Microsoft Dynamics® AX

Service Tax Reverse Charge

Last Updated: January 2014
AX 2012 R3 / Version 1.0.0
 Contents

Introduction................................................................................................3
Audience.....................................................................................................3
Scenario......................................................................................................3
Before you begin........................................................................................3
Service tax reverse charges - create Item sales tax group..........................4
Create and post purchase order with a service tax reverse charge.............5
Create and post a purchase order with a service tax
reverse charge and a category of Others...................................................6
Vendor payment with a service tax reverse charge....................................8
Sales tax settlement process.......................................................................9
Service tax authority payment..................................................................11
Conclusion................................................................................................12
Disclaimer................................................................................................12

AX2012R3- Microsoft Dynamics AX 2012 Service tax reverse charge Demo Script 2
s

INTRODUCTION
This document demonstrates how Microsoft Dynamics AX 2012 R3 supports the service tax reverse charge
functionality.
The primary objective of the demo script is to provide the user with an overview of the financial impact of service
tax reverse charge transactions.

AUDIENCE
The scripts in this document should be used to demonstrate the value of Microsoft Dynamics AX 2012 R3 to a
business decision maker (BDM) and how the solution supports service tax reverse charge transactions. The
executives that you present to will find value in this script if they have an interest in:
 How to create a purchase order transaction with a reverse charge and a service category of Others.
 The financial impact of service tax reverse charge transactions

SCENARIO
This script focuses on the following processes:
 Post a purchase order with a service tax defined reverse charge and a category of ‘Others’.
 Verify the financial entries

DEMO PRESET CONFIGURATION:

This script was written to work with the Microsoft Dynamics AX 2012 R3 RTM Virtual Machine (VM). Make sure
that the VM is up and running and that you have logged on. The script addresses key pain points and challenges that
different roles might face. However the demo can be completed logged on as the system administrator.
Domain: CONTOSO
User: Administrator
Password: pass@word1

BEFORE YOU BEGIN

Before you begin please add the following to your environment in demo data set and company Contoso INMF:
Use the following log in details:
 Domain: CONTOSO
 User: Administrator
 Password:pass@word1

AX2012R3- Microsoft Dynamics AX 2012 Service tax reverse charge Demo Script 3
SERVICE TAX REVERSE CHARGES - CREATE ITEM SALES TAX GROUP

Accounting supervisor
1. Click File > Tools > Session date and time
2. Click the calendar icon and select 11/10/2013 in the calendar
3. Click OK
4. Click General ledger > Setup > Sales tax > Item sales tax
groups

5. Filter on Item sales tax group ST-KA_2

6. Verify Accounting basis Point of taxation basis
7. Verify Reverse charge percentage 25
8. Click Close
End of the Item sales tax group for tax type – service tax with reverse charge %

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CREATE AND POST PURCHASE ORDER WITH SERVICE TAX REVERSE CHARGE

Purchasing agent
1. Click Accounts payable > Common > Purchase order > All
purchase orders

2. On the Action pane, click Purchase order

3. Enter Vendor account INMF-000005

4. Click the General FastTab
5. Enter Site Site1
6. Enter Warehouse 11
7. Click OK
8. Enter Item number S0001
9. Enter Quantity 1.00
10. Enter Unit price 10000.00
11. Click the Line details FastTab
12. Click the Setup tab
13. Select Sales tax group ALL_STG
14. Select Item sales tax group ST-KA_2
15. Save the record
16. On the action pane, click the Purchase tab
17. Click Sales tax

18. Verify the tax calculations

19. Close the Temporary sales tax transactions form
20. Click Confirm

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Accounts payable clerk
21. On the Action pane, click the Invoice tab
22. Click Invoice
23. Select Default quantity for lines Ordered quantity
24. Enter Invoice
25. Enter Invoice date 11/10/2013
26. Click Post, and then click Post
27. Click OK
28. On the Action pane, in the Journals group, click Invoice Click
the Overview tab
29. Click Voucher
30. Validate the voucher entries
31. Click Close for each form

End of create and post purchase order with service tax reverse charge
CREATE AND POST PURCHASE ORDER WITH SERVICE TAX REVERSE CHARGE AND CATEGORY OTHERS

Purchasing Agent
32. Click File > Tools > Session date and time
33. Click the calendar icon and select 11/10/2013 in the calendar
34. Click OK
35. Click Accounts payable > Common > Purchase order > All
purchase orders

36. On the Action pane, click Purchase order

37. Enter Vendor account INMF-000005

38. Click the General FastTab
39. Enter Site Site1
40. Enter Warehouse 11
41. Click OK

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 42. Enter Item number S0001
43. Enter Quantity 1.00
44. Enter Unit price 50000.00
45. Click the Line details FastTab
46. Click the Setup tab
47. Select Sales tax group ALL_STG
48. Select Item sales tax group ST-KA_2
49. Click the Tax information tab
50. Select Service category Others
51. Save the record

52. On the Action pane, click the Purchase tab

53. Click Sales tax
54. Verify the tax calculations
55. Click Close
56. Click Confirm

Accounts payable clerk

57. On the Action pane, click the Invoice tab
58. Click Invoice
59. Select Default quantity for lines Ordered quantity
60. Enter Invoice
61. Enter Invoice date 11/10/2013
62. Click Post, and then click Post
63. Click OK
64. On the Action pane, in the Journals group, click Invoice
65. Click the Overview tab
66. Click Voucher
67. Verify the voucher entries
68. Close the forms

End of the create and post purchase order with service tax reverse charge and the category Others

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VENDOR PAYMENT WITH SERVICE TAX REVERSE CHARGE

Accounts payable payment clerk

69. Click File > Tools > Session date and time
70. Click the calendar icon and select 11/25/2013 in the calendar
71. Click OK
72. Click Accounts payable > Journals > Payments > Payment
journal

73. On the Action pane, click Payment journal

74. Click New
75. Select Name VendPay
76. Click Lines
77. Enter Account number INMF-000005
78. Click Functions, and then click Settlement
79. Select the Mark check box on the line for Amount to settle -
10927.00
80. Click Close
81. Enter Offset account type Bank
82. Enter Offset account IND OPER
83. Click Post, and then click Post
84. Close the Infolog form
85. In the Journal voucher form, click Inquiries, and then Click
Voucher
86. Click Related voucher
87. Click Voucher
88. Verify the voucher as shown in the illustration
89. Click Close for each form

90. Click New

91. Enter Name VendPay
92. Click Lines
93. Enter Account number INMF-000005
94. Click Function, and then click Settlement
95. Select the Mark check box on the line for Amount to settle -
54635.00
96. Click Close

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 97. Select Offset account type Bank
98. Enter Offset account IND OPER
99. Click Post, and then click Post
100.Close the Infolog form
1. In the Journal voucher form, click Inquiries, and then click
Voucher
2. Click Related voucher
3. Click Voucher
4. Verify the voucher as shown in the screenshot
5. Click Close for each form

End of vendor payment with a service tax reverse charge

SALES TAX SETTLEMENT PROCESS

Accountant
6. Click General ledger > Periodic > Sales tax payments >
Sales tax payments

7. Select Tax registration group EX _ST

8. Enter Registration number ASDCE8796FST212
9. Select Settlement period Sr. Tax
10. Enter Date 11/31/2013
11. Enter Transaction date 11/31/2013
12. Click Tax adjustment
13. Click OK
14. Select the Update check box
15. Click OK
16. Click OK
17. Close the report

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 18. Click General ledger > Setup > Sales tax > Sales tax
settlement periods

19. Select Settlement period Sr. Tax

20. Click Sales tax payment
21. Click Voucher
22. Verify the settlement voucher
23. Click Close

End of the sales tax settlement process

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SERVICE TAX AUTHORITY PAYMENT

Accounts payable payment clerk

24. Click File > Tools > Session date and time
25. Click the calendar icon and select 12/01/2013 in the
calendar
26. Click OK
27. Click Accounts payable > Journals > Payments > Payment
journal

28. On the Action pane, click Payment journal

29. Click New
30. Select Name VendPay
31. Click Lines
32. Select Account number INMF-000009
33. Click Function, and then click Settlement
34. Select the Mark check box for each of the transactions
35. Click Close
36. Select Offset account type Bank
37. Enter Offset account IND OPER
38. Click Post, and then click Post
39. Click Close on the Infolog
40. In the Journal voucher form, click Inquiries, and then click
Voucher
41. Click Related voucher

42. Select the line with an Amount in transaction currency

amount of 300.00
43. Click Voucher
44. Verify the voucher as shown in the illustration
45. Close the forms
End of the service tax authority payment
End of the demo scripts

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CONCLUSION
This demonstration has guided you through how to create a purchase order with service tax reverse
charges and a service category of ‘Others’ by:
 Posting a purchase transaction with Service tax
 Posting a vendor payment
 Performing the tax settlement process
 Posting the service tax authority payment
 Validating taxes are posted to the appropriate accounts.

DISCLAIMER
© 2014 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista, Microsoft Dynamics and other product names are or
may be registered trademarks and/or trademarks in the U.S. and/or other countries. Other names and brands may be claimed as the property of
others.
The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this
presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of
Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation.
Sample code included in this presentation is made available AS IS. THE ENTIRE RISK OF THE USE OR THE RESULTS FROM THE USE
OF THIS CODE REMAINS WITH THE USER.
MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS
PRESENTATION. NO LICENSE, EXPRESS OR IMPLIED, BY ESTOPPEL OR OTHERWISE, TO ANY INTELLECTUAL PROPERTY
RIGHTS IS GRANTED BY THIS PRESENTATION. Microsoft products are not intended for use in medical, life-saving, or life-sustaining
applications.
Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business
decisions with greater confidence. Microsoft Dynamics works like and with familiar Microsoft software, automating and streamlining financial,
customer relationship and supply chain processes in a way that helps you drive business success.
U.S. and Canada Toll Free 1-888-477-7989
Worldwide +1-701-281-6500 www.microsoft.com/dynamics

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