Tax Classification in SAP SD: There are different kinds of taxes that are relevant for SD. The fundamental tax classification type that SD consultants need to worry about is Sales Tax. There might also be further variations in Sales tax like VAT, state sales tax etc.
The basic premise for taxation is at the material and customer level. Certain materials might be tax-exempt. Certain customers might be tax-exempt (eg. resellers). Certain customers/materials might be partially taxable or with low-tax rates.
The tax category of the customer and material are set respectively in the customer/material master.
Tax Classification in SAP
Tax categories in Customer master
The typical examples of tax classification are as 0- tax-exempt, 1- liable to taxes, etc
The tax classification as computed in pricing (tax condition types with classification D or E)
Tax Categories in Material master
For a sales order in most of the cases, the tax calculations as done in the pricing procedure for condition types with classification-tax (eg , MWST , UTXJ,XR1..etc) is based on first determining the tax classification of the customer/material and the country codes of the customer and the delivering plant.
1), The customer’s tax classification is trickled down to the sales document in the following order.
2), Payer (if different from sold-to)
3), Ship-to (if maintained)
4), Sold-to (if not maintained in ship-to)
5), The material tax classification is straight forward.
6), Tax classifications are also maintained at Country/Region (state) level.
For example UTXJ tax condition type is based on the above combination of customer/material/country/region tax classifications.
Also See: Extended Withholding Tax : How to Customizing
Recommended Reading For You
- To Know Service Tax Abatement in SAPService Tax Legal Changes for Abatement Reverse Charge Mechanism Service Tax Abatement in SAP: This is new change came into picture after 2012 budget. The Reverse charge mechanism […]
- How to do Month end Provision Entries in SAP?Month end Provision Entries
1. Process Depreciation RunAccounting -> Financial accounting -> Fixed assets -> Periodic processing -> Depreciation run -> Execute – […]
- What is SAP Workflow?Lets go by the very basic meaning of SAP workflow:SAP workflow, as the name suggests, means ‘FLOW OF WORK’ from one person to another person. It is, in fact, a sequence of connected […]
- SAP CRM Certification TipsSAP CRM Certification: Have you been advised by training institutes, experienced consultants, SAP advisers or random people on forums that you need to be having extensive SAP SD (Sales and […]
- SAP-Interview questions (GL)1. Give some examples of GL accounts that should be posted automatically through the system and how is this defined in the system?Stock and Consumption accounts are instances of […]