Define whether the Material can be used at which Sales and Distribution
Define Tax Determination Rules
You specify the valid tax types in transaction
OVK1. More than one tax type can be defined
for a country by defining the sequence.
A D V E R T I S E M E N T
The SAP System determines the taxes automatically within
In the standard SAP R/3 System, the elements of tax
calculation are predefined (for example, tax condition type "MWST"
for taxes on sales and purchases).
Assign the plant for Tax Determination in
OX10, using the country key, the SAP System
recognizes which tax type is valid for a plant and thus which taxes are relevant
when creating an SD document.
Define the Customer Taxes in OVK3,
you will maintain the tax code in Customer Master.
Define the Material Taxes in OVK4,
which will then be maintain in Material Master.
For example :-
MWST GST 0 Tax Exempt
MWST GST 1 Liable for Taxes
Now, you define the Tax Determination in
VK12 - Domestic
Condition Type MWST
Customer Taxes Material Taxes Rate Taxes
0 0 0 %
0 1 0 %
1 0 0 %
1 1 9 %
In this example, if both the Customer Master and Material
Master Tax code is 1, Tax will be included when you create the Sales Order.
Tax Code in Customer
Master / Sales Order
How can we maintain the Tax Code (Tax code - which we
maintain in MWST Condtion Records) in Customer Master or in Sales Order?
There are few points which I would like to remind you:
1) MWST is a tax condition which is applied to customer to
whom we are selling. The rate of tax is depend on various parameteres, whether
is fully liable for tax or expemted (in case of Defence Customer)
2) There are few parameteres which we apply tax condition.
Whether customer is tax liable? Whether material is tax exempted?
For example, if you are selling a goods which are free for
tax to any customer, put the Tax Indicator (at MMR as '0'). If your
material is tax liable pur the Tax Indicator (at MMR as 1). If your customer is
not liable for tax at all (like the case of Indian
Defence organisations) put the Tax Indicator (at CMR as 0) or 1 in case fully
3) Now, at VK11 you need to mainatain your pricning
conditions with all the combinations like:
4) While maintaining your Material Master Records or Cusotmer
Master Records, you must identify, which are tax liable and which are tax
5) In anycase, as a SAP standard Best Practises, while
processing a sales order, you must retrieve a Tax condition record from SAP
database only and not entered Manually. Accordingly, at V/06, the MWST condition
Defintions, the field for 'Manual Entries', it would be marked as - D (Not
possible to process Manually).
Due to this setting, normally, you cannot maintain Condition
tax code during sales order processing. And in Cusotmer Master, you can only
maintain Tax Indicator and not Tax Code.
6) In case your client insists for Manual entry of Tax code
during Sales Order processing, you can change the field at point 5) above to
C-Manual entry is priority instead of D.