This Blog post is subsequent to below FI Blog post on topic Reverse Charge Tax calculation

https://s4hanacloud.community.sap/blogs/show/jmNq6wxleGAuIm1pMkJp98

Here aim is to explain the process of Procurement with RCM – Intra State Scenario (Deductible) in SAP S4HANA Cloud through an example in system

Target Audience 

Business Users, Key Users, Consultants

 

Target Industry 

All

 

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

 

This Blog refers to Intra State Procurement with RCM, here Plant & Supplier both belongs to Same State (e.g. Gujarat) hence relevant tax code at the time of PO creation should be selected

Supplier Address -

 

 Plant Delivery Address - 

Applicable Tax Code  

Creation of Purchase Order 

Role – PURCHASER

Fiori App – Create Purchase Order – Advance 

Lets assume product CP-RM5 is purchased from Non Registered supplier within state

All the required details are entered in PO during creation step. In Invoice Tab at item level, Tax code J2 – CGST (9%) + SGST (9%) (RCM) is selected

At Purchase Order Level, Calculation of taxes appears as below

 

PO Approval

In our example, we are considering automatic approval of Purchase Order

Delivery of Goods

Role: WAREHOUSE_CLERK

Fiori App – Post Goods Movement

In first delivery of goods, Let’s assume only 50 units are received from the supplier.In goods receipt screen, information corresponding to PO, Receipt Qty, Sloc & other necessary details are entered & document is posted 

Account Entries are triggered considering price Indicator & material price from the material master record. Important to note, no GST related posting happens at this stage

 

Post Supplier Invoice 

After posting the receipt of goods, Next step is to post the supplier invoice

Role - AP_ACCOUNTANT

Fiori App – Create Supplier Invoice - Advance

Explanation of Accounting Entries at this step  

Purchase without Reverse Charge (Regular Purchase) (Deductible)

In case of a normal purchase, the accounting entry will be  

Vendor  Cr        5000 

Expenses  Dr     500 

CGST Tax Dr     450

SGST  Tax Dr    450

In this case, the buying organization pays the tax amount to the Vendor (in the payment against invoice), who in turn will submit it to the government. 

 

Purchase with Reverse Charge (Deductible)

 

In case of a reverse charge, the accounting entry will be

Vendor  Cr       5000 

Expenses  Dr    500 

CGST Tax Dr    450 (Input)

SGST  Tax Dr   450  (Input)

CGST Tax Cr    450  (Output)

SGST  Tax Cr   450  (Output)

 

Procurement with RCM – Inter State Scenario (Deductible)

Applicable Tax Code : J1- IGST 18% - Domestic input GST -RCM

 

Accounting entries assuming values from above example

 

Vendor  Cr        5000 

Expenses  Dr    500 

IGST Tax Dr    450 (Input)

IGST Tax Cr    450  (Output)

 

Procurement with RCM – UT Scenario (Deductible)

Applicable Tax Code: J3- CGST 9% +UTGST 9% - Domestic input GST-RCM

Here, SGST condition type will be replaced with UGST tax condition type

Accounting entries assuming values from above example

 

Vendor  Cr       5000 

Expenses  Dr    500 

CGST Tax Dr    450 (Input)

UGST  Tax Dr   450  (Input)

CGST Tax Cr    450  (Output)

UGST  Tax Cr   450  (Output)

For Non- Deductible Scenario – As per rule, all the tax amount will be loaded to Material inventory