Step No

1 Define Tax Code

Responsibility

India Local Purchasing

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Setup Tax Taxes

Figure 1. Selecting the Organization

Define tax codes that are applicable under VAT regime. Taxes that can be defined under VAT Regime are Value Added Tax,
Octroi, Purchase Tax, Turnover Tax and Entry Tax. If VAT is applicable, the codes defined here will not be considered for
accounting. The account codes defined at Organization Regime Registration details will be considered. When VAT is
applicable, codes can be created for different rates of taxes alone since the account code for each inventory organization can
be taken up at Organization Regime Registration. .

Figure 1.1 VAT 4% FOR PSIN INVENTORY ORGS
Figure 1.2 VAT 12% FOR PSIN INVENTORY ORGS
Figure 1.3 VAT 4% for NPI Inventory Organisation
Figure 1.4 VAT 12% for NPI Inventory Orgs
Figure 1.5 Entry Tax 12% for NPI
Figure 1.6 Entry Tax 12% for PSIN
Step No

2 Define Tax Categories

Responsibility

India Local Purchasing

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Setup Tax Tax Categories

Figure 2 Tax Categories

Tax Categories can be defined for each Item Class and for each Operating Unit. Item Classes are (FGIN/CGIN/CCIN/OTIN/RMIN/
FGEX/CGEX/CCEX/OTEX/RMEX). This can be defined for each item class or without item class generally.
Figure 2.1 Tax Categories for PSIN for item class FGIN
Figure 2.2 Tax Categories without assigning item class.
Step No

3 Define Item Categories

Responsibility

India Local Purchasing

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Setup Tax Item Categories

Figure 3 I tem Categories
Item Categories associate the tax category for each item. We can create any number of item categories for a same item.
Figure 3.1 I tem Categories State wise for TN

This item category can be attached to all customers of TamilNadu if the tax rate is going to be same for all the customers.

Figure 3.2 Item Categories State wise using different tax category
This item category can be attached to all customers of Kerala, if the tax rate is going to be same
for all the customers.
Figure 3.3 Item Categories Customer wise

This item category can be attached specific customers (Glads).
Step No

4 Define Item Class

Responsibility

India Local Inventory

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Setup Master Master Items /Organization Items

Figure 4 Defining a Master I tem.

If we want to Define item class wise tax categories, you should assign the item class for each item. This can be done at the DFF available in the
Master Items Header Block ( Context India Items ).
Step No

4.1 Define Item Class

Responsibility

India Local Inventory

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Setup Master Organization Items

Figure 4.1 View / Modify the same in organization.

If we want to Define item class wise tax categories, you should assign the item class for each item. This can be done at the DFF available in the
Master Items Header Block (Context India Items). However if attribute of an item is different in another Inventory Organization, you can query
the item in this form and modify the attributes.
Step No

5 Additional Information for Supplier

Responsibility

India Local Purchasing

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Supply Base Additional Supplier Info

Figure 5 Attaching Item Class for a Supplier for null site
Here Item Category List VAT is attached for a Null Site of a Supplier.
Figure 5.1 Attaching I tem Class for a Supplier for specific site

Here Item Category List LST for Tamil Nadu is attached for a Specific Site of a Supplier.
Step No

6 Additional Information for Customer

Responsibility

India Local Order Management

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Customers Additional Information

Figure 6 Attaching Item Class for a Customer
Here we can attach the Item Category List for a Specific Customer
POINTS ON TAX DEFAULATION


Tax configuration is basically for defaulting applicable taxes for a item at the time of entering transactions.
In Procure to Pay (P2P) cycle, tax configuration follows a 3-way tax defaulting methodology.

First level considers the item category list attached to the supplier and site.

In the absence of first level, Second level considers the item category attached to the null site of the supplier.

In the absence of the both level, Third level considers the item class assigned to the item. Tax category and
item class relationship should be set in the tax category window.

The tax so defaulted should be modified if necessary, according to the requirement of the transactions
concerned.

Where all levels of defaultation fail, the users have an option to assign taxes to the shipment lines, manually.