This Blog aims to highlight the business process of procurement of  Free of Cost items from international market. Such items can be supplied by foreign vendor as replacement or samples etc. however business needs to pay the custom duty, Social welfare cess and IGST on imports

To handle this type of scenario in system, purchase order is raised with minimal price of material say 0.50 & its advisable to go for separate material code to avoid any impact on valuation of original material code

Target Audience 

Business Users, Key Users, Consultants 

 

Target Industry 

All

 

In Our Example of Import Scenario, below tax conditions are used with below combination

 

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)

 

Test Scenario - FOC Import with IGST (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 (Import)

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

Let’s assume product SP001- Bearing is supplied as free of cost by supplier 1006714. In order to entertain custom conditions, minimal gross value of material in Purchase order is maintained. Lets say its 0,20EUR

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 K1 – GST 18% Deductible

After Entering all the details Save the PO. In our case, PO reference is 4500020641

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 vendor is paid

 

Next step is to Enter Assessable value, Basic Custom & Social Welfare Surcharges  manually  as per Bill of Entry. Lets assume, here assessable value is 10000 & corrosponding BCD, SWS values are maintained manually as shown in screen shot

 

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

In above example, Total amount payable to custom vendor is 3.966,48 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

Conclusion - FOC material through Import process is received in the plant 

Additional Learning 

Standard Import Process in SAP S/4 HANA Cloud

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