Objective Of This Blog Is To Highlight The Purchase Process From Economic Zone 

Definition of  Economic Zone 

 Economic Zone is the area that is used to promote free flow of goods and services & enjoys simple tax and easier legal formalities. SEZ's are located within country borders, however they are treated as foreign territory from taxation perspective. As per GST rule, any supply of goods or services from/To Special economic zone attracts IGST even supplier or buyer belongs to same or different state 

Target Audience 

Business Users, Key Users, Consultants 

 

Target Industry 

All

Applicable Conditions & Tax Code 

Procurement of SEZ (with IGST deductible) involves below tax conditions & Tax Code

 

JCDB - IN Basic Customs    (Maintained in Material pricing procedure A18001-Service/Material)

JSWC - IN: Social Welfare C      (Maintained in Material pricing procedure A18001-Service/Material)

JIMD - IN: Import GST deduct      (Maintained in Tax pricing procedure 0TXIN – Sales Tax India)

K9 - IGST 18% - Imports - SEZ purchase (Deductible)

Below Roles are used to simulate the example

 

Business Role

Business Role ID as Delivered by SAP

Product Master Data Specialist

SAP_BR_PRODMASTER_SPECIALIST

Purchaser

SAP_BR_PURCHASER

Master Specialist

SAP_BR_BUPA_MASTER_SPECIALIST

Warehouse Clerk

SAP_BR_WAREHOUSE_CLERK

Accounts Payable Accountant -

SAP_BR_AP_ACCOUNTANT

 

Step – 1 Create Purchase Order for SEZ Vendor

Role – PURCHASER; Fiori App – Create Purchase Order – Advance

Let’s assume product SP005- Mechanical Seal is supplied  by vendor 1004191 Gujarat Traders, Located in Special Economic Zone within Gujarat State & delivery location is at Ahmadabad, Gujarat. As per GST Rule, all the taxation structure will be applicable as of Import procurement i.e. Custom Duty Component & IGST Component (deductible in our example)

In Condition Tab, Ensure Custom Vendor is maintained for the Condition type

 JCDB – IN: Basic Custom

JSWC – IN: Social Welfare C

At item level, Click on Invoice then maintain Tax code K9 – GST 18% Deductible

After Entering all the details Save the PO. In our case, PO reference is 4500020683

Step 2 - PO Approval

We are assuming automatic approval of Purchase Order

Step 3- Book Custom Supplier Invoice

Role - AP_ACCOUNTANT

Fiori App – Create Supplier Invoice – Advance

In this step, custom part is paid

Next step is to Enter Assessable value, Basic Custom & Social Welfare Cess manually as shown below 

Ensure, selection of Tax code which is maintained in Purchase Order

In above example, Total amount payable to custom vendor is 3906 as per below tax calculation

After validating all the entries, post the custom invoice. Below FI accounting entries are generated after posting it

Step 4 - Delivery of Goods

After custom clearance, next step is receive the goods in plant

Role: WAREHOUSE_CLERK

Fiori App – Post Goods Movement

Step 5 – Book Supplier Invoice – SEZ Vendor

Role - AP_ACCOUNTANT

Fiori App – Create Supplier Invoice – Advance

Last step is post invoice of material vendor which belongs to SEZ

Conclusion – Procurement Process from Suppliers belonging to SEZ is explained 

Additional Learning       

       A)  Standard Import Procurement Process (India Localization) in SAP S/4 HANA Cloud 

  https://s4hanacloud.community.sap/blogs/show/WbcuPIBM57JzokaWOpyS7y

 B)   Import Process for Free of Cost items  (India Localization) in SAP S/4 HANA Cloud

https://s4hanacloud.community.sap/blogs/show/n1o8RnL0dJleQmXtwASOae

      C)      SNOTE – 2458404 – GST Import