TAX CONFIGURATION
Nikhil N Borkar
INDEX
1 Condition Type
2 Define Account Key
3 Define Procedures
4 Assign Country Code to Calculation
5 Define Tax Codes for Sales and Purchases.
6 Define Tax codes for non Taxable Transactions
7 Assign Tax Code For Non Taxable Transaction
8 Create Input And Output G/L
9 Define Tax Account
10 Define Tax Code Selection:
Why do we need tax procedure?
This is legal requirement by the government we need to pay tax whatever we gain ,some
percentage of tax we have to pay. Wherever you’re doing operation we are abide by the countries
local rules and regulation tax is one part.
Input tax: Purchases
Output Tax: Sales
Input tax is considered as an asset and output tax is considered as an liability
Input tax credit is an asset because we have already paid the amount of tax to the supplier of the
goods and in future when we have to pay tax on our sales we can utilise the credit by writing off the
amount payable from this account.
coming to output tax it is nothing but tax paid on sales that is on those items which are sold out for those
we are liable to pay tax therefore it is considered as liability.
In India we will have three types of GST “Goods and Service Tax” :
1)CGST: Central Goods and Service Tax
2)IGST: Integrated Goods and Services Tax
3)SGST: State Goods and Services Tax
1)BASIC SETTINGS:
• Check calculation Procedure
1: Condition type
Condition type is defined as specific features of daily pricing activities in a SAP system. Using the
condition type, you can also put different condition types for each pricing, discounts on goods, tax
and surcharge that occurs in business transactions.
Menu Path: SPRO > IMG > FI Global setting > Tax on sales/ purchase > Basic setting
Step 1: You can go by T-code also OBYZ
Step 2: First we create double Click on Condition type
Step3: click on mew entries
Step4: update following fields we are creating for input GST like wise we have to create same for Output
GST
Condition Type: Give 4 Alphanumeric code
Access key : Type MWST
Control Data1:
Condition class: D Taxes
Calculation Type: A Percentage
Condition Category: D Tax
After that Click on Save button
Like wise You have to create for Input & Output do same configuration
IGST,SGST,CGST just you have to change condition type name Like for Input CGST 10JC Like this
Here One more example for OUTPUT SGST Like This you have create For IGST CGST
In this Screen shot you can see I have created Condition Type for Input and Output
After Creating Condition Type Next thing is we have create our Account Key
2:Define ACCOUNT KEY
With the account keys, you group together similar accounts in financial
accounting. Using the account key, the SAP System finds the desired G/L
accounts.
Step1: T-code OBCN
Step2 : Click on new entries
Step 3: Update the following fields
Here I’m creating for input tax IGST like wise you have create for SGST and CGST
For Output account key See this screen shot And follow the same
Like wise you have to create CGST AND IGST Account key
After Creating successfully condition type and account key Next step is Define procedure.
3: Define Procedure:
Menu Path: SPRO > IMG > FI Global setting > Tax on sales/ purchase > Basic setting
Step 1: You can go by T-code also OBYZ
Step 2) A pop up window condition element screen displays with options, you need to choose
procedures so double click on it.
Step 3) On change view procedure screen, click on new entries button for definition of new tax procedure
in SAP.
Step 4) On new entries calculation procedures screen, update the following details.
▪ Procedures: – Enter the four/Six digits key that identifies the tax procedure in SAP.
▪ Description: – Update the descriptive text of tax calculation procedure – GST tax India-1008.
After maintaining the details, click on save button and save in your request number.
Step 5) Now select TAXJY procedures row and double click on control data folder.
Step 6) Select new entries button.
Step 7) On new entries screen, update the following details.
▪ Step: – Enter the number (100, 200, 300…) which specifies the sequence of the conditions
within a procedure
▪ Condition type: – Update the condition type key that indicates the each activity or tax.
▪ Description: – Description text will be automatically updated based on condition type text.
▪ From, To: – This indicate which tax should be calculated on which base amount.
▪ Account key: – Assign the account that respective to condition types.
Step Ctype Description From To Acct Key
100 BASB Base Amount
200 10JI Input tax IGST 100 JY1
300 10JS Input tax SGST 100 JY2
400 10JC Input tax CGST 100 JY3
500 10OS Output Tax SGST 100 JY4
600 10OI Output Tax IGST 100 JY5
700 10OC Output Tax CGST 100 JY6
After maintaining all the required details, click on save button and save the configured details.
Successfully we have maintained tax calculation procedures in SAP.
4:Assign Country Code To Calculation
In SAP. The link between country and calculation procedure is established thorough the assignment of
country and tax calculation procedure.
You can assign country to calculation procedure by using one of the following navigation method.
▪ Transaction code: – OBBG
▪ Path: – SPRO –> IMG –> Financial Accounting (New) –> Financial Accounting Global
Settings (New) –> Tax on Sales/Purchases –> Basic settings –> Assign Country to Calculation
Procedure.
Step 1) Enter T-code “OBBG” in the SAP command filed and enter.
Step 2) On change view “Assign country –> calculation procedure”: overview screen, click on position
button and enter the country key “IN” in the given field and press enter.
Step 3) Now country IN displays on top of the screen. Now assign your calculation procedure to IN.
Step 4) After assignment, click on save button and save in your request.
Successfully we have assigned country to calculation procedure in SAP.
5:Define Tax Codes for sales and Purchases
The next important configuration step is define tax codes for sales and purchases. Here we are going to
create new tax codes of
V1: 18% Input Tax IGST
V2: Input tax CGST 9% + SGST 9% =18%
A1: Output Tax IGST 18%
A2: Output Tax CGST=SGST 18%
You can maintain tax codes by using the following navigation methods.
▪ Transaction code: – FTXP
▪ IMG path: – SPRO –>SAP IMG –> Financial Accounting (New) –> Financial
Accounting Global Settings (New) –> Tax on Sales/Purchases –> Calculations
–> Define Tax Codes for Sales and Purchases.
Step 1) Enter SAP tcode “FTXP” in command field and enter.
Step 2) Enter country key in the given field, as we are creating new tax codes for country India, show we
have updated IN key.
Step 3) Now you need to enter tax code key V1 which is you like to create.
Step 4) On maintain tax code initial screen, update
▪ Tax code description as Input Tax IGST @18%.
▪ Tax type as V (Input Tax).
▪ Press enter to continue to next configuration screen.
Step 5) On Maintain Tax codes: tax rates screen, update the tax percentage rate for input tax.
Note: – Here under percentage rate, only three tax types are displaying i.e. Base amount, Input tax and
Output tax, other tax types are not displaying to update the tax percentage rates. This is because, we have
defined tax procedure with condition types of Base amount, Input and output tax. You need to maintain
condition types under tax procedure as per the organization requirements. Further you are allowed to
update other tax rate like excise duty, etc in tax codes.
You have to do same for SGST AND CGST
On next screen you have to update 9%CGST + 9 % SGST
For Outout Tax You to do same just you have change Tax Type A for Output tax
And afterthat Just update percentage And For SGST and CGST Do same like I did for Input CSGT AND
SGST and then save it.
6:Define Tax codes for non Taxable Transactions
But since transaction is not tax relevant hence we don't want any tax calculation to happen. In such
scenarios, tax code with zero percentage tax is used e.g. A0 &V0. Sap has made it mandatory to provide
input tax code for posting vendor invoice
You can maintain Non Taxable transaction tax codes by using the following navigation methods.
▪ Transaction code: – FTXP
▪ IMG path: – SPRO –>SAP IMG –> Financial Accounting (New) –> Financial
Accounting Global Settings (New) –> Tax on Sales/Purchases –> Calculations
–> Define Tax Codes for Sales and Purchases.
Step 1) Enter SAP tcode “FTXP” in command field and enter.
Step 2) Enter country key in the given field, as we are creating new tax codes for country India, show we
have updated IN key.
Step 3) Now you need to enter tax code key A0 which is you like to create.
Step4: No information Filled required Just save this
You have to do same for Input Non taxable transaction for also and save it.
7:Assign Tax Code For Non Taxable Transaction
Procedure to Assign Tax Codes for Non Taxable Transactions
Step 1) Enter T-Code “OBCL” and enter.
Step 2) On change view allocate company code –> Non taxable transactions overview screen, click on
position button and enter your company code in the given field.
Step 3) Now update 0% input tax code and 0% output tax code in the given field as shown below.
Successfully we have assigned tax Codes for non taxable transactions in SAP.
8:Define Input And Output G/L
We have to create Input GST And output GST
Step 1: Goto FS00 T-code
Step2: Create new GL Account for your company code
Step4: Update following fields
Step5: control Data
Tax Category: *All tax type
Sort Key:001
Step 6: Create/Bank/ Interest
After that Just save it you have created successfully Input Tax for IGST
Similarly you have to create Fir Input CGST, SGST and for output IGST, CGST, SGST.
9:Define Tax Account
So whenever you come to OB40 here you have got transaction Debit Credit and names
Transaction is nothing but your account key what we have created earlier JY1,JY2,JY3,JY4,JY5,JY6
Menu path: SPRO > IMG > Financial accounting > Financial accounting Global Setting >Tax on sale /
Purchase >Postings > Define Tax Account
T-Code OB40
Step 1) Enter SAP tcode “OB40” in command field and enter.
Or go by menu path
Step 2: Click on Position and Give transaction JY1
Step 3: On next screen You just have to give Debit 40 And credit 50 for you al trs J1………JY6.
After that just click on save button.
Step 4:After the creating transaction debit credit just select JY1 And click on Rules.
Step5: click on new Entries
Step 6: here we are assigning our transaction code with chart of account
Click on save button
You have to do assign chart of account similarly For all transaction for JY2,JY3,JY4,JY5,JY6.
Next thing is You have to assign your GL with Tax Code.
In same T-code
Step1: Just select transaction key JY1 click on rules
Step2: Select rules and click on Accouts
Step3: Click On New Entries
Step4: Here You have to give tax code and G/l Account number here we are linking our GL Tax code
with G/L
After that click on save.
You have to assign similarly with other processes also like JY2,JY3,JY4JY5,JY6 you have to assign GL,
With all processes.
10:Define Tax Code Selection:
This is your again Important step which will a give you like Whatever the tax codes that you’ve got,
whatever the tax code we’ve created you will have to select like for which transaction is it valid for
transaction selection, like weather it is for MMIV , FIAR , if you want to specify or select the relevant all
transaction
So that it will reflect the for all the transaction that you do here.
Step1:Enter SAP t-code “OBZT” in command field and enter.
Step2: Give Country Key IN
Step3: Click on New entries
Step4: Update Transaction code
Here you can define for MMIV , FIAP, FIAR I’m putting here for all relevant transaction you change as
also as per requirement.
After that click on save Button.
