(IND) Set up and use a sales tax hierarchy [AX 2012]

Updated: November 27, 2013

Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2

Set up a sales tax hierarchy and then use the sales tax hierarchy to set up a tax setoff rule, set up a sales tax hierarchy profile, and settle sales tax transactions. For an overview of sales tax hierarchies, see (IND) Sales tax hierarchies.

NoteNote

This topic does not apply to versions of Microsoft Dynamics AX 2012 prior to cumulative update 7 for AX 2012 R2.

The following illustration shows how to set up and use a sales tax hierarchy. The numbers correspond to the procedures later in this topic.

设置并使用营业税层次结构的流程

The following table shows the prerequisites that must be in place before you start.

Category

Prerequisite

Version

Microsoft Dynamics AX 2012 R2 with cumulative update 7 or later

Country/region

The primary address for the legal entity must be in the following countries/regions: India

Related setup tasks

Set up the parameter for India sales tax. For more information, see (IND) Activate sales tax parameters.

Set up sales tax codes, sales tax groups, and item sales tax groups. For more information, see (IND) Set up sales tax codes, (IND) Set up sales tax groups for VAT, and (IND) Create item sales tax groups.

Set up tax components for sales tax. For more information, see (IND) Tax components (form).

Set up service codes. For more information, see (IND) Set up service codes for service goods.

Use the General ledger parameters form to set up the parameter to use the sales tax hierarchy.

To perform this task, follow these steps:

  1. Click General ledger > Setup > General ledger parameters.

  2. Click Sales tax, and then in the Sales tax area, on the General FastTab, select the Use the sales tax hierarchy framework check box to process sales tax payments using the sales tax hierarchy.

Microsoft Dynamics AX provides a default hierarchical structure that you can use to set up a sales tax hierarchy based on your requirements. Use the Sales tax hierarchies form to set up a sales tax hierarchy based on the default hierarchical structure.

To set up a sales tax hierarchy, follow these steps:

  1. Click General ledger > Setup > Sales tax > India > Sales tax hierarchies.

  2. In the Sales tax hierarchies form, click New to create a sales tax hierarchy record based on the default hierarchical structure.

  3. In the Create a sales tax hierarchy dialog box, in the Name field, enter a name for the sales tax hierarchy.

  4. In the Structure field, specify the structure for the sales tax hierarchy, and then click OK. The name and the structure of the sales tax hierarchy are updated in the Sales tax hierarchies form.

    The Use a sales tax hierarchy for tax setoff check box is selected by default based on the default hierarchical structure. The Structure schematic diagram FastTab provides a visual representation of the sales tax hierarchy. A default hierarchy version is created on the Versions FastTab when you create the sales tax hierarchy.

    NoteNote

    You cannot modify the structure type for the sales tax hierarchy in the Sales tax hierarchies form.

  5. Optional: On the Versions FastTab, click Add to create an additional version of the sales tax hierarchy. The version number is updated with the next number in the sequence based on the time and date when the hierarchy version is created.

    –or–

    Optional: On the Versions FastTab, click Copy to copy a selected sales tax hierarchy version to use as the template for a new hierarchy version.

    NoteNote

    Click Remove to delete the selected version of the sales tax hierarchy. You cannot delete a sales tax hierarchy version that is referenced by a transaction or used in a sales tax hierarchy profile.

  6. On the Versions FastTab, in the Description field, enter a description for the sales tax hierarchy version.

  7. Click Synchronize to synchronize the tax components and service codes that you configured with the nodes in the structure of the sales tax hierarchy.

  8. To activate the selected sales tax hierarchy version, click Activate.

  9. To deactivate the selected sales tax hierarchy version, click Deactivate.

    NoteNote

    You cannot deactivate a sales tax hierarchy version that is used in a sales tax hierarchy profile.

  10. Click View to open the Sales tax hierarchy designer form, where you can modify the selected sales tax hierarchy.

After you set up the sales tax hierarchy based on the default hierarchical structure, you can manage the sales tax hierarchy based on your requirements. Use the Sales tax hierarchy designer form to manage the selected sales tax hierarchy version.

To manage the sales tax hierarchy, follow these steps:

  1. Click General ledger > Setup > Sales tax > India > Sales tax hierarchies.

  2. In the Sales tax hierarchies form, on the Versions FastTab, select a sales tax hierarchy version, and then click View to open the Sales tax hierarchy designer form.

  3. On the Action Pane, on the Hierarchy designer tab, click Edit to modify the default sales tax hierarchy.

  4. To enable a selected node for the sales tax hierarchy, click Enable. You can use the hierarchy node to create tax setoff rules.

  5. To disable a selected node for the sales tax hierarchy, click Disable.

  6. Click Synchronize to synchronize the tax components and service codes that you configured with the nodes in the sales tax hierarchy.

  7. Optional: To make a hierarchy node the focus of the sales tax hierarchy, click the button on the node. The sales tax hierarchy is updated to display only the selected node and its child nodes.

  8. Optional: Click Hierarchy details to open the Sales tax hierarchies form, where you can view the structure type and version details about the sales tax hierarchy.

  9. Optional: Select a tax component, a service code, or a tax record type node for the sales tax hierarchy, and then click Node details to open the Tax components form, where you can view the tax component details.

Use the Setoff rules for sales tax hierarchies form to set up a tax setoff rule that is used to set off the input tax for one tax component in the sales tax hierarchy with the output tax of another tax component.

To set up a tax setoff rule, follow these steps:

  1. Click General ledger > Setup > Sales tax > India > Sales tax hierarchies.

  2. In the Sales tax hierarchies form, click View to open the Sales tax hierarchy designer form.

  3. On the Action Pane, on the Hierarchy designer tab, click Setoff rules for sales tax hierarchies to open the Setoff rules for sales tax hierarchies form.

  4. Click New to create a setoff rule. The priority that determines how the tax setoff rules are applied to the sales tax hierarchy is automatically updated in the Priority field.

  5. In the Name field, enter a name for the tax setoff rule.

  6. On the Recoverable FastTab, in the right pane, select the tax types, service codes, tax components, and tax record types that are used to set off taxes.

  7. On the Payable FastTab, in the right pane, select the tax types, service codes, tax components, and tax record types that are set off against the recoverable tax nodes. For example, you can set off service tax against excise duty by selecting Service tax on the Recoverable FastTab and Excise on the Payable FastTab.

    NoteNote

    The path of the selected service code, tax component, and tax record type from the root node of the sales tax hierarchy to the selected node on the Recoverable FastTab and the Payable FastTab is updated in the Path of the selected node field.

Use the Maintain setoff hierarchy profiles form to create a sales tax hierarchy profile. You can create multiple versions of the sales tax hierarchy for different reporting periods based on your requirements.

To create a sales tax hierarchy profile, follow these steps:

  1. Click General ledger > Setup > Maintain setoff hierarchy profiles.

  2. Click New, and then in the Create a setoff hierarchy profile dialog box, in the Effective date field, select the date from which the sales tax hierarchy is effective.

  3. In the Hierarchy field, select the sales tax hierarchy that is applied to set off taxes, and then click OK. You can only select a sales tax hierarchy that is active, and for which the Use a sales tax hierarchy for tax setoff check box is selected in the Sales tax hierarchies form.

    NoteNote

    The version number and the description of the sales tax hierarchy from the Sales tax hierarchies form are updated in the Version field and the Description field based on the hierarchy that you select in the Hierarchy field.

After you create a sales tax hierarchy profile or modify an existing profile, you can activate the sales tax hierarchy. When you activate a setoff hierarchy, all of the unsettled transactions are validated and updated against the active hierarchy and version. For example, if an unsettled transaction contains service tax, then the service tax information, such as service code and accounting code information, is validated based on the active sales tax hierarchy.

To activate a setoff hierarchy profile, follow these steps:

  1. Click General ledger > Setup > Maintain setoff hierarchy profiles.

  2. Select a profile, and then click Activate.

Click History to open the Setoff hierarchy revision history form, where you can view the number of changes that you made to an activated hierarchy profile. You can view the date when the hierarchy is activated and the name of the person who activated the hierarchy profile for each version.

Complete this procedure to reject the changes to the setoff hierarchy profile that have not been activated.

To discard the setoff hierarchy profile changes, follow these steps:

  1. Click General ledger > Setup > Maintain setoff hierarchy profiles.

  2. Select a profile, and then click Discard.

Use the Sales tax payment balances form to use the setoff rules that you created based on the sales tax hierarchy to process sales tax payments.

To settle sales tax transactions, follow these steps:

  1. Click General ledger > Reports > External > Sales tax payments.

  2. In the Sales tax payments form, select a sales tax transaction, and then click Sales tax payment balances. You can view the recoverable and payable information that is used to settle each tax type.

    Field

    Description

    Registration number

    The tax registration number for the tax type.

    Path of the selected node

    The path from the root node of the sales tax hierarchy to the selected node for the selected tax type.

    Recoverable amount

    The recoverable tax amount of the tax type for the transaction.

    Recoverable amount to settle

    Modify the recoverable tax amount that is used to settle the payable tax amount.

    Adjustment

    The amount that is adjusted for the tax type.

    Payable amount

    The payable tax amount of the transaction for the selected tax type.

    Payable amount to settle

    Modify the payable tax amount that is used in the tax settlement process.

    Subtotal amount

    The balance amount for the tax type after tax settlement.

When you run the sales tax settlement process, you can view the details of each tax component in the Payment journal form. In the Journal voucher form of the vendor payment journal, click Functions > Settlement. The component-related tax details are displayed for the voucher that is generated on the Overview tab in the Settle open transactions form.

If you don't have access to the pages that are used to complete this task, contact your system administrator and provide the information that is shown in the following table.

Category

Prerequisite

Configuration keys

No configuration key is required for this task.

Security roles and duties

To set up and use a sales tax hierarchy, you must be a member of a security role that includes the duties that are described in the following table:

Duty Name Procedure
Enable sales taxes process TaxSalesTaxesProcessEnable Perform sales tax payments.
Review sales taxes process performance TaxSalesTaxesProcessPerfReview View the sales tax payment report.
Maintain sales tax transactions TaxSalesTaxTransactionsMaintain Set up sales tax hierarchies.

Security roles and privileges

To set up and use a sales tax hierarchy, you must be a member of a security role that includes the privileges that are described in the following table:

Privilege Name Procedure
Settle sales taxes due TaxReportProcess Perform sales tax payments.
Maintain indirect tax transactions TaxIndirectTransactionMaintain_IN Set up sales tax hierarchies.
View sales tax payments information TaxReportVoucherView View sales tax payment reports.

Announcements: To see known issues and recent fixes, use Issue search in Microsoft Dynamics Lifecycle Services (LCS).

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