Tax Calculation on Freight Different Scenarios

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Internationalization and Unicode: TaxCalculation on Freight - Different Scenarios

Posted by PRASOON AK Mar 28, 2014 Hi,

I have seen many threads with different requirements of PO tax calculation with / without freight, freight to be

relevant for VAT only, not for excise etc for INDIA. In this blog, I am just sharing some of the standard options

for the different business scenarios.

Basic Settings:

1. Freight condition type with acrual flag inserted in MM pricing procedure with acrual key.

2. Tax procedure configured and tax codes with valid condition records.

Case 1: PO Tax should not be calculated over freight (Normal Case)

If the freight condition type is with acrual key and no subtotal maintained against the condition type in MM

pricing, then the condition wont be added to the net value / tax base and it wont affect the tax calculation.

MM pricing procedure:

Tax Procedure:

Test Case: PO with freight

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Internationalization and Unicode: Tax Calculation on Freight - Different Scenarios


2

PO price: 100 INR per 1 EA

Freight: 10% = 10 INR

Tax Calculation:

Note: Freight value wont be added to tax base and the freight has no effect on tax.





3

Case 2: The freight value should be added to tax base, so that all taxes (VAT, ED etc) will be calculated

over the net + freight:

In this case, maintain subtotal "4" against the freight condition in PO pricing procedure and

maintain the base calculation procedure as 362 against the BASB condition in tax procedure:

MM Pricing Procedure:

Tax Procedure:





4

Test Case:

Tax Calculation:

Note: Freight value WILL be added to tax base.





5

Case 3: Freight Relevant for VAT only, NOT for excise:

Sample calculation:PB00: 100

FRA1: 10

ED : 12.36 (12.36 % on net value :100 * 12.36%)

VAT 5% on net value + Freight + ED ( that is freight has to calculate over 100+10+12.36 = 122.36 and the

value will be 122.36 * 5% = 6.12 )

In order to achieve the requirement, maintain the subtotal "6" against the freight condition in MM

pricing procedure and maintain the base calculation 363 against BASB and the VAT condition type in

tax procedure.

MM Pricing Procedure:





6

Tax Procedure:

Test Case: PO

Tax Calculation:





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Result: The ED is calculated over net and VAT is calculated over NET + ED + Freight

Thanks for your time.

Regards,

AKPT

7147 Views Tags: tax, freight_condition

Sindhu Chugh

Aug 28, 2015 8:05 PM

Our current setup is - the taxes are calculated for - PO line items + unplanned delivery cost (UPD) on MIRO

transaction and then UPD (excluding the taxes) is distributed to the PO line items on MIRO. This is working

fine.

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We have a scenario where product purchased on a PO is ‘NON taxable’ and UPD is ‘taxable’, in

this scenario capturing the tax for UPD in the tax field in MIRO is not possible. We want to have

the ability to assign and calculate tax on UPD at a rate different than PO line items and continue

to distribute UPD (excluding the taxes) to the PO line items on MIRO. Can we automate/configure

this new scenario while keeping our current setup?

Please help. Thank you.Regards,

Sindhu

Steps to reconstruct the new scenario

Invoice is for purchase order items that are not taxable, invoice has on it charges for unplanned freight. Freight

charges are taxable.

PO line item - $100

Freight - $50

tax on freight - 10% = $5

Total of the invoice - $155

vivek gaurav

Jul 2, 2015 2:18 PM

The document is very descriptive and addresses important scenarios.

adhi ak

May 2, 2015 6:27 AM

Requirement is,

CIF Value (100)+ ZDTY(50) + ZSH1(50) = 200

Currently i am get BASB =100 requirement is 200.

Guide me how to achieve the requirement.

Regards,

Adhi

adhi ak

May 2, 2015 6:14 AM

Hi Prasoon,

Thank you for this document. It is very helpful & i tried all the mentioned steps by you.

Actually one of the client have the same requirement but its not working, might be somewhere i am missing

logic need your valuable inputs.

SAP WARRIOR

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Mar 24, 2015 4:10 PM

Hi

Very Very Informative document. Thanks for sharing

PRASOON AK in response to Amrit Kaur Pawar on page 9

Nov 4, 2014 4:13 PM

Hi,

You may go with the new base formula 371 as explained in the note: 1835308 - Routine 371 to support

planned+unplanned delivery cost- MIRO

Regards,

AKPT

Amrit Kaur Pawar in response t o PRASOON AK on page 9

Nov 4, 2014 3:57 PM

Hi,

Thank you for the reply. I have checked the above note. Earlier there was no tax calculation on unplanned

delivery costs because the routine used was 362 even if above note was not implemented. To fulfil our case 3

requirement I have changed the routine to 363.

I believe the sudden tax calculation on unplanned delivery costs is due to change in routine. Please advice if

we can use routine 362 to achieve case 3 requirement and the steps for the same.

Regards

Amrit

PRASOON AK in response to Amrit Kaur Pawar on page 9

Nov 4, 2014 3:45 PM

Hi,

Please check the note 1402621 - Taxes are getting calculated on Unplanned del.costs - MIRO

Regards,

AKPT

Amrit Kaur Pawar

Nov 3, 2014 4:28 PM

Hi Prasoon,

Thank you for this document. It is very helpful. Actually our requirement is of case 3 and I did exactly as you

suggested. The CST tax calculation is correct but during MIRO, the tax is getting calculated on unplanned

delivery cost which is entered in the header. When routine 362 is used for BASB condition, there is no tax on

unplanned delivery costs.

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Could you please advice how to achieve case 3 requirement with routine 362 against BASB condition. We

don't want tax to be calculated on unplanned delivery costs during MIRO.

Regards

Amrit

kasel kasel in response to PRASOON AK on page 10

Jul 23, 2014 12:50 PM

Hi

case 2 & case 3 works separately. We have vendor invoice for below both scenarios ?

Scenario 1:

PB00 : 100

FRA1 : 10 subtotal : 4

ED : 12.36% on PB00 + FRA1

VAT : 5% on net PB00 + FRA1 + ED

Scenario 2:

PB00 : 100

DIS1 : -10 subtotal : 6

ED : 12.36% on PB00

VAT : 5% on net PB00 + DIS1 + ED

BASB (362) & JVRD (363) : Scenaria 2 is working but scenaria 1 is not working (ED is calcualted on PB00 +

FRA1 but vat 5% on net PB00 + ED and not considering FRA1)

please advice on combination of base type & subtotal to be maintained to address both the scenarios ?

rgds.....kasps

PRASOON AK in response to Binoy Vargis on page 11

Jul 23, 2014 11:02 AM

Thanks Binoy.

Regards,

AKPT

PRASOON AK in response to kasel kasel on page 11

Jul 23, 2014 11:01 AM

Hi,

Thanks for the feedback.





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If you want the freight to be considered for both VAT and ED, you can copy the freight value to BASB

condition as explained in case 2. Please maintain the config as per the case 2 option and test the scenario and

revert back.

Regards,

AKPT

Binoy Vargis

Jul 23, 2014 10:40 AM

Informative. Thank you

kasel kasel

Jul 23, 2014 9:43 AM

Hi AKPT

Very useful documents & every MM consultant working for indian projects must read.

My customer has business has case 2 & case 3, how it can be addressed ? what base type we should have for

BASB & JVRD

I have tested with BASB as 362 & JVRD as 363.

ED considers condition with sub total 4 but not c onsider with s ubtotal 6 and JVRD considers condition wiht

subtotal 6 but not consider with subtotal 4

how to achieve a case where condition value (freight, discount etc) to consider for both ED & VAT

please advice

rgds....kasps

PRASOON AK in response to Atul Mahajan on page 11

Jun 12, 2014 7:22 AM

Hi Atul,


Your question is valid. Even I couldnt find any standard document explaining the full usage of standard

subtotals and routines .

I explained the above options based on my experience only. Additionally, refer the note: 1559145 -

Frequently asked questions for Procurement in India: CIN - Purchase Order - Q Number 3, which gives a hint

about the above option.

Regards,

AKPT

Atul Maha jan

Jun 9, 2014 1:34 PM

Dear Prasoon,

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12

first of all thanks for sharing this very useful document. ( I have never seen any literature like this,educating

about 'subtotal or routine')

I wanted to know, from where we can get educated more about the various thing used in Pricing procedure..like

subtotal & routine.

Where to use which subtotal & respective routine to get the desired results? I like to learn the various effects

but i didn't find any documents even form SAP to understand these things.

Please guide if i can get the better learning material in depth in case.

PRASOON AK in response to Anjali Singh on page 12

May 12, 2014 1:11 PM

Hi,

If you use subtotal 6, then you have to assign base calculation 363 against BASB and the JVRD.

Regards,

AKPT

Anjali Singh in response to PRASOON AK on page 12

May 12, 2014 12:27 PM

Hi AKPT

The subtotal against the MM condition is given as 6. The cost is getting loaded on the material , but only while

calculating VAT (JVRD) condition the amount is excluding the created condition type.

Regards

PRASOON AK in response to Anjali Singh on page 12

May 12, 2014 11:56 AM

Hi,

Did you assign the correct subtotal against the MM condition type in the MM pricing procedure. Please check

and revert back.

If you want to add the tax directly to material cost, maintain the account key NVV (or a copy of NVV in OBCN)

against the tax condition type in the tax procedure.

Regards,AKPT

Anjali Singh

May 12, 2014 11:15 AM

Hi AKPT

Very good information.


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We have to introduce Green Goa Cess in MM as one of the condition type . Applied the above settings for

BASB and JVRD., but it is not working for me. The JVRD is zero if the base type 363 is selected , it only get

calculated if the same is changed to 370. But the JVRD calculated in this case i.e with 370 , takes only the

Base and ED/Manual ED .

The Green Goa Cess , should get loaded on material and will not be separately posted in a particular GL,

Can I get any hints , so the same can be made applicable.

Regards

Anjali

PRASOON AK in response to subburam v on page 13

Apr 20, 2014 12:36 PM

Thanks Subbu..

Regards,

AKPT

PRASOON AK in response to priyaranjan choudhury on page 13

Apr 20, 2014 12:36 PM

Thanks!!

Regards,

AKPT

PRASOON AK in response to Narendra Konnipati on page 14

Apr 20, 2014 12:36 PM

Thanks NK!

Regards,

AKPT

subburam v

Apr 16, 2014 11:59 AM

Hi AKPT,

Nice information. Thanks for the document.

Regards

Subbu

priyaranjan choudhury

Apr 11, 2014 11:00 AM

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14

Its really very helpful document.

Thanks for the sharing.

Regards

PR

Narendra Konnipati

Apr 6, 2014 7:58 PM

Hi MM,

Thanks a lot for sharing this document to us.The way you described is very nice.

Keep it up .

Thanks,

Naren

PRASOON AK in response to Manosij Basu on page 14

Apr 6, 2014 6:28 AM

Hi,


But in case 3, the base type 362 WONT work, since it will alter the BASB. 362 will work with KZWI4. You may

test the scenario.

Regards,

AKPT

Manosij Basu

Apr 5, 2014 8:53 PM

Great document!

Just a query, can't we use 362 bas. typ. even for case 3? I think it fetches both KZWI4 and KZWI6 from KOMP.

PRASOON AK in response to Lakhya Pratim Baruah on page 14

Apr 5, 2014 6:45 AM

Thanks!!

Lakhya Pratim Baruah

Apr 2, 2014 11:02 AMA very clear document regarding the same... Nice and thanks for sharing.

PRASOON AK in response to HHC MM on page 14

Mar 31, 2014 3:24 PM

Thanks!

HHC MM

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Mar 31, 2014 7:15 AM

Thanks for sharing. i was having the doubt on case 3. Now it is clearly understood.

Helpful doc.

PRASOON AK in response to Prasanna Murugesan on page 15 Mar 29, 2014 5:22 AM

You are welcome!

Prasanna Murugesan

Mar 28, 2014 1:08 PM

Very helpful document. Thanks AKPT for sharing this.

Regards

M.Prasanna

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Tax Calculation on Freight Different Scenarios