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Swachh Bharat cess configuration for Indian clients

Dear friends,

Swachh Bharat cess is a “tax on services” in addition to service tax in india.

It has been introduced with effect from 15.11.2015 in India
The rate of Swachh Bharat Cess is 0.5% of value of taxable service on which Service Tax is payable.

Please note that Swachh Bharat Cess will have to be separately shown in all of Service Invoices raised on or after 15.11.2015.

Let me explain the step by step configurations required to have Swachh Bharat cess in SAP.

Swachh Bharat cess in Accounts Payable:

In T code OBCN (SPRO–>FA–>FA Global settings–>Tax on sales/purchases–>Basic settings–>Check and change settings for Tax processing), create new processing key. This will enable us to assign separate GL account for Swachh Bharat cess(SBC).


Then in T code OBQ1 (SPRO–>FA–>FA Global settings–>Tax on sales/purchases–>Basic settings–>Check calculation procedure) create new condition type for SBC.


Then assign the condition type and processing key in pricing procedure vide SPRO–>FA–>FA Global settings–>Tax on sales/purchases–>Basic settings–>Check and change settings for Tax processing.


Then Create separate GL account for SBC vide T code FS01.

Then in T code OB40 (SPRO–>FA–>FA Global settings–>Tax on sales/purchases–>Posting–>Define Tax accounts) assign GL account for the relevant tax code in the transaction (Read processing key) created for SBC in T code OBCN.


Then in T code FV11 create condition records for SBC for the service tax applicable tax codes.


The abovementioned process meant for Swachh Bharat cess payable to vendor and Service tax credit is available.

If Service tax credit is not available then we can include the SBC with the Service tax rate.

That is Service tax rate 14% and SBC 0.5% so total taxes is 14.5% and the entire amount will be booked into the natural expenses head.

With respect to Reverse charge cases, in our company we are following Withholding tax type route for Reverse charge mechanism.

We have decided to include the SBC rate in the Service tax rate and then before processing returns pass manual JV to show separately the Service tax and SBC amount.

Example If the Service tax base amount is 1000 Crores, then Serv tax is 140 C and SBC is 5C so in reverse charge, Service tax payable head will be credited by 145C . At the time of filing of return We will pass rectification entry like,

ST payable DR 145 C

ST payable CR 140 C

SBC           CR    5 C.

Swachh Bharat cess in Accounts Receivable

In accounts receivable side, we have used condition type route for service taxes and not followed Tax code route.

Create New condition type in T code V/06 (SPRO–>Sales and Distribution–>Basic functions–>Pricing–>Define condition types).


Then create new account key for SBC vide SPRO–>Sales and Distribution–>Basic functions–>Account assignment/Costing–>Revenue account determination–>Define and assign account keys.


Then in Pricing procedure assign the SBC condition type in T code V/08 (SPRO–>Sales and Distribution–>Basic functions–>Pricing–>Assign Pricing procedures)


Then in VK11 create condition records for SBC.


Then in VKOA maintain GL account assignment for the account key (SPRO–>Sales and Distribution–>Basic functions–>Account assignment/Costing–>Revenue account determination–>Assign GL accounts).


Sample accounting document is as follows.


Hope it helps.

Kindly revert back for any clarification.

Your views and criticisms are also welcome.

Thanks and Regards,


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  • With SCN being international community I think it'd make sense to add at least some links on what the mysterious 'Swachh Bharat Cess' is... Quick Google search finds this brilliant quote:

    Swachh Bharat Cess is not another tax but a step towards involving each and every citizen in making contribution to Swachh Bharat

    which somehow does not add much clarity. 🙂

  • Hi Sethuraman

    Wonderful document given by you. Thanks for that.

    But the configuration for WHT is missing (Direct Vendor or Customer Invoice).

    And no Cenvat credit can be taken in any form on this Cess. Whatever the Cess balance is there in the books of accounts has to be expensed out and cannot be adjusted against this Cess...

    Thanks, Venkat

  • Nice Document...

    As on date, SBCess credit is not allowed because CENVAT Credit Laws are not amended.

    SAP has released two notes on Swachh Bharat Cess, please refer -

    1. 2133774 - Swachh Bharat Cess on Services vide Notification No. 21/2015, 22/2015
    2. 2133639 - Changes on Service Tax Union Budget 2015-16 - DDIC activities



  • Hi Sethuraman,

    Thanks for the document. Its been very helpful.

    Just a quick question

    Under TAXINN procedure which uses condition records, should we create new service tax codes which includes Swachh  Bharat Cess or can modify existing tax codes adding Swachh  Bharat Cess condition with validity starting from Nov 15th?

    Thanks for your suggestions.



    • Hi,

      For TAXINN procedure you need not create new tax codes. You can modify the exisiting ones.

      SAP has released two notes on SB cess.

      1. 2133774 - Swachh Bharat Cess on Services vide Notification No. 21/2015, 22/2015
      2. 2133639 - Changes on Service Tax Union Budget 2015-16 - DDIC activities.

      It will be helpful in guiding you.

  • Hi,

    For New Input Tax code we have created Key SB1. We have created new P&L GL 7230700 & assigned it to key SB1 in this tax code.

    But while posting MIRO system gives error "Account 7230700 requires as assignment to a CO object"

    We want to extract taxes calculated against SBC GL.

    Kindly suggest the GL type to be used for SBC. Matter urgent.



    • Hi,

      As per Accounting standards, service tax non creditable should be booked against natural expenses. i.e exp head assigned in PO account assignment. That case you could assign key non deductible in tax code.

      But if you want to book it to SBC head then assign default cost center for this GL in T code KA02.

      • Hi,

        Thanks for the immediate reply.

        Where to enter 0.5% SBC in FTXP?

        Is accounting key NVV to be assigned to Condition Type of A/P Swachh Bharat (JSB1)?

        Please help.



        • Hi Gaikwad,

          create condition type and account key assign tax procedure , ..  In  FTXP which you created key sb2 and codition type  there assign 0.5 .other you can create condition FV11.

          For more details you refer below  SAP Note ,

          1. 2133774 - Swachh Bharat Cess on Services vide Notification No. 21/2015, 22/2015
          2. 2133639 - Changes on Service Tax Union Budget 2015-16 - DDIC activities



  • Dear Friends

        We are on TAXINN and are in the process of  configuring the Swach Bharath cess in our system.

    We have 6 Plants and each of them is mapped to different  profit center . We also have Cost centers Plant wise/ Profit center wise.

    I have configured all aspects of the swach Bharath  Cess as given by SAP in its notes.

    We would like to maintain 1 Tax code (SM) for 14% Service Tax + 0.5 % Swach Bharath cess.

    We also have maintained the Process Key SB1 in OBCN as  Non-Deductible and Posting indicator 2 meaning Seperate Line Item. We have also mapped the Process Key SB1 in T code OB40 to an P & l GL as we would like to expense the same.

    When we do a MIRO post the Service sheet entry  we face an error saying that the GL account ( Mapped for SB1 Process in OB40 )

    Account 46987900 requires an assignment to a CO object

    Message no. KI235

    If we do maintain this GL as a cost element and also assign a default Cost center to the cost element we are able to post the same but the Swach Bharath Cess is always posted to one Profit center only instead of the Profit center assigned to the Service Item.

    Need suggestions to overcome this situation.


    T N Ramanathan


  • Dear,

    i got a doubt in you screen shot posted. You mentioned  as

    . &

    But in India we don`t use jurisdiction code.

    Where as we have access sequence with Country and tax code.

    Kindly help me on this.