Tax Configuration for GST Reverse Charge Scenario

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Contents
Tax procedure configuration for GST ........................................................................................................ 1
Configuration for Procurement ................................................................................................................ 2
Condition types .................................................................................................................................... 2
Accounting Keys................................................................................................................................... 9
G/L Account Assignment .................................................................................................................... 10
Update Tax Procedure - TAXINN......................................................................................................... 12
Condition records maintenance for reverse charge conditon types .................................................... 14
Classify Condition Types ..................................................................................................................... 15
Reverse Charge posting 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.

Create five negative condition types for reverse charge. For example, reverse charge condition types
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 Description

JICR IN: RCM CGST
JISR IN: RCM SGST
JIIR IN: RCM IGST
JIUR IN: RCM UTGST
JCIR 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 Description

ZCRN IN: RCM CGST Inv
ZSRN IN: RCM SGST Inv
ZIRN IN: RCM IGST Inv
ZURN IN: RCM UTGST Inv
ZRCN IN: RCM CESS Inv

Note: These Z conditions are not delivered from SAP this is just a reference condition types for non-
deductible 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, lets 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):
Disclaimer

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