Sap Mm How to Link a Tax Procedure to a Pricing Procedure
Customers who have implemented Country Version India (CIN) in the initial stages are using a formula-based tax procedure named 'TAXINJ' which was the initial tax procedure released for India. In TAXINJ, tax codes are used to derive tax rates. Due to multiple Excise duty, Service tax, VAT and CST rates and many variations/exemptions in central/state taxes, TAXINJ customers need to use many tax codes in MM and SD, and customers are running out of tax codes as they have reached the maximum limit of tax codes (2 digits possible). Many tax codes create problems for users, as they need to keep track of several tax codes at master data level as well as transaction level.
There is another tax procedure, TAXINN, which is based on the pricing condition techniques. In TAXINN, tax codes do not play a vital role in rate determination, where other logistics entities such as plant, material, chapter id, vendor, customer, regions and so on are used for tax rate derivation. A seamless migration from TAXINJ to TAXINN was not possible and customers need to foreclose open purchase orders in TAXINJ, and start with a new line item in TAXINN tax codes which is a difficult approach, considering the volume of documents.
Tax procedure migration covers CIN-relevant MM and SD processes in SAP which have taxes and tax code implications. With this solution, SAP would like to propose a feasible migration from TAXINJ to TAXINN. The proposed solution will have an impact on processes such as procurement, sales, job work, stock transfers, returns, excise duty posting transactions, in logistics and financials for goods and services. Non-taxable scenarios would continue without any impact in TAXINN set up also.
Sales Process & Solution Proposal
Order to cash process in India has tax implications. Sale of goods in India is levied excise duty which is a goods movement tax and service provision in India is levied service taxes which are at the time of invoice. All taxes are defined in pricing procedures but unlike procurement, tax code has a minimal role on the SD side. There are state-specific sales taxes such as VAT and CST which are calculated on top of the excise duty for goods.
A tax code is required in condition record of tax condition types'. So in general, excise duties condition records do not have tax codes as they are discount/surcharge in nature, whereas VAT/CST condition types require a tax code.
Major tax relevant sales processes in India are the following:
· Domestic sales
· Sale to external Customer (EXP)
· Dispatch from a plant (STO)
· Sale from a depot (STO)
· Service provision
· Customer Returns
· Dispatch for job work (sub-contract)
· Credit and debit note to customer scenarios
The documents involved which have a tax impact for the above process are the following:
· Sales order
· Goods issues/deliveries
· Outgoing excise/challan postings
· Customer invoices
· Direct A/R FI transactions with taxes
Prerequisites: Ensure that you have performed the following settings:
· Configured TAXINN (with A/R condition types)
· Defined OB40 settings according to customers' requirement
· Changed the tax procedure in OBBG
Since all your pricing procedure's condition types are not changed, the pricing procedure determination and condition types mapping to valuation fields of COPA is not impacted. Configure SD Pricing procedure with access sequences for all set of condition types.
1. Excise Conditions: If customers are also using pricing formula/routine for excise relevant conditions in SD pricing procedure (Control via J1ID), remove the formulas in pricing procedure and configure customers' SD pricing procedures as per the business requirement.
2. Remove condition type 'UTXJ' which is used for various base value determinations, and tax code based rate determination for VAT, CST and Service Tax condition types. These have to be done according to TAXINN set up in SD Procedure, as per customers' business requirement.
3. Maintain required SD relevant access sequence for all (excise, VAT, CST, Service…) tax conditions.
4. Maintain condition records with appropriate tax rates at required access levels in the VK11 transaction for all required (Old & present items) cases for relevant taxes (Excise, Services, VAT, CST...), as per customers' business requirements.
5. Sales tax/Service taxes: In SD, tax codes are required for all output tax condition records (transaction VK11) for respective tax condition types (non-excise).
6. If G/L accounts are maintained based on the tax code in OB40, customers have to verify/update the same with the new TAXINN tax codes (for tax conditions VAT, CST, Service Taxes and so on) as shown in the screenshot below. Customers' need to take a call in this regard based on the requirement.
7. If customers are using alternate VAT G/L account determination functionality, where G/L accounts are maintained based on tax codes in the J_1IT030K_V view, they have to update the same with new TAXINN tax code as shown in the screenshot below. This needs to be done based on customers' requirement.
8. If the billing document was created in TAXINJ and not released to accounting, customers need to carry out the New Pricing Run in billing, so that the TAXINN tax code is considered. Else, they will encounter tax code error 'FICORE 704' during release to accounting.
9. If customers cancel a billing document posted in TAXINJ, they need to carry out the New Pricing Run so that tax code error FICORE 704 will not come up during release to accounting.
Note: Tax calculation in Direct A/R FI transactions are managed with tax codes only Usage of tax codes or condition record for old Sales Order/Invoice to be decided at customers' end based on the requirement.
For any queries please get in touch with me at dinesh.18gbu@gmail.com
Sap Mm How to Link a Tax Procedure to a Pricing Procedure
Source: https://www.linkedin.com/pulse/gst-tax-procedure-migration-taxinj-taxinn-sales-process-dinesh-kumar