Service Tax consulting note for the TAXINN Customers:

Requirement:
The requirement for the Service tax credit in India is that the
Service tax credit can be availed only after making the Vendor
payment to the extent of Payment made to Vendor. Similarly the
Service tax should be paid only when you receive the Payment
from the Customer.
Proposed Service tax Solution:
In the existing solution released in note 779512 will accumulate
the Service tax credit in the Interim account and the Service tax
payable will account in the interim account. Please refer the SAP
note 921634 and do the Customizing Changes and code correction
mentioned in the SAP note. You will have to create the GL
accounts with the controls mentioned in the SAP note 921634. The
Service tax credit can be availed when you run the Report
J_1I_RFUMSV50 (RFUMSV50 for ECC Customers) for the Payment
made Invoices.
The following additional Customizing is required for the Sales
transactions.
We assume that the Condition types JSE4 AR Service tax and
JES4
AR ECS on Service tax has been created in SD Pricing
condition and assigned to the SD Procedure with the account key
VS9 AR Service tax and VS0 AR ECS on Service tax created and
assigned in the SD Pricing procedure for the condition types JSE4
and JES4 respectively.

1. Customizing Changes:
1.1 Condition type:
Create two new condition type JSE4
AR Service tax & JES4 AR
ECS on Service tax. Copy the Condition type JIN1 & JIN2 as JSE4

&. Use transaction code OBQ1 for creating the new condition type.
Kindly use the access sequence MWST and not JTAX.

1.2 Account Key:

Define two new account keys VS9 & VS0 same as the SD account
key created. If you are using different account in SD Pricing
procedure then you will have to create the same account key here.
Customizing Path:
SPRO Financial Accounting Tax on
Sales/Purchases Basic Settings Check and Change Settings for
Tax Processing

1.3 Tax Procedure Change:

Include the two conditions JSE4 and JES4 in the TAXINN
Procedure.
Customizing Path:
SPRO Financial Accounting Tax on
Sales/Purchases Basic Settings Check Calculation Procedure
Define Procedures

2. GL Account Creation:
Kindly create 4 GL accounts with the following properties. Two GL
accounts should be created for the Interim account of Service Tax
and ECS on Service Tax and Two GL account for the Final GL
account.

2.1 Interim GL Account Properties:

Only Balance in Local Currency should not be activated. The Tax
Category should be >. The open item management and Line item
display indicator should be active.

2.2 Final GL Account Properties:

Only Balance in Local Currency should not be activated. The Tax
Category should be >. The open item management should not be
active.

3. Tax Code Creation:

You have to create two tax codes for the Service tax setting. One
tax code for posting into the Interim account when you carry out
the Sales transactions. This tax code will not be having any rates
maintained in FTXP.

The final tax code should have the rates maintained.

Assign the Final tax code to the interim tax codes as Target tax
code through FTXP Properties.

4. GL account Assignment:
Assign the Interim GL account for the Interim tax codes and Final
GL accounts to the Final tax codes.
Customizing Path:
SPRO Financial Accounting Tax
Sales/Purchases Posting Define Tax Accounts
Activate the tax code indicator for the Account key.

on

Assign the Posting Key:

The Service tax Interim Tax code is M3 which will post the value
into the interim GL account 24820010. The Service tax Final tax
code is M4 which has been assigned with the Service tax Final GL
account 24820012. When we receive the Payment from the
Customer the Service tax payable will be moved from Interim
Account (24820010) to Final Account (24820012).
The Same setting should be carried for the ECS on Service tax
account key also.
Activate the tax code indicator for the Account key.

Assign the Posting Key:

The ECS on Service tax Interim Tax code is M3 which will post the
value into the interim GL account 24820011. The ECS on Service
tax Final tax code is M4 which has been assigned with the Service
tax Final GL account 24820013. When we receive the Payment
from the Customer the Service tax payable will be moved from
Interim Account (24820011) to Final Account (24820013).
5. SD Condition Record:
Create the condition record for the Service tax and ECS on Service
tax with 12% and 2% with the Interim Tax Code M3 assigned. If
you have already gone live with the Service tax then you may
ensure that the Interim tax code is assigned.

The condition record shown here is only for the reference and it is
not expected to have the same access table. You can have your
own access table to determine the Service tax and ECS on Service
tax rates but ensure that the Interim tax code is assigned.

6. Process flow for Normal Sales Cycle:

The Sales process is like this, you will have Sales order
Sales Order Delivery Billing.

Billing or

When you generate the billing document the Service and ECS on
Service tax payable will be posted into Interim GL account.

Carry out the In-coming Payment receipt through the transaction

F-28.
Once you create the In-coming Payment then you can run the
report J_1I_RFUMSV50 (RFUMSV50 for ECC Customers) for
transferring the Payable from Interim to Final Account.