SAP Financial Accounting (FI) Taxes (FI-AP/AR) Sales Tax

Use

This is a tax levied on the sale of a product. It is applied on the gross price of goods, inclusive of excise duty.

Prerequisites

In addition to the standard Implementation Guide (IMG) settings for taxes on sales and purchases, you must also have maintained the tax registration numbers of your vendors, customers, and your own plants.

Furthermore, if the state legislation allows you to offset input local sales tax (LST) against output LST, you must also have defined this (see Material Master (Excise Data)).

Features

There are two types of sales tax. Interstate sales (for example, between Karnataka and Tamil Nadu) are subject to central sales tax (CST). The tax rate is the same throughout the country. Intrastate sales, on the other hand, are subject to local sales tax (LST), which differ from state to state. The system handles these using tax jurisdiction codes.

A percentage of input LST can be deducted against output LST, depending on what percentage of goods you have purchased in the state in question.

The system calculates the sales taxes automatically, when you enter the tax codes. A report is also available that tells you how much sales tax you have paid and collected.