How to Assign tax codes for non taxable transactions in SAP

In previous SAP tutorials you have learned how to define tax procedures step by step, the next configuration step is assign tax codes for non taxable transactions in SAP.

Non tax codes are mandatory to maintain in SAP, whenever you are posting the non taxable transactions to the tax relevant accounts, we need to specify 0% tax codes. Here we are going to configure A0 & V0 0% tax codes and assign to company code TK01.

Before assigning tax codes for non taxable transactions, we need to define 0% input tax and 0% output tax.

  1. A0 – 0% Output Tax
  2. V0 – 0% Input Tax

Configuration steps for V0 – 0% Input Tax

  • Transaction Code: – FTXP
  • Path: – SPRO > SAP IMG > Financial Accounting (New) –> Financial Accounting Global Settings (New) –> Tax on Sales/Purchases –> Calculations –> Define Tax Codes for Sales and Purchases.

Step 1) Enter T-code “FTXP” in SAP command field.

SAP transaction code FTXP

Step 2) Enter country key “IN”, as we are tax codes for country India so we have entered In. If you are maintaining tax code for United States, enter US as country key.

SAP Country Key IN

Step 3) On maintain tax code: Initial screen, enter tax code that you like to create. Update as V0 and press enter to continue.

Maintain Tax Code SAP

Step 4) In next screen, update tax code description and tax type as V (Input tax). Press enter to continue.

Define V0 Tax Codes for Non Taxable Transactions

Step 5) Now update input tax – tax percentage rate as 0.

Click on save and save the configured tax code.

Tax code V0

Similarly create  A0-Output tax code

Step 1) Enter T-Code “FTXP”

SAP transaction code FTXP

Step 2) Choose Country key In.

SAP Country Key IN

Step 3) In next screen, enter A0 in the tax code field and enter.

Maintain tax code A0 SAP

Step 4) Update tax code description and tax type key as A, press enter to continue.

Define A0 Tax Codes for Non Taxable Transactions

Step 5) In next screen, you need to update tax percentage rate and update it as 0.

A0 tax code SAP

Click on save button and save the configured tax code.

Procedure to Assign Tax Codes for Non Taxable Transactions

Step 1) Enter T-Code “OBCL” and enter.

SAP transaction code OBCL

Step 2) On change view allocate company code –> Non taxable transactions overview screen, click on position button and enter your company code in the given field.

allocate company code to Non taxable transactions

Step 3) Now update 0% input tax code and 0% output tax code in the given field as shown below.

Assign Tax Codes for Non Taxable Transactions SAP

Successfully we have assigned tax Codes for non taxable transactions in SAP.