Tax Procedures – TAXINJ vs TAXINN

What is the difference between maintaining tax codes in TAXINJ and TAXINN

Both procedure TAXINJ and TAXINN has thin line difference where as TAXINN procedure is condition based &  TAXINJ is fomula based.If you drag down details of  TAXINJ is fomula based,where you can find Routine( selection with logic in line of condition type)  are play vital role in tax calculation.

If you selected TAXINN procedure , you can maintained tax rate with respective condition types  in FTXP during creation of tax code.But you should maintain condition record in FV11 t.code for condition types JMX1 & JMX2  are as 100%. Also you can maintain  tax rate for condition types Basic Excise Duty,Edu cess , H. Edu cess,VAT/CST in FV11 t.code in stead of maintaining tax rate in FTXP.

1.     TAXINJ is a tax calculation procedure for country version India and it supports formula-based excise determination. You need to configure this tax calculation procedure

Excise Conditions

⇒  JMOD   IN: A/R BED

⇒  JNED    IN: A/R NCCD

⇒  JAED    IN: A/R AED

⇒  JSED    IN: A/R SED

⇒  JCES    IN: A/R Cess

⇒  JECS    A/R Educational CESS

LST/CST/VAT Conditions

⇒  JIN1      IN: A/R CST

⇒  JIN2      IN: AR LST

⇒  JIN4      IN: A/R CST Surcharge

⇒   JIN5      IN: AR LST Surcharge

⇒   JIN6      A/R VAT Payable

⇒  JIN7      A/R CST Payable VAT

Service Tax Conditions

⇒  JSE4    Service Tax

⇒  JES4    ECS on Service Tax

2.      Set up the following Account Key

IMG ⇒Financial Accounting ⇒ Financial Accounting Global Settings ⇒ Tax on Sales/Purchases ⇒ Basic Settings ⇒ Check and Change Settings for Tax Processing.

⇒  VS6    Input Tax

3.      Define the Tax Procedure according to the settings in the figures below.

You can do this in the IMG ⇒ Financial Accounting ⇒ Financial Accounting Global Settings ⇒ Tax on Sales/Purchases ⇒ Basic Settings ⇒ Check Calculation Procedure ⇒ Define Procedures. Tcode:OBBG

4.      Assign Tax Procedure to the country.

You can do this in the IMG ⇒ Financial Accounting ⇒ Financial Accounting Global Settings ⇒ Tax on Sales/Purchases ⇒ Basic Settings ⇒ Assign Country to Calculation Procedure. Tcode:OBYZ

The standard system comes with two tax calculation procedures. TAXINN is only supports condition-based excise determination, whereas TAXINJ supports condition-based excise determination and formula-based excise determination.

Both tax procedures contain condition types that cover all of the excise duties and sales taxes applicable.

Since the exact rates of excise duty can vary on a large number of factors, such as which vendor you purchase a material from, or which chapter ID the vendor stocks the material under, you create condition records for every sort of excise duty.

When you come to enter a purchasing document, the system applies the excise duty at the rates you have entered in the condition records.

Activities,

Customizing

Make the settings in Customizing for Logistics u2013 General, by choosing Taxes on Goods Movements ⇒ India ⇒ Basic Settings ⇒ Excise Duties Using Condition Technique and u2026 ⇒ Account Determination.

These activities include one activity where you define a tax code for condition-based excise determination.

Master Data

Create condition records for all excise duties that apply, and enter the tax code for condition-based excise determination in each.

TAXINN Vs TAXINJ:

Definition: condition-based excise determination

A method that the system uses of determining excise duty in India.

This method requires you to create condition records for each combination of vendor or customer and material (and possibly other conditions).When you create a purchasing document, the system calls the tax procedure assigned to India. The tax procedure finds all of the condition records that you have created for that combination of vendor and material.

When you create a sales document, the excise duties and sales taxes are determined by the pricing procedure (not the tax procedure).

Definition: formula-based excise determination

A method that the system uses of determining excise duty in India.

This method was used in the Country Version India Add-On and requires you to maintain additional data in the Excise Rate Maintenance transaction, J1ID.

When you create a purchasing document, the system calls the tax procedure assigned to India. Each of the excise duties in the tax procedure has its own condition types, and each condition type is assigned to a formula. This formula instructs the system to calculate the excise duty using the data that you have maintained in the Excise Rate Maintenance transaction.

When you create a sales document, the system determines the excise duties and sales taxes using the pricing procedure (not the tax procedure).

Pricing Procedures: 

The primary job of a pricing procedure is to define a group of condition types in a particular sequence. The pricing procedure also determines:

• Which sub-totals appear during pricing
• To what extent pricing can be processed manually
• Which method the system uses to calculate percentage discounts and surcharges
• Which requirements for a particular condition type must be fulfilled before the system takes the condition into account

Example of a Pricing Procedure:

If a sales department processes sales orders for a variety of foreign customers, the department can group the customers by country or region. A pricing procedure can then be defined for each group of customers. Each procedure can include condition types that determine, for example, country-specific taxes. In sales order processing, you can specify pricing procedures for specific customers and for sales document types. The system automatically determines which procedure to use.

Choose Basic Functions ® Pricing ® Pricing control ® Define and assign pricing procedures.

Assign Pricing Procedure to Sales Area

T Code: OVKK and assign respective sales area for different kind of pricing procedure.

Pricing procedure follows below assignment.

Pricing procedure ⇒ condition types(1:N) ⇒ access sequence (1:N) ⇒ accesses(1:N) ⇒ condition tables(1:1) ⇒ condition fields.

During creation you can follow bottom-up sequence.

1. Create condition table with condition fields. CUSXXXXX

2. Create access sequence and maintain accesses assigned with condition table. ZAS ->CUSXXXXX

3. Create condition type and assign access sequence. ZCT->ZAS

4. Create pricing procedure and assign condition types. ZPP->ZCT

Determination part.

In order to determine pricing procedure 5 parameters needed.

Sales org + distribution channel + division + customer pricing procedure + document pricing procedure ,SO+DC+DIV+CP+DP = ZPP

and we assign pricing procedure against above 5 parameters in the configuration.

based on condition maintenance we restrict the application where you gonna maintain the condition record.

lets say you restricted it to product and successfully you maintained a condition record for testing.

now I am using this product in a transaction document(example ZAG). you called the transaction type(ZAG) and entered the customer ABC and entered some product XYZ with quantity. now the minute you enter the product and hit on enter.

System searches for relevant pricing procedure to determine. by formulating all 5 parameters from the sources based on org model it brings respective sales area data(SO+DC+DIV) and based on ABC’s customer pricing procedure(you can find it in sales area data a/block under billing area.

based on transaction type it will bring the value document pricing procedure ( ZAG’s transaction category header data).

after forumalting all 5 parameters it determines corresponding pricing procedure from the configuration.

again based on the maintained condition record it will apply the value on to the screen.

based on number of different condition types(diff calculation types) it will show different price element in the output. and all these calculation will be done by IPC.

Configure Tax on Sales and Purchases

Introduction To Tax Configurations In SAP

Tax configurations are done in SAP at the country level. This is because all businesses in the same country need to follow the same taxation policies and generally accepted accounting principles while preparing their financial statements. Therefore, tax configurations in SAP are done for each country. Any company code which is then created in that country can then automatically use the tax configuration that is done for that country. So tax configurations need not be done for each and every company code again and again. This saves the effort required to carry out the tax configurations for every company code separately.

SAP allows the tax rates to be defined internally or the tax rates may be fetched from an external taxation system like Vertex. The tax configurations are stored in SAP in the form of tax calculation procedures and tax codes. These procedures can then be assigned to different countries. These procedures then become available to any company code which is created in that country.

The tax rates are provided by the tax codes are the different tax types while the method of calculation is defined in the tax calculation procedure. SAP allows the following taxes to be processed while posting documents:

• Tax on sales and purchases.
• Additional taxes like VAT which our country specific.
• Sales and Use tax as in USA.
• Withholding tax like income tax in India.

Concept Of Tax Jurisdictions

Tax jurisdictions represent the government authorities to which the taxes are paid. SAP allows up to 4 levels of tax jurisdictions representing state, county, city and others. The tax jurisdiction structure needs to be defined before the tax jurisdictions can be created in SAP. As mentioned before, the tax jurisdiction structure can have four levels. The tax jurisdiction structure defines the length of characters which will be used to represent each level in the tax jurisdiction code. The tax jurisdiction code structure needs to be defined for every tax calculation procedure.

Once the tax jurisdiction code structure has been defined, the next step is to create the actual tax jurisdiction codes. The tax jurisdiction codes need to be created for every government authority to which the tax needs to be paid.

Assign Tax Procedure To Country

Step 1: The tax configuration details are stored in the tax procedure. The first step is to assign the tax procedure to the country in which the company code exists. Navigate to the Implementation Guide menu path as shown below or execute the transaction code OBBG.

Step 2: Position to the country to which the tax calculation procedure is to be assigned and enter the tax calculation procedure details as shown in the screenshot below.

Step 3: Click on the save button to save the changes. A success message showing that the changes have been saved is displayed.

Define The Tax Jurisdiction Code Structure

Step 1:Navigate to the implementation guide menu path as shown in the screenshot below or execute the transaction code OBCO from the SAP easy access menu.

Step 2: Select the tax procedure for which the tax jurisdiction code structure needs to be defined and enter the length for the various jurisdiction levels as shown in the screenshot below. The length chosen should be sufficiently large to accommodate enough tax jurisdiction codes as per the requirement. For e.g. the first level represents the state. If the number of states is large then it is better to have a four letter key to represent it rather than having a two letter key. This is because the number of combinations possible with a four letter key will be much more than those possible with the two letter key.

Step 3: Click on the save button to save the changes. A success message indicating that the changes have been saved is displayed.

Define The Tax Jurisdiction Codes

Step 1:Navigate to the implementation guide menu path as shown below or execute the transaction code OBCP from the SAP easy access menu.

Step 2: Enter the work area details in the pop-up as shown in the screenshot below and click on the continue button.

Step 3: Enter the tax jurisdiction code and its description as shown in the screenshot below. On the basis of the configuration for the tax jurisdiction code structure, the first two letters of the tax jurisdiction code will represent the state, the next three letters will represent the county, and the next four letters will represent the city. Therefore, every tax jurisdiction code will be nine characters long. It will be possible to determine the correct taxing authority on the basis of the tax the jurisdiction code described above.

Step 4: Click on the save button to save the new tax jurisdiction code. A success message indicating that the new tax jurisdiction code has been saved is displayed.

Define Tax Codes

The tax codes are defined for each and every country. The tax codes contain the actual rates to be used while calculating the tax on the basis of the tax calculation procedure. Each country can have multiple tax codes for different types of taxes like input tax sales and purchases, output tax on sales and purchases, etc.

Step 1:Navigate to the Implementation Guide menu path as shown in the screenshot below or execute the transaction code FTXP from the SAP Easy Access menu.

Step 2: Enter the country in the pop -up as shown in the screenshot below and click on the continue button.

Step 3: Enter the tax jurisdiction code and the other details on the screen as shown in the screenshot below and press the Enter key. The tax code represents the type of the tax for which the rates are going to be maintained.

Step 4: Enter the tax rates as shown in the screenshot below. These tax rates can be used to calculate the tax while posting a document in SAP. The method of calculation will be determined on the basis of the tax calculation procedure.

Step 5: Click the save button to save the changes. A success message indicating that the changes have been saved is displayed.

Company code not assigned to country or country to calculation procedure

1st Step : You have to define the Taxing procedure in t-code OBYZ.

2nd Step: Then go to t-code OBBG and assign your country to your Tax -code created in OBYZ.

Hope it will help.