Configuring Material Master Data (SD) 
Configuring Material Master Data (SD)
Use
You must define the possible tax classifications for the tax category that appear in the material master data on the billing screen.
The A/R material tax classification indicator is used as a key in automatically determining the tax code within SD. Multiple tax classifications may need to be set up for special tax rules and regulations based on material. These tax classification indicators are user-defined and point to user-defined tax codes.
Procedure
In Customizing for Sales and Distribution, choose Basic Functions
® Taxes ® Define Tax Relevancy of Master Records. Choose Material Taxes. You can also use transaction OVK4 (Table TSKM).A/R material tax classification indicators are defined based upon tax category UTXJ for the US and tax category CTXJ for Canada.
For example, you can configure the following:
Tax classification |
Description |
Tax Code |
0 |
Exempt material/service |
O0 |
1 |
Standard product |
O1 |
2 |
Service |
O2 |
3 |
Rental/lease |
O3 |
4 |
Taxware product code 12000 for consulting services |
O4 |
5 |
User-defined product code of 9937299 |
O5 |