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Mass Update of Tax Classification Material in Material Master using Direct Input Method (LSMW)

By Chirag Modi, Infosys

Introduction

We had a requirement of mass updating tax classification material in material master. We achieved this requirement by using LSMW (Direct Input Method). This document explains the various steps involved in using Direct Input Method for updating Tax Classification Material.  

Before explaining the steps let us go through what tax classification material is in material master.  

Tax category in Material Master

As per OSS Note 872449 - Tax determination in Sales and Distribution, the plant assignment to the sales organization impacts the data in the material master. The note indicates,

The tax classification of the material determines whether the material is fully, half or not liable for tax. Due to this classification, different tax rates can be determined. The tax classification is determined from the material master and you can change it manually in the sales distribution document at item level. The system displays the countries provided in the material master in the Sales and Distribution area: Sales organization, from the plant assignment (plant country) for the distribution channel and division (transaction OVX6).

In this case, you can store a tax classification for each tax category or condition and country.  

Tax data is maintained in the material master in conjunction with the settings made in Customizing for Sales.

The relevant settings are:

  • Assignment of plants to sales organization

  • Assignment of country to plant

  • Assignment of country to sales organization (via company code)

  • Tax per country.  

Note that whenever you make changes in configuration side, you need to create new material master and check.

Maintaining Tax Category in SAP  

Tax Category displayed in the Material Master record depends on: -

1) Material Sales Organization.

2) The country of each plant assigned to that Sales Organization.  

Once the required enterprise setup is in place, you can maintain tax categories against a country in transaction OVK1.  

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Multiple tax categories can be maintained against a single country as highlighted in the above screenshot of t-code OVK1.  

Transaction Table - TSTL

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Example - For Tax Country Code "IN" (India)  

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Maintaining Tax Classification against Tax Category  

You can maintain tax classification material against tax category in transaction OVK4.

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Generally there are 3 values for tax classification material

1) 0 - Tax Exempt

2) 1 - Full Tax

3) 2 - 50% Tax  

Transaction Table - TSKM

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Example - For Tax Category "JTX1", tax classification materials maintained in TSKM Table  

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Steps  

Step 1: Before going to LSMW Process, create flat files as shown below with the delimiter as 'Tabulator'.  

Header File

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WERKS - Plant

VTWEG - Distribution Channel

VKORG - Sales Org.

MATNR - Material  

Item File

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MATNR - Material

VKORG - Sales Org.

TAXM1 - Tax Classification Material (To be updated)

TAXY1 - Tax Category

ALAND - Country Code  

Step 2: Create an Object in T-Code: LSMW  

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Click here to continue...

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