Feature of Tax code in Sales and Distribution

Tax Codes are mainly used in SD for following:

1. Determine the Tax GL Accounts when Posting the Invoice to Accounts. (say in Domestic, all
revenues goes to General Sales account, but Taxes need to be posted to different Accounts like
VAT / CST / Service Tax Etc...) Thus to differenciate between GL Accounts while posting, Tax
Codes are used in OB40 - GL Account assignment.
2. While creating Tax Codes in FTXP you mention Tax Codes as Input or Output. Thus while
entering Tax Codes in VK11, system will accept only Output Tax (so leaving no room for
mistake)
3. Tax Codes can also be used to generate Reports. Say your client needs State-Wise details of
VAT or CST amounts for a quater. Here you can easily generate a report based on Tax Codes.

Tax Categories not working

For my TAXINN requirement I had defined JIVC and JIVP two tax categories and assigned it to
country IN. I had created few tax classifications to each of them.

JIVC - CST Exempt, Full CST and C Form

JIVP - VAT exempt, Full VAT and CT2 form

I had created a customer (inter-state for CST sales). In the sales area data - Billing I had
maintained tax classifications as below

JIVP - 0 VAT Exempt

JIVC - 2 C form

When I create a sales order, system is picking up only JIVP-0 and not JIVC-2

Plant Region is 22

Ship-to Region is 20

Tax classfn of Cust is 0 (2 is correct one)

Tax classfn of Matl is 1 (Full CST)

As the above combination is not relevant for CST, system doesn't find any condition record.
The basic reason for the problem I understand is that when I maintain MULTIPLE TAX
Classifications for customer it is not picking up second one. It is stopped at 1st one.

Am not really familiar with CIN concept, but by seeing your question as you said the condition type for C
form is not picking, general C form is used for interstate sales, so are the goods delivered with in the
state or interstate.