Tax Configuration for GST Reverse Charge Scenario Disclaimer: This document is a draft, and provided as a reference. This document is not to be considered final, and all information contained herein is subject to change. As such, this document is not to be quoted, cited in any reference, or used by anyone for any purpose other than as a draft document -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Contents Tax procedure configuration configuration for GST .......................... ......................... ......................... ............................ ......................... ... 1 Configuration Configuration for Procurement Procurement ......................................... ......................... ........................... ................... 2 Condition Condition types................................................. ........................ ......................... .................................................. ......................... ......................... ........................... ...... 2 Accounting Keys ................................................................................................................................... 9 G/L Account Assignment .................................................................................................................... 10 Update Tax Procedure Procedure - TAXINN ................................................. ........................ ......................... .......................... ......................... ..... 12 Condition Condition records r ecords maintenance maintenance for reverse charge conditon types ................................. ................... 14 Classify Condition Condition Types................................................. ....................... .......................... ......................... ........................................... ........................ ................... 15 Reverse Charge Charge posting examples examples .............................................. .......................... .............................. ........................ ...... 16 Disclaimer .............................................................................................................................................. 20
Tax procedure configuration for GST Configuration for Procurement Condition types NOTE: The condition types provided are for reference only. You can copy and change as per your needs. 1. Deductible reverse charge condition types Here, there are 5 reference condition types already delivered to handle GST for taking credit (CGST, SGST, IGST, UTGST, and CESS). For example, JICG, JISG, JIIG, JIUG & JCIS.
condition types for reverse charge. For example, reverse charge condition types Create five negative condition given below. Also, refer the screen shot as below and same way create other reverse charge condition types Execute the transaction OBQ1 OR use below IMG path SPRO Financial Accounting (New) Financial Accounting Global Settings (New) Tax on Sales/Purchases Basic Settings Check Calculation Procedure Create Condition Types. Deductible reverse charge condition types
Condition Types JICR JISR JIIR JIUR JCIR
Description IN: RCM CGST
IN: RCM SGST IN: RCM IGST IN: RCM UTGST IN: RCM Comp. CESS
Reverse Charge Condition type for Central GST - JICR – IN: RCM CGST
Note: Use the access sequence JGSI or MWST as per your business requirement.
Reverse Charge Condition type for State GST - JISR - IN: RCM SGST
Reverse Charge Condition type for Integrated GST - JIIR – IN:RCM IGST
Reverse Charge Condition type for Union Territory GST - JIUR – IN: RCM UTGST
Reverse Charge Condition type for CESS - JCIR – IN: RCM Comp. CESS
2. Non-Deductible reverse charge Scenario Here, there are 5 reference condition types already delivered to handle GST for non-deductible cases (CGST, SGST, IGST, UTGST, and CESS). For example, JICN, JISN, JIIN, JIUN & JCIN. For non-deductible RCM scenario, create your own five negative RCM condition types by referring deductible RCM condition type. For example, JICR you can copy this and create your own condition type. You can refer below table as reference non-deductible reverse charge condition types
Condition Types ZCRN ZSRN ZIRN ZURN ZRCN
Description IN: RCM CGST Inv IN: RCM SGST Inv IN: RCM IGST Inv IN: RCM UTGST Inv IN: RCM CESS Inv
Note: These Z conditions are not delivered from SAP this is just a reference condition types for nondeductible scenario
Accounting Keys Execute the transaction OBCN to create accounting keys
Accounting keys for Deductible condition types Account Key
Corresponding deductible condition type
JRS – IN: RCM SGST
JISR- IN: RCM SGST
JRC - IN: RCM GST
JICR - IN: RCM GST
JRI - IN: RCM IGST
JIIR - IN: RCM IGST
JRU - IN: RCM UTGST
JIUR - IN: RCM UTGST
JCR - IN: RCM Comp. CESS
JCIR - IN: RCM Comp. CESS
Reference Accounting key maintenance for JRS is given below: Same way create for other duties.
Note: For non-deductible condition types create your own accounting key and assign separate G/L account
G/L Account assignment Execute the transaction OB40 to assign G/L accounts. As per the legal change for reverse charge in GST regime, the recipient of the service is required to pay full portion of the GST tax i.e. 100% to the Government. The recommendation is that, directly post the tax amount to the final payable account and make the payment to the Government depending upon the pending payables for each period on the payment date. Create separate G/L account for reverse charge deductible condition types(duties) and assign the same to accounting key. Following screen shot is the example for the same,
Now maintain the G/L account in view J_1IT030K_V
Note: 1.
If the business requirement is to post tax credit to an interim account, then you may need to create your own GST Z condition types by referring SAP delivered condition types (JICG, JISG, JIIG, JIUG & JGCS) and maintain the interim G/L account for the same. If the condition record maintenance is not based on tax codes, then you may even need to create posting key and achieve the same.
2. Transfer of such tax credit from interim to final payable account must be handled through FI transaction at your end, which is not in scope of SAP support.
Update Tax Procedure - TAXINN Execute the transaction OBQ3 Maintain the defined condition types and account keys in the tax procedure as shown Below, 1. Deductible scenario:
2. Non-deductible scenario (Expense out)
Note: -
This is an illustration of GST conditions only; steps may vary from actual. From ’100’ in the above screen shots refer to the BASB condition type These reverse charge condition types are calculated based on respective duty. Example, as shown above JICG (CGST) Condition type is at step number 660 therefore its reverse charge condition JICR must be calculated on step number 660. The step number may vary in your system.
Condition records maintenance for reverse charge condition types Create condition records for reverse charge condition types using transaction FV11/FTXP (For Tax classification category) based on your business requirement. In the below example, le t’s consider the GST taxes rates (CGST, SGST, IGST & UTGST) are maintained as 18%, So you need to create condition records for the reverse charge condition types maintaining it as 100% to fulfill the percentage of reverse charge (Applicable for both deductible and non-deductible scenario). The below is deductible CGST condition types maintained 18%
The below is reverse charge deductible CGST condiiton types maintained 100% (As in GST it is 100% reverse charge)
Classify Condition Types Classify the reverse charge condition types in the view - J_1IEXCDEFN through the transaction SM30 -
Deductible condition types
-
Non- deductible condition types
Reverse Charge posting examples Case 1: - Reverse Charge with 100% Tax credit Create a PO with GST duties for intrastate procurement with rate as example CGST & SGST 18%.
Accounting Simulate in MIRO transaction (Invoice verification):
Case 2: - Reverse Charge without tax credit (100% Expense out) In case of reverse charge without credit scenarios, the whole amount is expensed out. Create a PO with GST duties for interstate procurement with rate. For example, IGST 18%.
Accounting Simulate in MIRO transaction (Invoice verification):
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