Overview

Customers who have implemented Country Version India (CIN) in the initial stages are using a
formula-based tax procedure named 'TAXINJ' which was the initial tax procedure released for
India. In TAXINJ, tax codes are used to derive tax rates. Due to multiple Excise duty, Service tax,
VAT and CST rates and many variations/exemptions in central/state taxes, TAXINJ customers
need to use many tax codes in MM and SD, and customers are running out of tax codes as they
have reached the maximum limit of tax codes (2 digits possible). Many tax codes create
problems for users, as they need to keep track of several tax codes at master data level as well
as transaction level.

There is another tax procedure, TAXINN, which is based on the pricing condition techniques. In
TAXINN, tax codes do not play a vital role in rate determination, where other logistics entities
such as plant, material, chapter id, vendor, customer, regions and so on are used for tax rate
derivation.

Assign new country pricing procedure to country India

SPRO Financial accounting new Tax on Sales/Purchase Basic settings Assign country
to calculation procedure

Tax Procedure configuration

SPRO Financial accounting new Tax on Sales/Purchase Basic settings Check

calculation procedure.

Do not modify TAXINJ and reuse as TAXINN. Please go for standard TAXINN or modified
TAXINN based on requirements.
Configure TAXINN procedure as per customers' business scenario along with OB40
settings and relevant CIN settings. If you use COPA or custom specific reports depend on
condition types, use TAXINJ procedure's condition types itself in TAXINN also, so that
customer's mapping to COPA valuation fields and customs reports impacts can be
reduced. If you are using existing condition types, you need to change the access
sequence for the condition types, based on your business requirement (e.g. MWST to
JTAX).
SPRO Financial accounting new Tax on Sales/Purchase Basic settings Posting
Define Tax account

If there is any accounting key where tax code is used for posting rule(Example refer
below screen shot), please remember to add new tax codes. Do not delete old entries.

SPRO Financial accounting new Tax on Sales/Purchase Basic settings Posting

Assign tax codes tax codes for non- Taxable transactions.

Verify/change input and output tax codes for Indian company codes level in SPRO as
shown in the screenshot below, in case customers use different zero tax codes in
TAXINN. Otherwise, incorrect tax codes will be posted in excise relevant accounting
(PART2). This can affect the customers COPA and other accounting reports which work
based on tax codes.
SPRO Sales and distribution Basic function Taxes Define Tax determination Rules

Add your tax conditions here. Do not remove UTXJ. Add for BED condition type here. For
VAT, CST and service tax, add here only if you have planned to use access sequence
using tax classification indicator. I recommend to use Region and plant for VAT and CST.

SPRO Sales and distribution Basic function Taxes Define Tax relevancy for master
records

Tax classification indicators for customer and materials should be maintained here with
condition types so that the same can selected in master records.
SPRO Sales and distribution Basic function PricingDefine and assign pricing
procedure

Find out the list of pricing procedure used in organization from assignment.
Modify the pricing procedure relevant for India specific sales organization.
Remove condition type 'UTXJ' which is used for various base value determinations, and
tax code based rate determination for VAT, CST and Service Tax condition types. These
have to be done according to TAXINN set up in SD Procedure, as per customers' business
requirement.
Remove all the routines assigned to tax conditions.
Changes access sequence in tax conditions as per your business need and continue to
use same condition types. Do not create new pricing procedure.
Tax code creation

Please create new tax codes in transaction FTXP. Service taxes will continue to have rates maintained in
tax codes. Map the TAXINJ and TAXINN tax codes for table J_1ITCJCMAP via transaction code 'J1ITCMAP'
(For more information, refer to SAP Note 827268). Leave the jurisdiction codes blank. This tax code
mapping is used by the transactions J1IMGPO and J1IMGCN while updating open purchase orders and
contracts.

Master data Changes

Tax classification indicator in customer

Tax classification indicators in Material master
Condition records for TAXINN
Tax codes in info record

Migration Transactions

Execute transaction J1IMGPO and Extract open purchase orders/scheduling agreements. This
step helps reduce downtime as the open purchase orders and scheduling agreements are
downloaded into intermediate SAP tables.
Execute the transaction J1IMGCN and extract contracts to the intermediate SAP tables. The
steps (6&7) can be performed before cut over time.
Update TAXINN tax codes at PO, scheduling agreement, service order, STO (if tax code used)
lines by executing the transaction J1IMGPO. This will help avoid foreclosing purchase order
items.
In the same way, use transaction code J1IMGCN to update tax codes for contracts from the
intermediate tables. This will help avoid foreclosing contract items. The steps (8&9) need to be
performed in the cut over time.
The above programs take care of basic master data validation by considering only open PO
items. It also handles basic tax relevant errors, updates the table J_1ITCJCUPDATE to keep log of
 processed documents, avoids PO items which are already updated with the program, application
error logs and basic exceptions handling.
Use MASS transaction for, info record Material master and customer master updates