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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
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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