what is difference between Tax procedure & Pricing Procedure?

[Former Member]

Hello SAP Experts,

I am new in SAP so Can anybody tell me what is the difference between Tax Procedure and Pricing Procedure? Why we both have to create in the SAP system? What are the significance of both? Thank you in advance.

Regards,

Biraj Adeshara

[former_member186100 · Accepted solution]

pricing are the components of Price agreed between  buyer and vendor/transporter , these values determine what will be the value of material purchased by you in inventory books. It is decided on the basis of negotiation between buyer and vendor. eg. basic price , discount

taxes are additional values on pricing levied by government ( state or central ) , this amount is to be paid to government by your vendor for making sale to you. Vendor has no control on rates of these taxes and they are decided by tax authorities based on financial budget passed by government. Hence they do not change on the basis of purchase order and we maintain them via tax procedures where we use automatic conditions , unlike pricing where we generally enter values manually. Additionally while pricing components always effect inventory valuation , taxes can  be inventorized or can be of recoverable nature. ex VAT , Excise duty , Service tax.

[Former Member · Accepted solution]

Thank you every1 for your guideline.

Regards,

Biraj

[Former Member · Accepted solution]

Awesome reply..

[BijayKumarBarik]

Hi,

When you are procuring material  or service in India where excise duties,VAT,CST and service tax involved,you

need go for using tax procedure with MM pricing procedure.The tax code which enter during purchase order creation,

play vital role for linking tax procedure with MM pricing procedure.The amount flow from MM pricing procedure

to tax procedure for further tax calculation with help of BASB condition type with routine 362 in tax procedure.

Generally in MM pricing procedure, you have pricing component such as: material price, discount,P& F charge,insurance,delivery cost

and octori.

Tax procedure, you have tax components such as service tax,BED,Edcess,Hedcess,VAT and CST.

Regards,

Biju K

[Former Member]

Hi,

Better to read this thread and search basic on help.sap.com.

scn.sap.com/thread/1570913

Thanks

Sanjeet