SAP Tax Rate Change

[Former Member]

Hi,

We have Service PO  with existing Service Tax Code (14%) and 75% of Order quantity's payment have made, but due to budget the Service Tax rate need to change (14.5%).

What should better way to change the Tax Rate ?

[sanilbhandari]

Hi

I would suggest to create a new tax code with the required rates and while booking the invoice use the new tax code.

Thanks & regards

Sanil Bhandari

[Former Member]

As per your reply, if we have tax code A1 (14%) in PO, then we create another tax code for 14.5% i.e. A2 and we have to use A2 tax code during invoice (MIRO)...

Is it correct process???

[sanilbhandari]

Hi Anil

There may be multiple fiscal years when a PO is serviced. Would you modify a PO everytime, if there is a change in tax rate. The tax rate is as on applicable basis. So in your case, you can change the tax code during invoice verification in MIRO. I do not see any issues in that.

Regards

Sanil Bhandari

[Former Member]

When we insert Tax Code (14%) in PO, tax amount (Condition type - JEXS) load on Material Price during MIGO process.

Now as you suggested, we have to change Tax code (14.5%) during MIRO process.

Then this tax amount of 14.5% should not load on Material price during MIGO and Vendor got the updated tax amount (due to Tax code change in MIRO).

Is it not discrepancy in process?

[sanilbhandari]

Hi

If the condition type is same, in such a case, the difference of 0.5% will get loaded on inventory as well in your case if stock is available or to price difference if stock is not there. So there is no discrepancy in process. Any ways, you need to book taxes as per the law at current rates and not as per PO, which may be long term in nature as well. I do not see any issues there.

Regards

Sanil Bhandari

[Former Member]

We have already use Service Tax 14.5% during MIRO process.

In below screen, Service PO was created for 12 Months, showing 4 Service Entry Sheet with MIRO documents respectively.

Now after it, Material Consumption G/L showing the below values....

Increased amount of .5% is showing of Rs. 512.50 (highlighted row).

Please confirm the system behaviour is correct?

[sanilbhandari]

Hi Anil

This is the correct behavior if your are inventorizing the tax part to inventory or expensing it out on the Expense GL. Any differential amount at the time of invoice will get booked that way.

Regards

Sanil Bhandari

[Former Member]

Please clear one more thing that if we insert Tax Code 14% in PO and change tax code during MIRO processing to 14.5%...then how end user understand it at the time of Purchase Register Report.

Because end user understand that Tax code should come from PO then it should be same on both sides (PO & MIRO).

Thanks for your valuable support.

[sanilbhandari]

Hi

You have to explain the accounting to your users. So this is something of your consulting skills.

I do not know the logic of your purchase register since it may be a custom report. If it is a standard T Code you are referring, please specify the T Code you are looking at , so that I can help you on the same.

Thanks & Regards

Sanil Bhandari

[Former Member]

We are using custom report for Purchase Register because there is no any Standard SAP report for Purchase Register .... PR --> PO --> MIGO --> MIRO.

[sanilbhandari]

In that case, you have to explain to users how it will show up in your custom report since I have no insight into logic of the same. The accounting entries which the system is showing is an expected standard SAP behavior and logically correct as well

Thanks & regards

Sanil Bhandari

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