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Service Tax Change

Former Member
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Dear All,

Service tax in india got changed wef 1st June 2015.We have done the config settings so that services from June to be taxed @ 14% instead of previous 12.36%.

But as per GOI notification even though any service rendered before June 2015 and getting invoiced on after June 2015 should be charged at 14%.We have got services rendered in April,May months which is getting invoiced in June only.But as per system config posting is getting done at 12.36%.But the requirement is to get it posted with 14%.How the same can be achieved?

Thanks,

Ebin

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Answers (2)

Answers (2)

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Hi,

The tax handling occurs in RE-FX using tax types and tax groups that are assigned the relevant valid tax code over time. The contracts and the contract conditions contain only the tax type and tax group which is link with the posting key in posting parameter tab.

The following describes in detail the steps required for a change in the service tax rate from 12.36% to 14% on June 01, 2015 as an example.

Service Tax Change Impact on REMS and process to use new tax code

  1. Changes in Tax group with time dependent (tax code V7=12.36 %, R0=14%)
  2. Tax Group FULL01/V7 valid till 31.05.2015
  3. Tax Group FULL01/R0 valid from 01.06.2015

Impact on REMS contract

All the contract which billing start date is from 01.06.2015 new tax R0 will be applied automatically

Standard Behavior (this will not impact on 1Q if posting already done)

E.g. Condition start date 01.04.2015 to 31.03.2016, frequency 3M

1Q 01.04.2015 to 30.04.2015 Tax calculate @12.36% because billing start date is before 01.06.2015

2Q 01.07.2015 to 30.09.2015 Tax calculate @14% because billing start date is after 01.06.2015

3Q & 4Q Tax also will be calculate @14% because billing start date is after 01.06.2015

E.g. Condition start date 01.04.2015 to 31.03.2016, frequency 1M

1st Month Tax applicable @12.36% because billing start date is before 01.06.2015

2nd Month Tax applicable @12.36% because billing start date is before 01.06.2015

3rd Month Tax applicable @14% because billing start date is after 01.06.2015

4-12th month Tax applicable @14% because billing start date is after 01.06.2015


For billing @14% tax rate, for any billing period create a new tax group with tax code (14%) without time dependent and assign this code to new posting parameter with new condition or copy existing condition with the start date from which new tax code need to apply.


Regards

Sudhir

bowen_cao
Contributor
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Dear Ebin,

Please check below note for example:

952495 -  RE-FX: Sales tax change: Steps to take

Regards,

Bowen