The Procedure of Tax

Configuration in SAP
SAP FICO (Financial Accounting and Controlling) Tutorial

Tax determination is mainly a country-specific setting and there are

separate SAP modules for tax. In SAP the amount of tax is
determined mainly on the basis of Tax procedures and Tax Codes.

Tax on Purchase/Sale- When we purchase something we have to

pay the tax, it is called input tax. It is denoted by V. When we are
selling something we have to pay the tax, it is called output tax and it
is denoted by A.

The Procedure of Tax Calculation in SAP

Define Condition Types
Define the Account Key
Create Tax Procedure
Assign the Country to the Calculation Procedure
Define Tax Codes

Define Condition Types

It indicates different types of tax such as GST, VAT, etc, and
conditions applicable.

Steps to create Condition Types

Step 1: Enter the T-Code SPRO in the SAP Command Field and
press Enter.
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 Now on the next screen click on SAP Reference IMG Button
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 Step 2: Navigate to SAP IMG Path:

Financial Accounting >> Financial Accounting Global Settings

>> Tax on Sale/Purchase >> Basic Settings >> Check
Calculation Procedure

OR

Enter T-Code OBYZ

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 Here you can Define your Condition Types

Click on Define Condition Types

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 Step 3: Click on the New Entries button on the top navigation

Step 4: Now make an entry in the following fields

Condition type: Enter condition type as RGST for company

code 1982.

Access sequence: Select standard Access Sequence MWST

from the list.

Condition class: Select Condition Class D for Taxes.

Calculation Type: Select Calculation Type A for Percentage.

After making all the entries press the Save button.

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 Now Condition Type RGST for company code 1982 is created.

Define the Account Key

Steps to create Account Key

Step 1: Enter T-Code SPRO and click on the button SAP Reference
IMG & Navigate to SAP IMG Path
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 Financial Accounting >> Financial Accounting Global Settings
>> Tax on Sale/Purchase >> Basic Settings >> Check and
Change Setting for Tax Processing

Here we will define our account key

OR

Enter T-Code OBCN

Step 2: On Change View Text Processing and Accounting Screen

click on the New Entries button
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 Step 3: Give information in the following field.

Process: Enter process name as RG1

Description: RGST for company code 1982

Tax type: Select Tax type 1 for Input tax and Tax type 2 for
Output tax

Posting indic: Select Posting indicator 2 for Separate line item

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 Press the Save button

Now the Account Key RG1 is created you can see it from the list.

Create Tax Procedure

It is the automatic mechanism developed to calculate tax on sales
and purchases by the system. Tax Procedure should not be created
for any company codes, it should be for one specific country.

There can be multiple tax procedures for the same country but for
multiple company codes, there is a single tax procedure. There are
so many country-specific Tax Procedures available in SAP, simply
you can assign the tax procedure to your country and its
applications. Tax Procedure should be assigned to the country
before creating the Tax Codes.
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 Steps to create Tax Procedure

Step 1: Enter T-Code SPRO and click on the button SAP Reference
IMG & Navigate to SAP IMG Path

Financial Accounting(New) >> Financial Accounting Global

SettingS(New) >> Tax on Sale/Purchase >> Basic Settings >>
Check Calculation Procedure

OR

Enter T.code OBYZ

Step 2: A popup window screen appears with options. Double click

the Define Procedures field.
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 Step 3: On Change View “Procedure”: Overview screen click on
New Entries button

Step 4: On New Entries: Overview of Added Entries screen

update the following field.

Procedure: Enter the name of the tax procedure which is a 5

digit key for example XYZIN.

Description: Descriptive text of the tax calculation procedure

for example TAX PROCEDURE FOR XYZ INDIA.
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 After maintaining the details click on the Save button.

Step 5: Now select the procedure XYZIN you created from the
procedure tree and double click the Control Data folder

Step 6: Select the New Entries button

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 Step 7: On the New Entries screen give information in the following
fields.

Step: Enter the number like 10, 20 30….etc. which specifies the
sequence of the procedure.

Condition type: Either we can create or use sap standard

condition type for example BASB for Base Amount.

Description: The description text appears automatically based

on the condition type

Account key: We link the account key to the tax procedure

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 After completing all the details click on the Save button and your tax
procedure is successfully created and you can see it from the
Procedure tree.

Assign the Country to the Calculation

Procedure
Step to assign the country to the tax procedure

Step 1: Enter T-Code SPRO and click on the button SAP Reference
IMG & Navigate to SAP IMG Path

Financial Accounting(New) >> Financial Accounting Global

Settings(New) >> Tax on Sale/Purchase >> Basic Settings >>
Assign Country to the Calculation Procedure

Or

Run T.code OBBZ

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 Step2: On the Change View “Assign Country” screen select the
country from the list and change the tax procedure to XYZIN
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 Then press the Save button

Now your Tax procedure XYZIN is assigned to the country India.

Define Tax Codes

Tax Codes are the tax rates used in the calculation of tax. We can
create multiple Tax Codes.

Step to create Tax Code

Step 1: Enter T-Code SPRO and click on the button SAP Reference
IMG & Navigate to SAP IMG Path

Financial Accounting >> Financial Accounting Global Settings

>> Tax on Sale/Purchase >> Calculation >> Define Tax Codes for
Sales and Purchases
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 Now it will ask you to select the country of which you want to define
Tax Codes
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 Step 2: On the Maintain Tax Code: Initial Screen

select

Country as IN India
Tax Code as R1
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 Step 2: Double click Tax code R1

Then the Properties window well come, update the following fields

Tax Code: R1
Tax type: V for Input Tax

Then press the check button

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 Now Maintain Tax Code: Tax Rates screen appears

In the field, Tax Percent Rate give the Input and Output Tax
percentage as 18%.

Then press the Save button.

Now your Tax Code R1 is created successfully.

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