Chapter 15 Input & Output Taxes PDF

CHAPTER 15 INPUT/OUTPUT TAXES
Table of Contents
1 Introduction ........................................................................................................2
1.1 Purpose................................................................................................................2
2 Taxes info at a Glance .......................................................................................2
3 Configuration .....................................................................................................3
3.1 Define Procedure .................................................................................................3
3.2 Define Tax Procedure ..........................................................................................4
3.3 Assign country to calculation procedure ..............................................................5
4 Value Added Tax - Input Taxes .........................................................................5
4.1 Create Input Tax code .........................................................................................5
4.2 Define Tax Accounts for Input Tax codes ............................................................7
4.3 GL Account properties of Tax GL accounts-FS00 ...............................................8
4.4 Post a Vendor Invoice with newly created Tax code –FB60 ................................9
5 Value Added Tax - Output Taxes ....................................................................10
5.1 Create Output tax –FTXP ..................................................................................10
5.2 Define Tax Accounts for Output Tax codes .......................................................11
5.3 GL Account properties of Tax GL accounts-FS00 .............................................12
5.4 Post a customer invoice with new output tax code-FB70 ...................................13
6 Tax reports .......................................................................................................14
1 venkat.emani@yahoo.com
1 Introduction
1.1 Purpose
The purpose of this Configuration document is to:
Provide for effective support after deployment
To enable additions to existing configuration
2 Taxes info at a Glance

Forms of taxes
1. Value added tax (Input tax-purchases & Output tax-sales)
2. Tax on Purchases ( Sales tax/Use tax- not applicable in India)
3. Additional taxes ( Investment-Norway/Clearing tax-Belgium)
4. Withholding tax
Calculation procedure contains

1. Order of steps
2. Condition types
3. Acct key or process key
Calculation methods:
Base amount is including CD is Gross method
Base amount is excluding CD is net method
What tax code does?
1. It calculates tax amount
2. Posts the calculated amount to GL account
3. Adjustments ( +CD or –CD)
4. Tax reports
3 Configuration
3.1 Define Procedure
Every country needs a tax procedure (calculation procedure) assigned to it to perform tax
calculations. R/3 is delivered with pre-configured tax procedures for most countries.
The tax procedure contains:
The order of steps which have to be taken in the tax calculation procedure (the “from step”
indicates where the system is to obtain the amount value for the “step”).
Tax types (condition types) which are valid for the country. The R/3 system is delivered with
required condition types for all types of tax calculations and the tax procedures already
contain the correct condition types.
Account/process keys which contain further specifications and are used for the automatic
account assignment for taxes of a certain type. Account keys have been predefined in R/3
and it is recommended that standard account keys be used.
Condition types are tax calculations that are valid for the country.
The “base amount” is an expense or revenue item.
Via Menus
Financial Accounting (New)  Financial Accounting Global settings (New) -
 Taxes on sales and purchases Basic settings  Check calculation
procedure  Define procedures
Via Transaction Code OBYZ
Double Click on Define procedures (Access sequence and condition types are done in MM module
& SD modules)
3.2 Define Tax Procedure
Click on
Select the procedure and click on Click on
Click on
3.3 Assign country to calculation procedure

Via Menus
Financial Accounting (New)  Financial Accounting Global settings (New) -
 Taxes on sales and purchases Basic settings  Assign Country to
Calculation procedure
Via Transaction Code OBBG
Click on
Note: Only one procedure per country can be assigned. Click on save icon
4 Value Added Tax - Input Taxes

4.1 Create Input Tax code
Via Menus
Financial Accounting (New)  Financial Accounting Global settings (New)
 Taxes on sales and purchases Calculation Define Tax codes for
Sales and purchases
Via Transaction Code FTXP
Input country code
Provide Tax code and press Enter
Provide Tax code description and Tax type
Press Enter
Provide Input Tax Percentage against Acct Key VST
Click on
4.2 Define Tax Accounts for Input Tax codes

Via Menus
 Taxes on sales and purchases Posting Define Tax Accounts
Via Transaction Code OB40
Double click on
Click on and provide Tax ocde and GL account
Click on
4.3 GL Account properties of Tax GL accounts-FS00

Make sure the following parameters are set to Input Tax GL Account
Go to FS00 and select Raw materials account
Click on
4.4 Post a Vendor Invoice with newly created Tax code –FB60
Document simulate Save and observe tax amount posted
5 Value Added Tax - Output Taxes

5.1 Create Output tax –FTXP
Via Menus
 Taxes on sales and purchases Calculation Define Tax codes for
Sales and purchases
Via Transaction Code FTXP
Provide county on prompt and give Output Tax code
Enter the description and tax type. Save
Press Enter and give out put tax percentage. Then Save
5.2 Define Tax Accounts for Output Tax codes

Via Menus
IMGFinancial Accounting (New)  Financial Accounting Global settings
(New)  Taxes on sales and purchases Posting Define Tax Accounts
Via Transaction Code OB40
Double click on
Select Tax code check box
Click on
Provide tax code and GL account number
Click on
5.3 GL Account properties of Tax GL accounts-FS00

Go to FS00 and make sure the below properties are set for Output Tax Account
Go to FS00 and select Sales Revenue account, ensure below properties.
5.4 Post a customer invoice with new output tax code-FB70
Document SimulateSave. Observe output tax amount posted
6 Tax reports
Via Menus
Accounting  Financial Accounting  General LedgerReportingTax
ReportsGeneral Advance Return for Tax on Sales/Purchases
Via Transaction Code S_ALR_87012357
Click on
View summary of Input and output taxes

Chapter 15 Input & Output Taxes PDF

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CHAPTER 15 INPUT/OUTPUT TAXES

Provide for effective support after deployment

To enable additions to existing configuration

2 Taxes info at a Glance

Calculation procedure contains

The “base amount” is an expense or revenue item.

Select the procedure and click on Click on

3.3 Assign country to calculation procedure

4 Value Added Tax - Input Taxes

Provide Tax code and press Enter

Provide Tax code description and Tax type

Provide Input Tax Percentage against Acct Key VST

4.2 Define Tax Accounts for Input Tax codes

Click on and provide Tax ocde and GL account

4.3 GL Account properties of Tax GL accounts-FS00

Go to FS00 and select Raw materials account

Document simulate Save and observe tax amount posted

5 Value Added Tax - Output Taxes

Enter the description and tax type. Save

5.2 Define Tax Accounts for Output Tax codes

Select Tax code check box

Provide tax code and GL account number

5.3 GL Account properties of Tax GL accounts-FS00

Go to FS00 and select Sales Revenue account, ensure below properties.

5.4 Post a customer invoice with new output tax code-FB70

Document SimulateSave. Observe output tax amount posted

View summary of Input and output taxes

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