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Author's profile photo Mukthar Ali Ahamed N

Krishi kalyan Cess configuration

With the encasement of the Finance Bill 2016, Krishi Kalyan Cess @0.5% will be levied on all taxable services.  So from 1st june 2016 effective service tax rate will be 15%. The tax break up will be:

         Service tax            @ 14%
Add: Swach Bharat Cess @ 0.5%
Add: Krishi Kalyan Cess   @ 0.5%
                          
                                Total: –    15%

In addition to that CENVAT credit will be applicable for Krishi Kalyan Cess. So total CENVAT credit available on service tax will be14.5%.

Now we have to map the cess in SAP. For that SAP is already released the note 2319788. In that note the customization document also provided. Here I want to brief about the configuration maintained in it in the receivable (A/P) point view.


Basically service tax categories are in 2 ways.

1. Full reverse charge :  Under full reverse charge the service receiver is liable to pay service tax and

2. Partial/joint reverse charge:  In this Mechanism, both the service receiver and the service  provider are liable to pay service tax at specified percentage 

                                              of the value of taxable service.

I am not going in depth above topic. Now come to configuration point of view in SAP. In the customization document the below conditions have been created.

1.   JKKP – IN: AP KK Cess – 


     The above condition will use for full reverse charge


2.   JKK1 – IN: AP KKC RCM

      JKK2 – IN: KKC RCM Offset


    These 2 conditions will use for partial reverse charge

In addition to that the below account keys are created for posting to GL accounts

1  .KP1: A/P KK Cess Tax – Is used for full reverse charge

2. KP2: A/P KKC RCM  & KP3: A/P KKC RCM Offset – These keys are used for partial reverse charge

As I already mentioned CENVAT credit available for the KKC. For that we have to create a KKC receivable a/c  and assign it to the keys KP1 & KP2 in OB40. In addition to that create KKC payable a/c and assign it to KP3.

When you make invoice posting,after done other configuration mentioned in the document. The system will pass below entry in 2 cases:

1. Expense A/c Dr

    Service tax receivable A/c Dr 

   Swach Bharat Cess A/c Dr

    KKC receivable A/c Dr

    Vendor A/c

2. Expense A/c Dr

    Service tax receivable A/c Dr 

   Swach Bharat Cess A/c Dr

    KKC receivable A/c Dr 

    Service tax payable A/c Dr 

   Swach Bharat Cess Payable A/c Dr

    KKC Payable A/c Cr

    Vendor A/c  Cr

In case if the company is EOU & SEZ scheme, then it cannot take CENVAT credit. In that case the KKC should be posted to separate expense account or distribute it to relevant account. The two cases I have mentioned below:

1. If we want to post it to separate expense account, then assign the expense GL account for the keys KP1 & KP2 in OB40.

2. If want to distribute it to relevant expense, then assign the key NVV to the tax conditions JKKP & JKK1 in the tax procedure in OBQ3.


However, we can map partial reverse charge under withholding tax also. The configuration will share in another document.

KKC configuration in withholding tax


Please go through the document and share your valuable feed back.


Thanks  & Regards,


Mukthar Ali N



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      Author's profile photo Sanju Sivan
      Sanju Sivan

      Good one

      Author's profile photo Mukthar Ali Ahamed N
      Mukthar Ali Ahamed N
      Blog Post Author

      Thank you...

      Author's profile photo Former Member
      Former Member

      Really nice ... updated on timely

      Author's profile photo Mukthar Ali Ahamed N
      Mukthar Ali Ahamed N
      Blog Post Author

      Thanks..

      Author's profile photo Former Member
      Former Member

      nice document and SAP OSS note 2319788 as well to refer .

      Author's profile photo Mukthar Ali Ahamed N
      Mukthar Ali Ahamed N
      Blog Post Author

      Thanks you...

      Author's profile photo Ashok Kumar Telugu
      Ashok Kumar Telugu

      Nice document Mukthar..

      Author's profile photo Mukthar Ali Ahamed N
      Mukthar Ali Ahamed N
      Blog Post Author

      Thank you..

      Author's profile photo Rajkumar Sharma
      Rajkumar Sharma

      Thanks, Its very useful article...!

      Author's profile photo Former Member
      Former Member

      Super Bro!

      Author's profile photo Mukthar Ali Ahamed N
      Mukthar Ali Ahamed N
      Blog Post Author

      Thank you..

      Author's profile photo Ravi Kumar
      Ravi Kumar

      Good Document with configuration. Mr.Mukther ali .

      Author's profile photo Mukthar Ali Ahamed N
      Mukthar Ali Ahamed N
      Blog Post Author

      Thank you Ravi..

      Author's profile photo Former Member
      Former Member

      very helpful document..

      Author's profile photo Mukthar Ali Ahamed N
      Mukthar Ali Ahamed N
      Blog Post Author

      Thank you..

      Author's profile photo Sattaiah Gundu
      Sattaiah Gundu

      Really very good doc

      Author's profile photo Mukthar Ali Ahamed N
      Mukthar Ali Ahamed N
      Blog Post Author

      Thank you..

      Author's profile photo Manjunath v
      Manjunath v

      Hi Mukthar,

      You have provided good information at the right time.

      Thank you !

      Regards

      Manjunath

      Author's profile photo Mukthar Ali Ahamed N
      Mukthar Ali Ahamed N
      Blog Post Author

      Thank you...

      Author's profile photo Former Member
      Former Member

      hI sir

          Nice document....for entry level persons in WBS(PS) like me.

        

         keep on posting , which would help a lot to all.

      Regards

      Raju

      Author's profile photo Mukthar Ali Ahamed N
      Mukthar Ali Ahamed N
      Blog Post Author

      Thank you..

      Author's profile photo Former Member
      Former Member

      Hi Mukthar,

      Thanks for sharing your valuable  knowledge.

      Author's profile photo Mukthar Ali Ahamed N
      Mukthar Ali Ahamed N
      Blog Post Author

      Thank you...