Service Tax Configuration in India (SD)Added by Rajesh Banka, last edited by Jyoti Prakash on Dec 01, 2011 (view change)OBJECTIVEThis document will detail the configuration required on the SD side to enable computation of Service taxand Education Cess in the output Service order.PROCEDUREInitial StepsCreate two new Tax conditions:JSE4JES4.Steps for creation of Tax Condition is illustrated belowCreate new condition types(Transaction OBYZ)Path: SPRO - Financial Accounting - Financial Accounting Global Settings - Tax on Sales/Purchases - BasicSettings - Check Calculation ProcedureSelect Define Condition TypesSelect Condition Type JIN1 and Click on Copy as (F6)and also provide the Condition type as JSE4 and the Name as "Service Tax".Select Condition Type JIN5 and Click on Copy as (F6) and give the Condition type as JES4 and the Nameas "ECS on Service Tax".OutcomeThe two tax conditions,
one for Service Tax andthe second for Education Cess on Service Tax have now been created.Create a new tax posting key VS9 and VS0Path: SPRO - Financial Accounting - Financial Accounting Global Settings - Tax on Sales/Purchases - BasicSettings - Check and Change Settings for Tax ProcessingSelect the Processing Key MW1 and Click on Copy as (F6) and give the Key as VS9 and Name as IndiaService Tax.Select the Processing Key MW1 and Click on Copy as (F6) and give the Key as VS0 and Name as ECS onService Tax.Note: If there are multiple service tax registration numbers, you need to have separate account postingto different GL accounts based on service registration number. This can be done provided a separate taxcode is maintained for each service registration number.To achieve this you need to define a set of 2 separate G/L accounts for service tax and Education CESSon service tax respectively, for every service registration number.In such a case, please activate multiple accounts posting per tax code as follows:Defining the GL accounts for the Service tax and ECS on Service TaxPath: SPRO - Financial Accounting - Financial Accounting Global Settings - Tax on Sales/Purchases -Posting - Define Tax accountsGo to Details of the Transaction VS9 (Service Tax GL account) and enter the Chart of accountsSelect the Tax Code Check Box if you want to have Tax Code Specific GL accounts or Blank when thecommon GL accounts...Click on Posting KeysEnter the 40 as Debit and 50 as Credit.Click on Accounts.Enter the GL codesIf you have tax code specific GL then enter the tax and GL account.
After completing select the VS0 and do the same steps for ECS on Service tax.A separate account for every tax code can be maintained as follows:Now maintain different account based on the tax code. Since the tax code will be specific for a plant youcan achieve posting to specific account for a plant.This should be maintained after configuring the tax procedureSteps are:You have to define the required tax codesCreate separate G/L accountsWhile creating the posting key, please follow the customizing settings given below:Path: SPRO - Financial Accounting - Financial Accounting Global Setting - Tax on Sales/Purchase - BasicSetting - Check Calculation ProcedureDefine Procedures:Select TAXINJ and click on control data.Click on New Entries and add the following two entries in your systemAdd Condition type JSE4 and JES4 respectively at appropriate steps.Also ensure to maintain the step from for JSE4 & condition JES4 dependent from JSE4You have to assign the accounting keyVS9 for JSE4 andVS0 for JES4.Changes to Tax Code:Path: SPRO - Financial Accounting - Financial Accounting Global Setting - Tax on sales/Purchase -Calculation - Define Tax Codes for Sales and Purchases.Country: INEnter the Tax code and Tax jurisdiction Code (If it is applicable in your system). Tax jurisdiction Code isnot applicable for TAXINN.
Incase of TAXINJ, maintain Tax Code with appropriate Tax Condition %. Enter the 10% for the Conditiontype JSE4 and 2% for JES4. The % have been changed in the budget announced in 2007 to 12 % forservice tax & 3 % for Education Cess.Changes to Pricing ProcedurePath: SPRO - Sales and Distribution - Basic Functions - Pricing - Pricing Control - Define Condition Types.Select Condition Type JIN1 and Click on Copy as (F6) and give the Condition type as JSER and the Nameas "Service Tax".Select Condition Type JIN5 and Click on Copy as (F6) and give the Condition type as JSTE and the Nameas "ECS on Service Tax".SPRO - Sales and Distribution - Basic Functions - Pricing - Pricing Control - Define and Assign PricingProcedure - Maintain Pricing Procedures (V/08)Select Pricing Procedure JFACT and click on control data & add the new condition at appropriate steps inthe pricing procedure & modify Pricing Procedure calculation as per requirement.Mark both the condition as Manual and Statistical.SAP Notes related to Service Tax in India:SAP NOTE NUMBER DESCRIPTIONNote 1353362 Service Tax Master NoteNote 1391485 Outbound Excise Invoice enhancements for Service TaxNote 1393506 Service tax enhancements for ARE Reversal processNote 1392593 Service tax enhancements in Monthly utilizationNote 1393534 Service Category determination & Service tax returns (ST3)Note 1393460 Update of GAR7 challan information-ST developmentNote 1522334 Missing corrections of Service Tax EnhancementsNote 1500389 Change button not enabled in J1IIN utilization screenNote 1510426 PART2 Entries not generated for excise invoice post-J1IEX
Note 1571186 Changes to Service Tax from Indian Union Budget 2011-2012