Skip to Content
Technical Articles
Author's profile photo Anant Patel

Deductible and Non-Deductible Taxes in SAP Business ByDesign

Deductible Tax – A Tax already paid to a Vendor that can be balanced against Output Tax.

While Purchase of materials, the Tax paid on the Purchase of items can be availed back from the government, this is called a Deductible Tax. Here, the Tax is not loaded to Material Inventory, It is posted to a separate G/L account as per the configuration and later stage it will be cleared-off by Financials.

Non-Deductible Tax – A Tax already paid to a Vendor that cannot be balanced against Output Tax.

In case of a Non-Deductible tax, the Tax amount will be loaded to Material Inventory. Here, the Company can not claim this Tax amount back from the government.

 

Taxable persons pay Input Tax to Vendors and Output Tax to the Tax Authority.

One part of the Input Tax, the Deductible Input Tax, can be balanced against the Output Tax, that is, a business pays tax on Sales and Purchases only on its own added value.

The other part, the Non-Deductible Input Tax, is excluded from this arrangement and depends on the applicable tax law of the appropriate country.

Assigned Tags

      7 Comments
      You must be Logged on to comment or reply to a post.
      Author's profile photo Taesik (Kevin) Jun
      Taesik (Kevin) Jun

      Greate Informative Blog.

      Author's profile photo Anant Patel
      Anant Patel
      Blog Post Author

      Thanks a lot.

      Author's profile photo Rakesh Yadav
      Rakesh Yadav

      Well Explained...

      Author's profile photo Kundan Kumar
      Kundan Kumar

      Very informative..
      Kindly explain on RCM on GST

      Author's profile photo Sukhbir Singh Chhina
      Sukhbir Singh Chhina

      Well explained in nutshell

      Author's profile photo Anant Patel
      Anant Patel
      Blog Post Author
      Sukhbir Singh Chhina Thanks a lot.
      Author's profile photo Naveen Kumar
      Naveen Kumar

      Thank you for the details