately into relevant GL. You will not post any thing for ZPIT to GL.

Thanks,

Rashpinder

[sri_ram18]

Ron,

Please mark the Condition type as "Accruals" and in Pricing Procedure you can have a different Account Key  with a different G/L Account and don't check it as "Statistical". Customer will not be charged but you can have a better tracking.

Sriram.

[moazzam_ali]

Sriram

Could you please share the accounting entry which will be posted with this? No tax will be charged to customer but it will be posted in accounting. How system will post the debit side of Tax?

Thank$

[moazzam_ali]

Ron Barry

I had a similar requirement in my previous compnay and I controlled it with accruals. What you need to do is already explained by others. I just want to add some more points.

• Mark the condition as accrual in V/06. If you read the F1 help of this field it is self explanatory that if you mark this tick this condition will appear in document as statistical condition.
• Assign two G/Ls in VKOA for this condition with combination of account key. One G/L is for debit posting (Expense G/L or you can say PL statement G/L) and one for credit posting Accrual G/L or balance sheet G/L.
• Now when you will post a document system will debit the Tax Expenses and credit the Tax Payable Liability. When you will pay the Tax system will debit the Tax payable Liability and credit Cash or bank.

Discuss this with your finance guys and see if it is helpful for you. Do let me know in case of more assistance.

Thank$

[former_member211526]

Hi experts,

I am unable to post the tax condition to the two accounts.

These are tax conditions, so they need an OB40 entry to have the tax code.  How can I map tax codes for same condition with same tax code/account key to 2 different accounts ?

This is whats happening now - The invoice does not have any posting related to the tax condition at all. Configuration is as follows -

• I have set tax condition as accruals in V/06
• Then in pric proc in both columns i have maintained same MW1 acct key. I have played with having only 1 acct key in accruals column. It doesnt work.
• Then in VKOA maintained different accounts for MW1 account key in G/L and Prov columns
• And in OB40 I have same G/L mapped to account key with tax codes.
• SCreen Shots below.
• One more thing - if I use a percentage Non tax condition and mark it accruals and enter MW1 in accruals column with VKOA entry in both columns. Then it works as desired. So basically it works for non tax. But when it comes to tax, how can we handle this ?

Thanks !!

V/06

V/06

PRICING PROCEDURE

VKOA

OB40

THANKS !!

[moazzam_ali]

One more thing - if I use a percentage Non tax condition and mark it accruals and enter MW1 in accruals column with VKOA entry in both columns. Then it works as desired. So basically it works for non tax. But when it comes to tax, how can we handle this ?

Your observation is correct. Accrual conditions can't act like taxes. If you are going to use it as accrual condition then it wont work like taxes and in order it wont reflect in Tax field which is under net value field. If condition class is D then it will be a tax condition and tax code settings will be done for that but if you use condition class A with accrual settings then it will work fine without tax codes and tax settings. It will simply create accounting document with expense and liability posting. Tax payable will be your liability which you will be paying later. Unfortunately this is limitation with Tax condition settings. This is what I know about this.

Thank$

[former_member211526]

So how can this be resolved ?

Any other ideas ?

[former_member184065]

Dear,

Ask your FI on this.He may be do directly in G/L accounts.

Thanks,

Nare

[stefan_upmeierzubelzen]

Hi Ron,

I have the feeling that you are in the dead end of the "trick".

Did you discuss my recommendation with finance (see above)? Do you need help with this recommendation?

Best regards

Stefan

[former_member211526]

I checked with Finance people but all they say is my solution is unacceptable. They are not coming up with any ideas on their front.

The reason your proposal will not work is - Company A has to pay taxes to Tax authorities on company A's invoice to customer. Dealing between company A and B is offline - manual posting.

Any other ideas ?

[stefan_upmeierzubelzen]

Hi Ron,

which tax law of which country applies? Is it a domestic sale or an export? Which tax type is relevant (VAT, sales tax, withholding tax, income tax ...?).

I hope to have an idea it I have more details.

Best regards

Stefan

[former_member211526]

Stefan,

This is for Country India (CST) taxes for a domestic FOC order.  Company A is in India who will be fulfilling warranty on behalf of company B (U.S.). Company B will reimburse company A later.

Others:

The issue is not with pricing. Its on the FI side when the invoice posting happens Taxes should not post to customer account instead post it to expense account.

[Shiva_Ram]

Did you raise the issue with SAP?

Regards,

[stefan_upmeierzubelzen]

Hi Ron,

1. do you need to post CST for the sales order of Company A. Which will be paid by company B.
2. Or do you need to post the CST for the sales order of company B wich is free (because of warranty) for the customer?

I assume that 2. is relevant for you. What is the basis for the tax in this case? Is it the stock value of the material sold or the value of the service done by company A? Do you have this information in the sales order or the invoice of this order. At least we need to create a base value to create a finance document with the tax.

In scn I found a similar discusion with the helpful answer: http://scn.sap.com/message/10642835#10642835. Ideally you already find a tax code fullfilling your need.

From my understanding you need

• a tax code with a tax line for the CST posting with reference to "material value, service value" - still haven't a clear picture what the basis will be
• a line with posting indicator NVV with reference to the tax line 100%. This will post to the cost accountRe: Central Sales Tax issue

I recommend to have a look at RF_STEUERINFO to get an overview of the existing tax codes perhaps there is already one which fits or is close to your needs and you could use this as a reference for your own tax code.

As start to find the correct tax code I follow Shiva Ram. In the SAPNet I found 41 notes while searching for "CST india". Nine of them where from this year: 2013!

You need to solve the finance issue first before you can use it in the sales document.

Hope it helps for the next steps. Happy to assist further.

Stefan

[stefan_upmeierzubelzen]

Which tax sheme is used in your system? There is an interesting comparison of TAXINJ and TAXINN: http://wiki.scn.sap.com/wiki/display/ERPLO/Difference+between+TAXINJ+and+TAXINN

Both have lines with CST. The taxcodes are defined based on these shemes. Therefore It is helpful to look for existing CST tax codes and analyse them based on the tax sheme.

[former_member182489]

Ron,

If its Central sales tax , You can mark in Cdn type Accrual and don't mark statistical in SD PP.

Assign GL account in VKOA

Already available in forums .

But normally for Free goods , sales tax wont be applicable. But chance of Excise to capture (if you have taken input credit etc.).

If its rare case happening or minimal value   in an year - cant you try Manual JVs .

check with your FI people and come check - Which way they are ok with .

Let us know . we will try to give a better sol.(Bcoz certain things will be statutory )

thanks

Manu

[Former Member]

Hello Ron,

I'm not sure if you will be okay with this soln. but how about creating an Item category in which you need to set the Billing Relevancy as 'A' and Pricing as 'B'. Now in your SD Pricing Schema after the calculation of your Net Price now use R100 Discount and do the Tax calculation along with your Net Price by taking it as an base.

At 1st Step, there will be in invoice price, at 2nd step other discount conditions if any, at 3rd step you will calculate the Net Price by taking From and To Steps up-till when required by you. At another level you will gonna use R100 condition and at the final step you need to put the Tax Condition and that will take base of that Step where you're calculating Net Price in From value. I'm sure this will work but all you need to do is to play a bit within the calculations with a great patience and yes don't worry as in my company even Taxation People always comes up with void ideas (Hope you'll understand what i mean).

Do hit back with your findings and updates. Thanks and have a good day.

Rgds,

Ammarah.

[Former Member]

Hello Rony

You can do it with other way also..

As this is free of charge sales order, you should have use the different sales document type for this..

For this tax calculation should use one more condition type...( value will be calculated based on the formula  and this condition type is determined based on FOC sales document type )

If its normal sales order this condition type will not determined and if its FOC it will determined

And As other said, you can marked this condition type as statistical with accrual posting..

it will not hampered your existing process and also easy for the testing......

Regards

Sohan

[jpfriends079]

As discussion is related to CIN(Country India Version). Therefore discussion moved to Internationalization and Unicode

People from following spaces, if they are looking for information & expertise related to CIN, you are request to use/utilize Internationalization and Unicode  SCN Space.

• SAP ERP Sales and Distribution (SAP SD)
• SAP ERP SD Sales
• SAP ERP - Logistics Materials Management (SAP MM)
• SAP ERP Financials
  

Thanks

[sri_ram18]

Ron,

Here are couple of links which might be helpful, I know as we are not talking about transactions in European Countries but still thought of sharing,

http://help.sap.com/saphelp_46c/helpdata/En/35/26b815afab52b9e10000009b38f974/content.htm

http://help.sap.com/saphelp_470/helpdata/en/96/8b329043ce11d189ee0000e81ddfac/content.htm

Regards,

Sriram.