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Service Tax Change-14% for REFX (Quarterly invoicing)

Former Member
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Hi Team,

We have contracts valid from last FY. We have periodic billing/quarterly billing. April, May and June due will be Invoiced at the month of June (Quarterly invoicing). Currently for April and May, the system is considering Service Tax of 12.36% and for items due in June, the system considering 14% service tax.

Since the posting date of the rent is in June 2015 (current period), the new  tax rate of 14% should be applicable even for Apr & May when doing a quarterly invoicing.


Please provide the steps to be taken to resolve this.

Thanks and Regards,

R Rajavelu

Accepted Solutions (0)

Answers (4)

Answers (4)

Former Member
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Hi,

Normally service tax is applicable based on the due date of cash flow line item. In your case if the billing is quarterly (frequency term is 3 months, one cash flow line item for 3 months) and due is in Arrears, then there should not be an issue.

If your frequency is monthly and doing billing in quarterly, i.e. due date for April is 01.04..2015 and for May is 01.052015 and for June is 0106.2015, then system will consider old service tax for April & May and new service tax for June. This is standard behavior, if you want to override this behavior SAP has release one note when i requested SAP when tax increased from 10 to 12%.

You can implement this below note to consider posting date as date for tax determination.

1715078 - Tax date independent of period of service

Rgds,

Srini

franz_posch
Active Contributor
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Hi Srini,

just one additional remark about note 1715078. The purpose of the note 1715078 is to ensure that the tax date is not adapted to the cash flow period.

But still the due date of the cash flow item to be posted is the key date to determine the tax rate.

Example 1:

Tax rate changes with 01.06.2015

Cash flow period is 01.05.2015-31.05.2015

due date: 01.06.2015  <<<

By default the tax date is adjusted to the cash flow period and the tax rate is determined with key date 31.05.2015.

After implementing the BAdI as described in the note the tax rate is determined with key date 01.06.2015.

Example 2:

Tax rate changes with 01.06.2015

Cash flow period is 01.05.2015-31.05.2015

due date: 01.05.2015 <<<

After implementing the BAdI as described the tax rate is still determined with key date 01.05.2015.

In this constellation it is necessary to manually change the due date of the planned cashflow item to 01.06.2015 to get the new tax rate when posting.

Regards, Franz

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Dear Rajavelu,


In customization

End old tax group with old tax code with end date 31.05.2015 and assign new tax code (14%) with tax group valid from 01.06.2015 this activity will control the tax calculation till May @12.36% and from 01.06.2015 @14% with time dependent setting in frequency term.


For calculating of service tax for all billing period @14% create a new tax group with new tax code.

In contract

create new posting parameter> add New tax group >assign new tax group with the condition in which you want tax rate @14%.


Regards

Sudhir

Former Member
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HI Rajavelu,

What entry you have maintained in pricing date tab under control data 2 tab in V/06(defining condition type) if your condition category for service tax condition type is tax than maintain Blank there and if condition category is not tax than maintain A and try.

Former Member
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HI, Thanks for your reply, your solution is valid for the SD module, but we are searching for changes in service tax rate in RE-FX (SAP Flexible Real Estate Management). Please help. Thanks and Regards, R Rajavelu

pardhreddyc
Active Contributor
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Dear,

Point of new tax structure for service tax 14%

Dear,

Hope for service tax codes in tax procedure ZTXINN have validity periods.I suggest you to have new tax structure for 14% service tax code.

Because you need to check for point of taxation based on your scenario of service supply for this as follows:

  1. Service Provision is complete till 31.05.2015 and Invoice raised till 31.05.2015 but Payment received on or after 01.06.2015- 12.36% applicable.

  1. Service complete till 31.05.2015, Invoice raised on or after 01.06.2015 but Payment is received till 31.05.2015 - 12.36%

  1. Service Provision complete till 31.05.2015 and Invoice raised on or after 01.06.2015 and Payment also received after 01.06.2015- 14%

  1. Invoice raised till 31.05.2015 in advance and some part of total consideration has been paid till 31.05.2015 but Service Provision is being done on or after 01.06.2015 -12.36% for such part payment, 14% for balance to be recd.

  1. Entire consideration received till 31.05.2015 but no invoice raised till 31.05.2015 and no service provided -14%

  1. Even if entire service has been provided on or after 01.06.2015 but both payment as well as invoicing has been done till 31.05.2015 then -12.36%

To summarize above parameters ,to make it simple- there are three parameters-

  1. Service provided
  2. Payment received
  3. Invoice raised.

If two parameters before 1.6.2015 then old rate. If two after 1.6.2015 then new rate.

I suggest better have new service tax codes and amend all the pipe line P.Os with new tax codes.

This service tax hits only at the time of MIRO.

Hope this information may help you  little bit.

Regards,

Pardhu

Former Member
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HI, Thanks for your reply, your solution is valid for the SD module, but we are searching for changes in service tax rate in RE-FX (SAP Flexible Real Estate Management). Please help. Thanks and Regards, R Rajavelu