Input and Output Tax Definition
Input / Output Tax:
At month-end, Input tax is offset with output tax and balance have to pay/receive the goverment.
Some countries allow setoff of output tax against inout tax which is called VAT in European countries and MODVAT in India ( hta is tax payable on sold items against tax paid against bought out items) based on materials and products.
Input Tax is receivable account and Output Tax is liability account. Output tax is periodically set off against input tax.
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Creating Tax Codes in SAP
In SAP system, we can create Tax codes through FTXP transaction.
The following step will give you explanation on “how to create a tax code in SAP“. Afterwards these tax codes must be used in the creation of condition tables such as for MWST condition.
- Go to SAP transaction code: FTXP and select the country for which you need to create a tax code.This country is automatically linked to the Tax Procedure which has been set up in the following SAP menu path
SAP IMG – Financial accounting – Financial accounting global settings – tax on sales/purchases – basic settings – Assign country to calculation procedure
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SAP Taxes
Tax Procedure calculate and accurately book tax liabilities for sales and use or VAT type taxes in the GL at the time of GR or IR.
Extended Tax Witholding will be covered in Accounts Payable section
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