To set up and process service tax on transportation

This functionality is specific for India.

To set up and process service tax on transportation, complete the following steps:

  1. Enable India localizations functionality
    In the India Localization Parameters (tccom9136m00l) session, in the Common tab, select the Indian Localizations Applicable check box.
  2. Define individual tax codes
    In the Tax Codes by Country (tcmcs0136s000) session, define a tax code for each kind of tax.
    • Tax code with the Kind of Tax field set to VAT and with tax rate as 0%.
    • Tax code for service tax on transportation, with the Kind of Tax field set to Social Contribution (Company Expense) and the Indirect Tax field set to Service Tax On Transportation.
    • Tax code for Ecess, with the Kind of Tax field set to Social Contribution (Company Expense) and the Indirect Tax field set to E Cess on Transportation Service.
    • Tax code for SHEcess, with the Kind of Tax field set to Social Contribution (Company Expense) and the Indirect Tax field set to SHE Cess on Transportation Service.
  3. Define tax rates
    In the Single Tax Rates (tcmcs0132m000) session, define the tax rates for all the singular tax codes. You must define the tax rate for the VAT tax code as 0% and for other tax codes as applicable.
  4. Define ledger accounts
    In the Posting Data for Tax Codes (tfgld0171s000) session, define the following ledger accounts for the singular tax codes with the Indirect Tax as Service Tax On Transportation or E Cess on Transportation Service or SHE Cess on Transportation Service.
    • In the Purchase Tax field, define a ledger account for the Service tax Payable account.
    • In the Service Tax on Transportation field, define a ledger account for the Service tax Claimable account/ Expense account as applicable.
  5. Approve individual tax codes
    In the Tax Codes by Country (tcmcs0536m000) session, approve the individual tax codes defined in the steps 2,3 and 4. You can add only approved tax codes to the group tax code. For more information on defining individual tax codes, refer to the To set up tax codes by country section.
  6. Define the group tax code
    In the Tax Codes by Country (tcmcs0136s000) session, define a tax code and select the Group Tax check box to indicate that the tax code is a group tax code. For a group tax code, you cannot enter other tax details. Approve the group tax code.
  7. Add tax codes to the group tax code
    In the Tax Codes by Country (tcmcs0536m000) session, on the Specific menu, click Tax Codes by Group. The Tax Codes by Group Tax Code (tctax0139m000) session starts.
    • In the Tax Codes by Group Tax Code (tctax0139m000) session, click New to add the tax codes to the group tax code.
    • Add the tax codes approved in step 5 to the group tax code.
  8. Levy service tax on transportation
    In the Purchase Invoices (tfacp1110s000) session, create a cost invoice for the freight charges with the details of the consignment note issued by the GTA. You must select the group tax code defined in step 6 in the Group Tax Code field.

Update the CENVAT credit pool using Journal Voucher only after the service tax on transportation records are declared with the Tax Declaration Type as VAT in the Tax Declarations (tfgld1625m000) session and after the invoice amount is paid.

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