Certain services have the material component in their price since the material supplied by the vendor. On this material component of total price VAT is applicable whereas on the remaining part of the total service cost, service tax is applicable. We have created the schema for the split calculation of service tax and vat. A tax code is also generated to define the rates of VAT and service tax.
In MIRO, the tax code considers the net price of the service as the base price and calculate VAT and service tax on it, instead of considering the part as applicable to VAt and service tax. It is required to calculate, post the VAT and service tax on their respective partial price component.
tis is right, because you need the different taxes calculated separately, because of financial reason.
The different tax amounts must be booked to difference accounts. If you book it as VAT, you will see the full amount on the VAT account, which you do not want.
I think to get a proper backgrounded answer, you might raise this question in the FI forum.