Product Information
Procurement with Reverse Charge Mechanism in SAP S4HANA Cloud
This Blog post is subsequent to below FI Blog post on topic Reverse Charge Tax calculation
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
Thanks for sharing Vivek 🙂