SAP Note 921634 Service tax India: Transfer from Interim to Final AccountNote Language: English Version: 27 Validity: Valid Since 24.09.2012 Summary Symptom SERVICE TAX. Transfer of Credit from the Interim Service Tax Account to the Final Service Tax Credit Account after the Vendor's Invoice has been paid for. Other terms Service tax , Deferred tax, J_1I_RFUMSV50 RFUMSV50, 705, tax, India, Transfer of credit, Reason and Prerequisites Legal change Solution Releases ERP2005 and higher In ERP2005 and higher use standard report RFUMSV50. You must not load any transport attached to the note. All objects (FM, tables, views) in ERP2005 and higher HAVE NO "J_1I" prefix. So use for example FM CREATE_DEFTAX_ITEM in ERP2005 instead of J_1I_CREATE_DEFTAX_ITEM in 46c-ERP2004. You should check your customizing in accordance with this note. Releases 46c-ERP2004 In 46c-47 follow all instructions of this note and use report J_1I_RFUMSV50. Read note 779512 to get Service tax legal background. As the solution contains a lot of dictionary objects please load the transport from the attachment in case if the report does not exist in your system yet. The report may exist already in your system due to last SP level in your system. Do not install transport in this case due to your overwrite your reports with old version from the transport. Check that notes 785561 and 817486 are implemented in your system or an appropriate SP is installed. Glossary Deferred tax code - The tax that is charged, but not accepted for payments to the budget. It is charged at the time of the receivables occurrence (creation of the invoice) and is accepted for payments to the budget at the moment of the receivables payment on the invoice. Target (actual) tax code - The tax accepted for settlement to the budget. Create general settings in Customizing for customers using TAXINN. Customers using SD tax schema TAXINN should do customizing in accordance with description in attachment "ServiceTaxConsultingTAXINNcust.zip" Create general settings in Customizing for customers using TAXINJ. Create special tax accounts for input and output tax codes. It is recommended to create separate tax accounts for deferred and tax codes. 08.03.2013 Page 1 of 7 . . If you use RFUMSV50 for selected countries you MUST to assign all BTEs (standard and J_1i*) for these countries accordanly.SAP Note 921634 Service tax India: Transfer from Interim to Final Account Step 1: Define new balance sheet G/L accounts for deferred taxes..mark the checkbox Line item display. . of an SAP Application Attention for releases 46c-ERP2004 : These standard BTEs (CREATE_DEFTAX_ITEM.do not flag the indicator Balances in local currency only.03.. .. Step 2: It is necessary to activate the following BTEs in 46c-ERP2004 00001025 IN J_1I_CREATE_DEFTAX_ITEM 00001030 IN J_1I_SET_DEFTAX_ITEM 00001040 IN J_1I_CREATE_DEFTAX_ITEM_REVERS 00001050 IN J_1I_CREATE_DEFTAX_ITEM_MR1M You can use for example the following tranasaction: FIBF->Settings->Process Modules-> . This parameter is optional. SET_DEFTAX_ITEM etc) exist and are active by default in all releases . e. of a customer In releases higher than ERP2005 it is necessary to check that the following BTEs are active 00001025 FI-TAX CREATE_DEFTAX_ITEM 00001030 FI-TAX SET_DEFTAX_ITEM 00001040 FI-TAX CREATE_DEFTAX_ITEM_REVERS 00001050 FI-TAX CREATE_DEFTAX_ITEM_MR1M You can use the following tranasaction: FIBF->Settings->P/S Modules-> . .mark the checkbox Open item management. In the tab account control: . If you do not use standard RFUMSV50 solution for other than India countries you MUST deactivate these standard BTEs. This parameter is mandatory.assign tax category ">"(output tax) or "<" (input tax).g. This parameter is optional. For example.2013 Page 2 of 7 . This parameter is optional. . This parameter is mandatory. using transaction FS00. This parameter is mandatory. Define new balance sheet G/L accounts for target taxes . This parameter is optional. assign 08. . with the following characteristics.assign tax category ">"(output tax) or "<" (input tax).do not flag the indicator Balances in local currency only. This parameter is mandatory.mark the checkbox Line item display.mark the checkbox Open item management. These BTEs in all releases require the following customizing: 1.SAP Note 921634 Service tax India: Transfer from Interim to Final Account J_1I_CREATE_DEFTAX_ITEM for IN and CREATE_DEFTAX_ITEM for DE. Run transaction SM30 and maintain view J_1IT001 Step 3: Create special deferred tax codes for input and output service taxes. Service tax processing o o Post an invoice using deferred tax code. Assign appropriate tax accounts to these tax codes on the tab Accounts. The field CUST should be marked for customer invoices accordingly. You have to assign this rule to your company code .Tax on Sales/Purchases . Run transaction SM30 and maintain view J_1IT007DT .Clearing date fiscal period o 08.Calculation . You have to create Deferred tax rule. See note 1244493 for details. Use transaction FI FTXP and enter the same percentage and condition type for deferred and target tax code.zip".03.deferred tax accounts (recommended for performance improvement) .Open items at key date . Important: this date restricts both tax transfer documents and invoices.G/L account . Default settings of deferred tax rule for India is TPLEV = '01' EXRAT = space BANKO = space VEND = 'X' CUST = space If the deferred tax report J_1I_RFUMSV50 is to be used in a mode when only full paid vendor invoices should be accepted the field VEND should be marked.Financial Accounting Global Settings .end of fiscal period date. 2. Use IMG: Financial Accounting . See also the attachment "TaxAccountDetermination.Define Tax Codes for Sales and Purchases For deferred tax code it is necessary to enter target tax code on the tab properties in the field target tax code. . This rule defines country specific behavior of the report.2013 Page 3 of 7 . Post a payment for the invoice using posting key with active check box "Payment transaction" Run report J_1I_RFUMSV50 with the following parameters: . Please see attachment "PostingErrors.Indicator No credit indexes should be active. .zip". The document posts tax amount from deferred tax account to target tax account.If option P_XCUST is active the report processes only full paide customer invoices.zip" to solve the problem. GL line item without tax code will violate 08. You could skip this warning without any problem.2013 Page 4 of 7 . This is due to wrong target tax code customizing in transaction FTXP. If the field J_1IT007DT-VEND for deferred tax rule is marked. but the field P_XCUST on the selection screen is empty the report generates warning message. FAQ:Recommendations and restrictions 1. See also the attachment with the report documentation "DeferredTax. o The report J_1I_RFUMSV50 creates so-called tax transfer documents. Error FF 705 "Tax entered incorrect .." This warning occurs due to the service tax has sevaral active conditions and these conditions have different tax base. See note 1244493 for detailed explanation and step 3 in the customizing section of this note. GL line item without tax code is forbidden. The customer could decide if to continue this run or to cancel it. But the tax trnasfer documents are created separately for each conditions and they all have the tax base equal to service tax base and the same tax condition. but the field P_XCUST on the selection screen is empty the report generates warning message. . 2. The customer could decide if to continue this run or to cancel it. correct .. You did not enter tax rates and did not assign tax accounts in FTXP. Partly paid and fully paid invoices are acceptable for processing. You can use report RFUMSV00 to do automatic posting to settlement with the budget account. Only fully paid invoices are acceptable for processing.as for service tax.SAP Note 921634 Service tax India: Transfer from Interim to Final Account . 3.03.Indicator No debit indexes should be deactive. Errors during tax transfer document posting 1. Only balance on target tax account should be used for settlements with the budget. Due to Service tax code contains several active lines a error "Tax code can contain only one line" can occur. . This document has two line items. The report shows in ALV documents but when you run the report im productive use the report creates batch input with 0 documents and in the next productive run the list is empty. The tax transfer document has reference to the original invoice in the header field Reference and reference to the payment in the second line item in the field Assignment. If the field J_1IT007DT-CUST for deferred tax rule is marked. If you have non-taxable revenue or would like have GL line item without tax code then you must assign 0% tax code to this line item.If option P_XVEND is active the report processes only full paid customer invoices. Deferred tax code in down payment with many active conditions is forbidden. Example: Your invoice in FB03 looks like Vendor -1070 EUR Service 1000 EUR Service tax 100 EUR Education tax 20 EUR Withholding tax -50 EUR Tax data for this invoice must be: Service tax tax base 1000 EUR. In case if e. Withholding tax amount should be added to client amount. You should see the down payment clearing document immediately after posting in the report RFUMSV52 with reference to the invoice. In our case we should add only 1000 EUR and do not add 100 (tax base for education tax) 4. 7. If you would like to reverse the final payment and the report already created tax transfer documents and cleared deferred tax line items in the original invoice then you have to RESET clearing in the tax transfer document. the invoice amount is greater then tax data amount then the report will calculate bigger amount then it is needed. 2.SAP Note 921634 Service tax India: Transfer from Interim to Final Account Golden Rule. Tax base should be added once per tax code. In our case invoice amount is 1070 + 50 = 1120 2. In case if the original payment was reversed/canceled the report creates 2 tax transfer documents. tax amount 100 EUR(10% rate) Education tax tax base 100 EUR.2013 Page 5 of 7 . 3. Down payment clearing document with reference to invoice is a special kind of payment. Deferred taxes "Golden Rule" is: The total amount of your taxes + tax base you see in "Taxes" area must be equal to your invoice amount you see in FB03. The report RFUMSV50 creates a separate tax transfer document for down payment clearing document. The reason is that for new payment for this invoice the report 08. For the new payment new line in RFUMSV52 will be shown. The second tax transfer document has opposite debit/credit side and as the result the balance of 2 tax transfer documents is zero. See item 3 below. The report RFUMSV52 shows one line for the first tax transfer document and for the tax transfer document which is opposite for it. 5.g. Down (advance) payment must be posted with final(target) tax code. As the result the total tax amount for posting will be bigger then original tax amount and you will see the final tax transfer documents in the batch input session due to differences error. 6.03. If you have some taxes non-deferred and some taxes deferred than read note 1244493. This is necessary due to the reversal of payment could be done in the other fiscal period than the original payment. tax amount 20 EUR (2% rate) In withholding tax area must be Withholding tax 50 EUR Golder rule: Invoice amount = 1000 + 100 + 20 = 1120 Tax area = 1000 + 100 + 20 = 1120 Attention : 1. The first one for the original payment and the second one for its reversal. This is very important due to the report will calculate tax amount for each of the tax for the payment based on data in TAX AREA. 8. In this case use the report RFUMSV53. Header Data Release Status: Released on: Master Language: Priority: Category: Primary Component: Secondary Components: FI-GL-GL-F1 VAT reporting (country specific) XX-CSC-IN-ST Service Tax Report (RFUMSV50) Released for Customer 24. You installed the latest version of the report but you still have incorrect records in DEFTAX_ITEM table.09.SAP Note 921634 Service tax India: Transfer from Interim to Final Account will create new tax transfer document via FB05 and deferred tax line items must be open to allow the report to post FB05 documents.2013 Page 6 of 7 .2012 07:22:31 English Recommendations/additional info Correction of Legal Function XX-CSC-IN India Valid Releases Software Component SAP_APPL SAP_APPL SAP_APPL SAP_APPL CIN Release 46C 470 500 600 4.Budget 2007 RE-FX Country Version for India 08.0 From Release 46C 470 500 600 40A To Release 46C 470 500 600 40A and Subsequent Support Packages Support Packages CIN CIN SAP_APPL SAP_APPL Release 40A 40A 470 500 Package Name SAPKIPNG13 SAPKIPNG14 SAPKH47029 SAPKH50018 Related Notes Number 1800344 1528242 1304228 1283867 1061135 1045145 1029613 Short Text How to start using RFUMSV50 Error messages in program RFUMSV50 ( S_AC0_52000644 ) J_1I_RFUMSV50: Migration from releases below ERP2005 Business Place for Service tax in RE-FX for India Service tax: Update after testing 1% SECess levied on service tax .03. zip DeferredTax.zip ServiceTaxConsultingTAXINNcust.2013 Page 7 of 7 .zip PostingErrors.zip Language E E E E E E E Size 236 KB 398 KB 231 KB 169 KB 110 KB 151 KB 1.zip ServiceTax46c.701 KB 08.zip ServiceTax47.zip TaxAccountDetermination.03.SAP Note 921634 Service tax India: Transfer from Interim to Final Account Number 817486 785561 779512 778976 Short Text RFUMSV50 Performance improvement RFUMSV50 more modes Master Note for Service Tax Configuration for Service tax (MM and SD) Attachments File Type ZIP ZIP ZIP ZIP ZIP ZIP ZIP File Name ServiceTaxERP2004.