Sap S4/Hana SD: Goods & Service Tax

SAP S4/HANA SD
-----------------------------------------------------------------------------------------------------------------------------------------------
*GOODS & SERVICE TAX*

GOODS & SERVICE TAX
INTERODUCTION
Generally the tax calculation procedure is differs from country to country. According to the
government policy and the revenue resources, it levies the tax on goods. For the purpose of tax
each country develops its own structure of taxation independently.
While implementing the project, we must understand the tax structure of the country and has to
apply the same to our project as per the business requirement.
SAP is standard software; hence it has not all developed for any country’s requirement specially.
It has globally developed. It will be configured or design separately for that company which
company will use it for their business requirement.
GST (Goods & Service Tax) is applicable in India from July 1, 2017 onward. There are two types of
taxes, one is input tax and other one is output tax. Input tax means the taxes on purchase of
goods or services and Output tax means the taxes on sales of goods or services.
With the help of the condition types and processing keys, the SAP creates tax procedure for the
country. For processing the Input tax and Output tax, we have to use the tax calculation
procedure to apply the relevant taxes. Condition types “MWVS” is for Input tax and “MWAS” is for
Output tax which is standard in SAP. We can create new condition types by using “Copy As” of
standard condition type “MWVS” for Input and “Copy As” of standard condition type “MWAS” for
Output.
GOODS & SERVICE TAX
INPUT TAX OUTPUT TAX
The tax on purchase of The tax on sales of goods

goods or services. or services.
1. Deductible
2. Non-Deductible
1. Deductible: The tax for which, we can take tax credit or benefit / Mod vat / Cen vat that is deductible.
2. Non-deductible: The tax for which, we cannot take tax credit that is non-deductible.
Component of GST
S. No. Input GST Output GST
1 SGST-Input SGST-Output
2 CGST-Input CGST-Output
3 IGST-Input IGST–Output
4 UTGST-Input UTGST-Output
5 RCM-CGST-Input
6 RCM-SGST-Input
7 RCM-IGST-Input
NOTE:
1. SGSG → State Goods & Service Tax
2. CGSG → Central Goods & Service Tax
3. IGSG → Integrated Goods & Service Tax
4. UTGST→ Union Territory Goods & Service Tax
5. RCM→ Reverse Charge Mechanism
 If the state of “Union Territory” then we take UTGST instead of SGST.

 RCM applicable on purchase of goods or services. If we purchase of goods or services from non-
registered vendor then “RCM” will be applicable.
 Tax rate: 0%, 5%, 12%, 18%, 28%
Example- This is interstate tax, if we sale or purchase of goods or services

IGST = 5% with another state of customers or vendors then it will be applicable.
It means the sellers and the purchasers both are in different state
then it will be applicable.
SGSG = 2.5% This is intrastate tax, if we sale or purchase of goods or services with
= 5%
CGST = 2.5% same state of customers or vendors then it will be applicable. It
means the sellers and the purchasers both are in same state then it
will be applicable.
This is intrastate tax, if we sale or purchase of goods or services

UTGSG = 2.5%
= 5% with same state of customers or vendors and the state is under
CGST = 2.5%
“Union Territory” then it will be applicable. It means the sellers and
the purchasers both are in same state and the state is under
“Union Territory” then it will be applicable.
Purchase Process
1. Deductible Tax = It carry the rate of GST, it means we will take input credit.
Entry – Goods Receipt
S. No. Particulars Dr. Cr.
1 Raw Material Inventory A/c 1,00,000.00
2 GR/IR Clearing A/c 1,00,000.00
Total = 1,00,000.00 1,00,000.00
Entry – Invoice Receipt
2 Input GST A/c 18,000.00
3 Vendor A/c 1,18,000.00
Total = 1,18,000.00 1,18,000.00
2. Non-Deductible Tax: It not carry the rate of GST, it means we will not take input credit.

Total = 1,18,000.00 1,18,000.00
3 Vendor A/c 1,00,000.00
Total = 1,18,000.00 1,18,000.00
3. Non-deductible tax in RCM case: If we purchase of goods or services from non-registered vendor
then RCM (Reverse Charge Mechanism) will be applicable.

Total = 1,00,000.00 1,00,000.00
3 Vendor A/c 1,00,000.00
Total = 1,18,000.00 1,18,000.00
Sales Process
In case of sales order, we select output tax code. No accounting entry for sales order (SO).
Billing TC “VF02”
Entry – Sales Invoice

1 Customer A/c 1,18,000.00
2 Sales/Revenue A/c 1,00,000.00
3 Output GST A/c 18,000.00
Total = 1,18,000.00 1,18,000.00
Entry – Payment Received
1 Customer A/c 1,18,000.00
2 Incoming Bank A/c 1,18,000.00
Total = 1,18,000.00 1,18,000.00

Entry – GST Payment
1 GST Payable A/c 2,40,000.00
2 GST Receivable A/c 1,80,000.00
3 Outgoing Bank A/c 60,000.00
Total = 2,40,000.00 2,40,000.00
Note:
 We maintain the GST registration number in business place (state). For every state the GST
registration number of the company will be single.
 For each registration number, we create separate business place in the system for GST return
and reporting purpose.
 Material Master Data related changes: HSN code will assign in Material Master Data in control
field of foreign trade tab.
 Vendor Master Data related changes: Vendor GST registration number will assign in Vendor
Master Control Data in tax No. 3 field.
 Customer Master Data related changes: Customer GST registration number will assign
Customer Master Control Data in tax No. 3 field.
CONFIGURAION
CHECK & CHANGE SETTINGS – TC “OBCN”
Purpose: In this step, we create the tax account key. Those tax conditions which will display or which will
post in separate GL account. Account keys are used to determine the GL account.
Path: SPRO → IMG→ Financial Accounting (New)→ Financial Accounting Global Settings (New)→ Tax
on Sales & Purchase→ Basic Settings→ Check & Change Setting for Tax Processing
Define Tax processing key

S. No. Input tax processing key Output tax processing key
1 IIC Input CGST IOC Output CGST
2 IIS Input SGST IOS Output SGST
3 III Input IGST IOI Output IGST
4 IIU Input UTGST IOU Output UTGST
5 NVV Nondeductible Tax
- Click on Check & Change Setting for Tax Processing

- Execute
- New Entry
- For “Input” tax
3 Digits tax
processing key Tax type: 1 for Output
tax & 2 for Input tax
Input CGST
Posting Indicator: 2 for separate

Tax type- 2 line items. For posting indicator the
system will credit the collected
Posting Indicator - 2 taxes either separate GL account of
adding to the basic cost.
- Process: IIC
- Description: Input CGST
- Tax Type: 2
- Posting Indic.: 2
↓
Enter – Save
↓
Prompt for customizing request
↓
– Create Request – to click
↓
Short Description: IIET- GST Configuration
↓
Enter – Enter
↓
√ - Data was saved
↓
- Next Entry - to click
↓
Process: IIS
Description: Input SGST
Tax Type: 2
Posting Indic.: 2
↓
Enter – Save
↓
↓
↓
Process: III
Description: Input IGST
Tax Type: 2
Posting Indic.: 2
↓
Enter – Save
↓
As per business requirement, similarly we define tax processing key for the state of “Union Territory”
↓
↓
Process: IIU
Description: Input UTGST
Tax Type: 2
Posting Indic.: 2
↓
Enter – Save
↓
↓
↓
For “Output” tax
3 Digits tax Tax type: 1 for Output

processing key tax & 2 for Input tax
Output CGST Posting Indicator: 2 for

separate line items
Tax type- 1
Posting Indicator - 2
- Process: IOC
- Description: Output CGST
- Tax Type: 1
- Posting Indic.: 2
- Enter - Save
- √ - Data was saved
- - Next Entry - to click

- Process: IOS
- Description: Output SGST
- Tax Type: 1
- Posting Indic.: 2
- Enter – Save
- - Next Entry - to click
- Process: IOI
- Description: Output IGST
- Tax Type: 1
- Posting Indic.: 2
- Enter – Save
Note: Tax processing keys are useful to process the collected tax amount to be posted in General Ledger
accounts. The definition of this processing keys, the system either credit the amount to separate GL
accounts or credit back to the respective GL accounts only.
CHECK CALCULATION PROCEDURE – TC “OBYZS”
Purpose: In this step, we define condition types and tax calculation procedure. Condition types represent
the tax element and tax calculation procedure is a tax calculation formula where we define the base
amount of each tax element.
on Sales & Purchase→ Basic Settings→ Check Calculation Procedure.
Check Calculation Procedure

↓
Execute
We will do one by one followings activities -
A. DEFINE CONDITION TYPES

B. DEFINE PROCEDURES
A. Define Condition Types:
Condition types represent the tax elements. Condition types “MWVS” is standard for Input tax and
“MWAS” is standard for Output tax, which predefined in the SAP system. We will copy from “MWVS” for
making new Input condition type and copy from “MWAS” for making new Output condition type.
S. No. Condition type for Input tax Condition type for Output tax
1 IICG Input CGST IOCG Output CGST
2 IISG Input SGST IOSG Output SGST
3 IIIG Input IGST IOIG Output IGST
↓
Define Condition Types
Double Click
Condition type for “Input” tax
↓
Position – to click
↓
Condition type – MWVS
↓
Enter
↓
MWVS – to select
↓
- Copy As - to click
↓
We will change 4 digit “IICG”
code for condition type as per
company’s identification
Input CGST
↓
Enter-Save
↓
↓
Select –customizing request “IIET – GST Configuration”
↓
Enter
↓
↓
Now select – IICG - Input CGST
↓
↓
We will change 4 digit “IISG”

Input SGST
↓
Enter - Save
↓
↓
Now select – IISG - Input SGST
↓
↓
↓
We will change 4 digit “IIIG”

Input IGST
↓
Enter - Save
↓
Now, we will define “Condition type” for Output tax
↓
Position – to click
↓
Condition type – MWAS
↓
Enter
↓
MWAS – to select
Condition type for “Output” tax
↓
We will change 4 digit “IOCG”

Output CGST
↓
- Enter – Save
- Select –customizing request “IIET – GST Configuration”
- Enter
- Now select – IOCG - Input CGST
- Now select – IOCG - Input CGST
↓
We will change 4 digit “IOSG”

Output SGST
- Enter-Save
- Select – IOSG - Output SGST
↓
We will change 4 digit “IOIG”

Output IGST
- Enter-Save
B. Define Procedure:
The tax calculation procedure is a tax calculation formula, which we define the bas amount of each tax
element and assign the account key with tax element.
TAXINN is a standard tax procedure, which is pre-defined in SAP system. We will copy with reference of
tax procedure TAXINN, after copy of this procedure we will change procedure and description and save it.
Steps Cond. type Description From To Acc. Key
100 BASB Base Amount-Input ------ ------ --------
150 IICG Input CGST 100 100 IIC
160 IISG Input SGST 100 100 IIS
170 IIIG Input IGST 100 100 III
180 IIUG Input UTGST 100 100 IIU
500 BASI Base Amount-Output ----- ----- ----------
550 IOCG Output CGST 500 500 IOC
560 IOSG Output SGST 500 500 IOS
570 IOIG Output IGST 500 500 IOI
580 IOUG Output UTGST 500 500 IOU
TC-OBYZ
↓
Define Procedure
Double Click
Tax Calculation Procedure ↓
BY COPY OF “TAXINN” Position – to click
↓
Procedure – TAXINN
↓
Enter
↓
Select – TAXINN
↓
↓
Procedure – TAXIN
Description – Tax Procedure –India – IIET
↓
Enter
↓
Copy all – to click
↓
Enter
↓
Copies no. of entry 1
↓
Save
↓
↓
Now we will select – TAXIN- Tax Procedure-India-IIET
↓
- Control - Double click
↓
↓
New Entry
↓
Steps Cond. type Description From To Acc. Key

100 BASB Base Amount-Input ------ ------ --------
150 IICG Input CGST 100 100 IIC
160 IISG Input SGST 100 100 IIS
170 IIIG Input IGST 100 100 III
180 IIUG Input UTGST 100 100 IIU
500 BASI Base Amount-Output ----- ----- ----------
550 IOCG Output CGST 500 500 IOC
560 IOSG Output SGST 500 500 IOS
570 IOIG Output IGST 500 500 IOI
580 IOUG Output UTGST 500 500 IOU
↓
Enter – Save
↓
↓
Back to click for see the details
Note: We can use any unused numbers between 1- 999 for step for calculation of tax. Condition type
“BASB” use for base amount of Input tax and “BASI” use for base amount of Output tax.
ASSIGN COUNTRY TO CALCULATION PROCEDURE – TC “OBBG”
Purpose: In this step, we assign tax calculation procedure with country “India” or for whichever country
we defined tax calculation procedure. Assign country to tax calculation procedure for calculating the tax
as per tax law of that country, which tax calculation formula we designed in tax procedure.
on Sales & Purchase→ Basic Settings→ Assign country to calculation procedure.
Assign Country to Calculation Procedure

↓
Execute
↓
Position – IN
↓
Enter
↓
Country Name Procedure
IN INDIA TAXIN
↓
Save
↓
Select customizing request – IIET GST Configuration
↓
Enter
↓
DEFINE TAX CODES FOR SALES AND PURCHASES – TC “FTXP”
Purpose: In this step, we define the tax codes for sales and purchases. Tax code carry the % rate of tax,
it is two character alpha numeric codes.
S.No Input Tax Codes Output Tax Codes

1 V0 Input Tax A0 Output Tax
2 V1 Input IGST@5% A1 Output@5%
3 V2 Input (CGST@2.5%+SGST@2.5%) A2 Output (CGST@2.5%+SGST@2.5%)
5 V4 Input (CGST@6%+SGST@6%) A4 Output (CGST@6%+SGST@6%)
on Sales & Purchase→ Calculation→ Define Tax Codes for Sales and Purchases.
Define Tax Codes for Sales and Purchases

↓
Input Tax Codes Execute
↓
Enter
↓
Tax code – V1
↓
Enter
↓
V1 – Input IGST@5%
Tax type: V – Input tax
↓
Enter
↓
Tax type Acc. Key Tax Rate in % Level From Level Cond. Type
Input IGST III 5,000 170 100 IIIG
↓
Enter
↓
Save
↓
√ - Tax code V1 was created
Tax code – V2
↓
Enter
↓
V2 – Input (CGST@2.5%+SGST@2.5%)
↓
Enter
↓
Input CGST IIC 2.500 150 100 IICG
Input SGST IIS 2.500 160 100 IISG
↓
↓
Enter
↓
Save
↓
Similarly we will create following tax code for Input tax.
Tax code – V3
↓
Enter
↓
V3 – Input@12%
↓
Enter
↓
↓
Enter
↓
Save
↓
Tax code – V4
↓
Enter
↓
V4 – Input (CGST@6%+SGST@6%)
↓
Enter
↓
↓
Enter
↓
Save
↓
Tax code – V5
↓
Enter
↓
V5 – Input@18%
↓
Enter
↓
↓
Enter
↓
Save
↓
Tax code – V6
↓
Enter
↓
↓
Enter
↓
↓
Enter
↓
Save
↓
Tax code – V7
↓
Enter
↓
V7 – Input@28%
↓
Enter
↓
↓
Enter
↓
Save
↓
Tax code – V8
↓
Enter
↓
↓
Enter
↓
↓
Enter
↓
Save
↓
↓
Now we will create Output Tax Codes
Tax code – A1
↓
Enter
↓
A1 – Output IGST@5%
Tax type: A – Output tax
↓
Enter
↓
Output IGST IOI 5,000 570 500 IOIG
↓
↓
Enter
↓
Save
↓
√ - Tax code A1 was created
Tax code – A2
↓
Enter
↓
A2 – Output (CGST@2.5%+SGST@2.5%)
↓
Enter
↓
Output CGST IOC 2.500 550 500 IOCG
Output SGST IOS 2.500 560 500 IOSG
↓
Enter
↓
Save
↓
Similarly we will create following tax code for Output tax.
Tax code – A3
↓
Enter
↓
A3 – Output@12%
↓
Enter
↓
↓
Enter
↓
Save
↓
Tax code – A4
↓
Enter
↓
A4 – Output (CGST@6%+SGST@6%)
↓
Enter
↓
↓
Enter
↓
Save
↓
Tax code – A5
↓
Enter
↓
A5 – Output@18%
↓
Enter
↓
↓
Enter
↓
Save
↓
Tax code – A6
↓
Enter
↓
A6 – Output (CGST@9%+SGST@9%)
↓
Enter
↓
- Enter
- Save
- √ - Tax code A6 was created
- Tax code – A7
- Enter
- A7 – Output@28%
- Tax type: A – Output tax
- Enter
- Enter
- Save
- √ - Tax code A7 was created
- Tax code – A8
- Enter
- A8 – Output (CGST@14%+SGST@14%)
- Tax type: A – Output tax
- Enter
↓
Enter
↓
Save
↓
CREATE GL A/C FOR INPUT TAX & OUTPUT TAX – TC “FSOO”
Purpose: In this step, we will create GL Accounts for Input tax and output tax.
TC-FS00
↓
Enter
↓
– Create New – to click
↓
GL Account – 400001
Company Code - IIET
↓
Enter
↓
Type/Descriptions
Account Group – Taxation (This is not standard; you can select as per your configuration which account
group you have define for Tax GL).
– Balance sheet account
Short Text – Input CGST A/c
GL Acc. long text – Input CGST Account
↓
↓
Control Data – to click
Control Data
Account currency – INR (It is company code currency, company code currency is known as local
currency. Any company code currency/local currency will be selected by default).
– Only balance in local currency - (It will be selected in those GLs for which we want to see the balance
in local currency)
Tax category – (-) Input tax (It will be selected for Input tax GL account i.e. CGST, SGST & IGST)
Tax category – (+) Output tax (It will be selected for Output tax GL account i.e. CGST, SGST & IGST)
– Posting without tax allowed – (It will be tick for without tax posting)
– Open item management – (It will be selected in those GLs which needs to be clear/nullify/paid in
future.
– Line item display – (It will be selected in those GLs which we want to see the separate transaction
(line items) in GL line items report.
Sort key – 001 (This sort key is posting date, it is use to sort the line items. You can use any sort key as
per your requirement).
↓
Create/bank/interest – to click
Create/bank/interest
Field Status Group – G014 -Taxation (This is not standard; you can select as per your configuration which
field status group you have define for Tax GL).
↓
Similarly we will create following GL A/c

- Input SGST A/c – 400002
- Input IGST A/c – 400003
- Output CGST A/c – 410001
- Output SGST A/c – 410002
- Output IGST A/c – 410003
↓
Enter – Save
↓
√ - Data saved
DEFINE TAX ACCCOUNT – TC “OB40”
Purpose: In this step, we will assign tax code with GL accounts in which GL we want to post the tax
amount separately.
on Sales & Purchase→ Posting→ Define Tax Account
Define Tax Accounts

↓
Execute
↓
↓
Input CGST – IIC
Double click
↓
Chart of Account - IIET
↓
Enter
↓
Tax Code -
↓
↓
Posting Key – to click
↓
Message – Do you want to save the data first? “YES, NO, CANCEL”
↓
↓
YES
↓
Posting key – to click
↓
Debit – 40
Credit – 50
↓
Accounts – to click
↓
↓
YES
↓
↓
Enter
↓
TC Account
V2 400001
V4 400001
V6 400001
V8 400001
↓
Enter
↓
Save
↓
↓
Enter – √ - Data saved
Similarly we will assign one-by-one tax processing key with GL Account for Input tax
Input SGST – IIS

Double click
↓
↓
Enter
↓
Tax Code -
↓
↓
↓
YES
↓
↓
Debit – 40
Credit – 50
↓
↓
↓
YES
↓
↓
Enter – Enter
↓
TC Account
V2 400002
V4 400002
V6 400002
V8 400002
↓
Enter - Save
↓
↓
Enter - √ - Data saved
Input IGST – III

Double click
↓
↓
Enter
↓
Tax Code -
↓
↓
↓
YES
↓
↓
Debit – 40
Credit – 50
↓
↓
↓
YES
↓
↓
Enter
↓
TC Account
V1 400003
V3 400003
V5 400003
V7 400003
↓
Enter - Save
↓
Select customizing request– IIET GST Configuration
↓
Similarly we will assign one-by-one tax processing key with GL Account for Output Tax.
TC “OB40”
↓
↓
Output CGST – IOC
Double click
↓
↓
Enter
↓
Tax Code -
↓
↓
↓
↓
YES
↓
↓
Debit – 40
Credit – 50
↓
↓
↓
YES
↓
↓
Enter
↓
TC Account
A2 410001
A4 410001
A6 410001
A8 410001
↓
Enter - Save
↓
↓
Output SGST – IOS
Double click
↓
↓
Enter
↓
Tax Code -
↓
↓
↓
YES
↓
↓
Debit – 40
Credit – 50
↓
↓
↓
YES
↓
↓
Enter
↓
TC Account
A2 410002
A4 410002
A6 410002
A8 410002
↓
Enter - Save
↓
↓
Output IGST – IOI
Double click
↓
↓
Enter
↓
Tax Code -
↓
↓
↓
YES
↓
↓
Debit – 40
Credit – 50
↓
↓
↓
YES
↓
↓
Enter
↓
TC Account
A1 410003
A3 410003
A5 410003
A7 410003
↓
Enter - Save
↓
↓
ASSIGN TAX CODE TO COMPANY CODES
Purpose: If the tax rate will not be reflected that screen after creating the tax codes by TC “FTXP” In this
case we will assign tax codes directly to the company by below path.
Path: SPRO→ IMG→ Logistics General→ Tax on Goods Movement→ India→ Basic Settings→
Determination of Excise Duty→ Condition Bases Excise Determination→ Assign Tax Code to Company
↓
Assign Tax Code to Company Codes
↓
Execute
↓
New Entry
↓
Company Code Tax Codes Company Code Tax Codes
IIETT A1 IIETT V1
IIETT A2 IIETT V2
IIETT A3 IIETT V3
IIETT A4 IIETT V4
IIETT A5 IIETT V5
IIETT A6 IIETT V6
IIETT A7 IIETT V7
IIETT A8 IIETT V8
↓
Enter
↓
Save
↓
Select customizing request – IIET – GST Configuration
↓
Enter
↓
OR
We will assign tax codes to company code by TC “FV11”

↓
TC “FV11”
↓
Condition Type – IICG
↓
↓
Enter
↓
Country – IN
↓
Company Code: IIET
Tax Code: A1
↓
↓
Enter – Save
↓
Enter
↓

Sap S4/Hana SD: Goods & Service Tax

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SAP S4/HANA SD

*GOODS & SERVICE TAX*

GOODS & SERVICE TAX

INPUT TAX OUTPUT TAX

The tax on purchase of The tax on sales of goods

 If the state of “Union Territory” then we take UTGST instead of SGST.

Example- This is interstate tax, if we sale or purchase of goods or services

This is intrastate tax, if we sale or purchase of goods or services

Entry – Goods Receipt

Entry – Goods Receipt

Entry – Sales Invoice

Total = 1,18,000.00 1,18,000.00

CHECK & CHANGE SETTINGS – TC “OBCN”

Define Tax processing key

- Click on Check & Change Setting for Tax Processing

Posting Indicator: 2 for separate

3 Digits tax Tax type: 1 for Output

Output CGST Posting Indicator: 2 for

- - Next Entry - to click

Check Calculation Procedure

We will do one by one followings activities -

A. DEFINE CONDITION TYPES

A. Define Condition Types:

We will change 4 digit “IISG”

We will change 4 digit “IIIG”

We will change 4 digit “IOCG”

We will change 4 digit “IOSG”

We will change 4 digit “IOIG”

Steps Cond. type Description From To Acc. Key

Assign Country to Calculation Procedure

S.No Input Tax Codes Output Tax Codes

Define Tax Codes for Sales and Purchases

Similarly we will create following tax code for Output tax.

Similarly we will create following GL A/c

Define Tax Accounts

Input SGST – IIS

Input IGST – III

We will assign tax codes to company code by TC “FV11”

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