reverse service tax mechanism

[former_member193801]

Hi Gurus,

As per Below Screen shot the entry is as follows:

I have configured the reverse service tax mechanism according to the tax code. Everything is going is fine. But the reverse service Tax is deducting the amount from the vendor.

But requirement is, amount should not be deducted. Any help on this is highly appreciated.

Regards,

Ranjith kumar.

[former_member198650]

Hi Rohit,

I think you have not created a positive tax condition in the tax procedure. Due to this it is deducting from vendor account. Here you have to create a positive tax condition in OBQ1 and later assign the condition in the tax procedure with account key. After that maintain the tax code for the condition in FV11. Then when you post invoice the debit/credit entries will post with same amount.

Regards,

Mukthar

[former_member193801]

Hi Mukthar,

I am creating the reverse service tax mechanism.If I create it with positive then it would be debited. Then it won't suffice the service tax mechannism.

Regards,

Rohit.

[former_member198650]

Hi Rohit,

As per service tax mechanism, the same amount will be debited/credited. If you are using w.h.tax then you can post with single w.h.tax code to different accounts with debit/credit. But here you are using sales tax code, so you have to define 2 tax conditions i.e.positive/negative, assign account keys for them and assign the same tax code with tax rates in FV11. Then when you post invoice, then system will post below entry:

Expense A/c Dr 100

Vendor A/c Cr  100

Service tax reverse charge A/c Dr 14

Service tax payable A/c Cr 14

Regards,

Mukthar

[former_member193801]

Hi Mukthar,

I have done the same configuration which you detailed above. But still no luck.Please find the attached screen shot and let me any changes needed.

[former_member198650]

Hi Rohit,

You have to use same percentage for both conditions. But as per your screen shot you are crediting 7 and debiting 14.

Regards,

Mukthar

[former_member193801]

Hi Mukthar,

The client requirement was like that. He wants 50% on Service tax 14%. That is the reason we have configured accordingly.

Everything is flowing perfectly.But the amount is deducting from the vendor i.e Reverse Tax mechanism amount. Attached screen shot for the same.

[former_member198650]

Hi Rohit,

You mean 50% liability stands for company and remaining 50% for vendor. In this case 50% liability books in our books and remaining 50% charge to vendor. In this case you have to create 2 service tax condition with negative/positive sign and one more condition for input service tax condition i.e. normal. After that assign the tax rates for the conditions 7%,-7%,7% respectively. Here the input service tax condition should have assigned the account key which has non-deductible i.e NVV and for remaining 2 account keys should have deductible indicator.

Regards,

Mukthar

[former_member193801]

Hi Mukhtar,

Please find the screen shot and guide me.In the attached screen shot Service Tax Input Receivable (6249.60) is calculating the right with the Tax code SB with 14% on 44,640.00.

The client want reverse service tax mechanism on the amount 6249.60 which is 50% that is 3124.5. I am confused how to map the same in the system.

Regards,

Ranjith kumar.

[Former Member]

Hi Rohit,

Please refer SAP Note 1736781 which specifies about Service Tax legal changes for abatements.

Regards

MG

[former_member198650]

Hi Rohit,

What are the conditions for service tax positive and service tax negative for reverse charge mechanism and normal service tax charge to vendor? Please share it, I will explain how it maintain in FTXP.

Regards,

Mukthar