Skip to end of metadata
Go to start of metadata

OBJECTIVE

This document will detail the configuration required on the SD side to enable computation of Service tax and Education Cess in the output Service order.

PROCEDURE

Initial Steps

Create two new Tax conditions:

  • JSE4
  • JES4.

Steps for creation of Tax Condition is illustrated below

Create new condition types

(Transaction OBYZ)
Path: SPRO - Financial Accounting - Financial Accounting Global Settings - Tax on Sales/Purchases - Basic Settings - Check Calculation Procedure

Select Define Condition Types

  • Select Condition Type JIN1 and Click on Copy as (F6)
    and also provide the Condition type as JSE4 and the Name as "Service Tax".
  • Select Condition Type JIN5 and Click on Copy as (F6) and give the Condition type as JES4 and the Name as "ECS on Service Tax".

Outcome

The two tax conditions,

  • one for Service Tax and
  • the second for Education Cess on Service Tax have now been created.

Create a new tax posting key VS9 and VS0

Path: SPRO - Financial Accounting - Financial Accounting Global Settings - Tax on Sales/Purchases - Basic Settings - Check and Change Settings for Tax Processing

  • Select the Processing Key MW1 and Click on Copy as (F6) and give the Key as VS9 and Name as 'India Service Tax'.
  • Select the Processing Key MW1 and Click on Copy as (F6) and give the Key as VS0 and Name as 'ECS on Service Tax'.

Note: If there are multiple service tax registration numbers, you need to have separate account posting to different GL accounts based on service registration number. This can be done provided a separate tax code is maintained for each service registration number.
To achieve this you need to define a set of 2 separate G/L accounts for service tax and Education CESS on service tax respectively, for every service registration number.
In such a case, please activate multiple accounts posting per tax code as follows:

  • Defining the GL accounts for the Service tax and ECS on Service Tax
    Path: SPRO - Financial Accounting - Financial Accounting Global Settings - Tax on Sales/Purchases - Posting - Define Tax accounts
  • Go to Details of the Transaction VS9 (Service Tax GL account) and enter the Chart of accounts
  • Select the Tax Code Check Box if you want to have Tax Code Specific GL accounts or Blank when the common GL accounts...
  • Click on Posting Keys
  • Enter the 40 as Debit and 50 as Credit.
  • Click on Accounts.
  • Enter the GL codes

If you have tax code specific GL then enter the tax and GL account.
After completing select the VS0 and do the same steps for ECS on Service tax.
A separate account for every tax code can be maintained as follows:
Now maintain different account based on the tax code. Since the tax code will be specific for a plant you can achieve posting to specific account for a plant.
This should be maintained after configuring the tax procedure
Steps are:

  • You have to define the required tax codes
  • Create separate G/L accounts
  • While creating the posting key, please follow the customizing settings given below:
    Path: SPRO - Financial Accounting - Financial Accounting Global Setting - Tax on Sales/Purchase - Basic Setting - Check Calculation Procedure
    Define Procedures:
    Select TAXINJ and click on control data.
    Click on New Entries and add the following two entries in your system
    Add Condition type JSE4 and JES4 respectively at appropriate steps.
    Also ensure to maintain the step from for JSE4 & condition JES4 dependent from JSE4
    You have to assign the accounting key
  • VS9 for JSE4 and
  • VS0 for JES4.
    Changes to Tax Code:
    Path: SPRO - Financial Accounting - Financial Accounting Global Setting - Tax on sales/Purchase - Calculation - Define Tax Codes for Sales and Purchases.
  • Country: IN
  • Enter the Tax code and Tax jurisdiction Code (If it is applicable in your system). Tax jurisdiction Code is not applicable for TAXINN.

Incase of TAXINJ, maintain Tax Code with appropriate Tax Condition %. Enter the 10% for the Condition type JSE4 and 2% for JES4. The % have been changed in the budget announced in 2007 to 12 % for service tax & 3 % for Education Cess.

Changes to Pricing Procedure
Path: SPRO - Sales and Distribution - Basic Functions - Pricing - Pricing Control - Define Condition Types.

  • Select Condition Type JIN1 and Click on Copy as (F6) and give the Condition type as JSER and the Name as "Service Tax".
  • Select Condition Type JIN5 and Click on Copy as (F6) and give the Condition type as JSTE and the Name as "ECS on Service Tax".
    SPRO - Sales and Distribution - Basic Functions - Pricing - Pricing Control - Define and Assign Pricing Procedure - Maintain Pricing Procedures (V/08)
  • Select Pricing Procedure JFACT and click on control data & add the new condition at appropriate steps in the pricing procedure & modify Pricing Procedure calculation as per requirement.
  • Mark both the condition as Manual and Statistical.

SAP Notes related to Service Tax in India:

SAP NOTE NUMBER

DESCRIPTION

Note 1353362

Service Tax Master Note

Note 1391485

Outbound Excise Invoice enhancements for Service Tax

Note 1393506

Service tax enhancements for ARE Reversal process

Note 1392593

Service tax enhancements in Monthly utilization

Note 1393534

Service Category determination & Service tax returns (ST3)

Note 1393460

Update of GAR7 challan information-ST development

Note 1522334

Missing corrections of Service Tax Enhancements

Note 1500389

Change button not enabled in J1IIN utilization screen

Note 1510426

PART2 Entries not generated for excise invoice post-J1IEX

Note 1571186

Changes to Service Tax from Indian Union Budget 2011-2012