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How to: Set Up Service Tax

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In Microsoft Dynamics NAV, you must set up the following service tax prerequisites:

  • Service tax groups

  • Service tax percentages

  • Service tax registration numbers

  • General ledger account

  • Location card

  • Service entity types

To set up service tax groups

  1. In the Search box, enter Service Tax Groups, and then choose the related link.

  2. On the Home tab, choose New.

  3. Fill in the fields as described in the following table.

    Field Description

    Code

    The service tax group code.

    Description

    The description for the service tax code.

    Minor Head

    The minor head as described in the Service Tax Act. All service categories are classified under minor heads, as specified by the Service Tax Law.

    Sub-Clause No.

    The sub-clause number for the service tax code. This number is populated under the serial number 3B of the ST-3 report.

    For more information, see Service Tax Groups Table and Service Tax Groups Window.

  4. Choose OK.

  5. For those service tax groups where reverse charge applies, you must set up the reverse charge information.

    Select the service tax group, and then, on the Actions FastTab, in the Functions group, choose Serv. Tax Reverse Chrg. Setup.

  6. Fill in the fields. The following table describes a possible setup.

    Service Tax Group From Service Entity Type To Service Entity Type Reverse Charge Tax Type Reverse Charge % Explanation

    ADV

    Company

    Company

    Standard

    100

    Service tax is to be fully paid by the service receiver.

    DEL

    Company

    Company

    GTA

    100

    Service tax is to be fully paid by the service receiver. Service provider is providing GTA services.

    CA

    Company

    Individual

    Standard

    75

    75 percent of the service tax is to be paid by the service receiver, while the remaining 25 percent is to be paid by the service provider.

    The From Service Entity Type and To Service Entity Type fields describe the type of the service receiver and service provider.

  7. To set up service entity types, choose the From Service Entity Type field, and then, in the Service Entity Types window, fill in the fields.

    For example, define a service entity type for entities that are companies and one for entities who are individuals.

To set up service tax percentages

  1. In the Search box, enter Service Tax Setup, and then choose the related link.

  2. On the Home tab, choose New.

  3. Fill in the required fields as described in the following table.

    Field Description

    Code

    The service tax code.

    From Date

    The starting date for the service tax group code.

    Service Tax %

    The service tax percentage.

    eCess %

    The educational cess percentage.

    SHE Cess %

    The secondary and higher education cess percentage.

    Service Tax Receivable Account

    The general ledger account for the service tax receivable account.

    Service Tax Payable Account

    The general ledger account for the service tax payable account.

    Receivables Account (Interim)

    The general ledger account for the interim receivables account.

    Payables Account (Interim)

    The general ledger account for the interim payables account of.

    Abatement %

    The abatement percentage, if applicable.

    Same Group Set Off

    Select to specify that setoff is available for the service tax group.

    For more information, see Service Tax Setup Table and Service tax Setup Window.

  4. Choose OK.

To set up service tax registration numbers

  1. In the Search box, enter Service Tax Registration Nos., and then choose the related link.

  2. On the Home tab, choose New.

  3. Fill in the fields as described in the following table.

    Field Description

    Code

    The code given at the time of the service tax registration.

    Description

    The description for the code.

    Premises Code No.

    The premises code number for the service tax.

    Service Entity Type

    Specifies the category of service receiver that the service tax registration number applies to.

    To set up service entity types, choose the Service Entity Type field, and then, in the Service Entity Types window, fill in the fields. For example, define a service entity type for entities that are companies and one for entities who are individuals.

    For more information, see Service Tax Provider TypesService Tax Registration Nos. Table, and Service Tax Registration Nos. Window.

  4. Choose the OK button.

To set up the service tax group code for the general ledger account

  1. In the Search box, enter Chart of Accounts, and then choose the related link.

  2. On the Home tab, choose New.

  3. In the G/L Account Card window, on the General FastTab, fill in required the fields as described in the following table.

    Field Description

    No.

    The general ledger account number. You can enter a maximum of 20 alphanumeric characters.

    Name

    The name for the general ledger account.

    For more information, see Setting Up G/L Accounts in the Chart of Accounts Window and G/L Account Table.

  4. On the Posting FastTab, in the Service Tax Group Code field, select the service tax group code.

  5. Choose the OK button.

To set up service tax for a location

  1. In the Search box, enter Locations, and then choose the related link.

  2. Open the relevant location.

  3. In the Location Card window, on the Tax Information FastTab, fill in the required field as described in the following table.

    Field Description

    Service Tax Registration No.

    Specifies the service tax registration number.

  4. Choose the OK button.

Next you must specify the relevant service entity types for vendors, customers, and your own company. The following procedure describes how to specify the service entity type for a vendor, but the same steps apply to customers.

To set up the service entity type for a vendor

  1. In the Search box, enter Vendors, and then choose the related link.

  2. Open the relevant vendor.

  3. On the Tax Information FastTab, fill in the required fields as described in the following table.

    Field Description

    Service Tax Registration No.

    Specifies the service tax registration number.

    Service Entity Type

    Specifies the category of service provider for the vendor.

    Note

    In the Vendor Card window, you must fill in the Service Entity Type field in order to have service tax calculated.

  4. Choose the OK button.

To set up service tax registration numbers for a location

  1. In the Search box, enter Locations, and then choose the related link.

  2. On the Home tab, choose New. For more information, see Setting Up Locations.

  3. In the Location Card window, on the General FastTab, fill in the required fields as described in the following table.

    Field Description

    Code

    The unique location code for the warehouse or distribution center. You can enter a maximum of 10 alphanumeric characters.

    Name

    The name of the location code. You can enter a maximum of 50 alphanumeric characters.

    For more information, see Location Table.

  4. On the Tax Information FastTab, in the Service Tax Registration No. field, select the service tax registration number.

  5. Choose the OK button.

See Also

Concepts

Service Tax Overview

Other Resources

Service Tax Groups Table
Service Tax Groups Window
Service Tax Setup Table
Service tax Setup Window
Service Tax Registration Nos. Table
Service Tax Registration Nos. Window
Location Table
Setting Up Locations
Setting Up G/L Accounts in the Chart of Accounts Window
G/L Account Table