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
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
B) Import Process for Free of Cost items (India Localization) in SAP S/4 HANA Cloud
C) SNOTE – 2458404 – GST Import
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