User Manual

GST-Indigenous Material Procurement

(Non Hydrocarbon)

Version 1.1
Version Date 29.06.2017
Created By Sharad Kumar/ Animesh Bag
Approved By Anil Bareja
Contents
Master Data ................................................................................................................................... 3
Vendor Master........................................................................................................................... 3
GST Registration Number...................................................................................................... 4
Vendor Classification ............................................................................................................ 5
Material Master ......................................................................................................................... 6
Harmonized System of Nomenclature ............................................................................... 6
Material Classification .......................................................................................................... 6
Purchase Types ........................................................................................................................... 10
Works Contract ....................................................................................................................... 10
Services only ............................................................................................................................ 10
Material only ............................................................................................................................ 10
Mixed Supply ........................................................................................................................... 10
Composite Supply................................................................................................................... 10
Determination of Taxes .............................................................................................................. 11
Tax Codes............................................................................................................................. 11
Reverse Charge Mechanism (RCM)................................................................................. 12
Purchase Document Creation ................................................................................................. 13
Contract Creation .................................................................................................................. 13
Creation of Call- up PO ......................................................................................................... 14
PO on Non Registered Vendor ............................................................................................. 16
PO under Works Contract...................................................................................................... 16
Open PO Handling ................................................................................................................. 17
Purchase Document Prints......................................................................................................... 18
Pipelines GST migration methodology .................................................................................... 19
New plant code for each location ...................................................................................... 19
Activities to be carried out before GST implantation ........................................................ 20
Project with multi-state delivery of Goods and Services ................................................... 20
Master Data

Vendor Master
A Vendor by default will be marked as “UNKNOWN” in vendor classification ,if no
information of that Vendor is available about GST, hence new PO creation and existing
PO Modification will not be allowed until and unless the Vendor is classified as
Registered, Non-registered or Compounding.
To do this, one has to go to T-code YMV  Change option and make the necessary
changes. Please take the help of Taxation dept regarding this
GST Registration Number

GST Registration number is a 15 digit identification that is allotted to each taxpayer based
on PAN and State of the applicant. In a GST registration number, the first two digits
represent the State Code, followed by the next 10 digits representing the PAN of the
applicant, one digit representing entity code, one digit is left blank and the last digit is a
check digit.

In Vendor master (XK03) the GST Registration Number is available in the GST Reg. No. field
of “Control tab”.
Vendor Classification

Vendor classification should be used to capture type of GST registration for a vendor.
− Compounding vendor
− Vendor shall not raise GST invoice
− Registered vendor
− Shall submit GST taxable invoice
− Unregistered vendor
− Reverse Charge mechanism shall be applicable. Vendor will not give taxable
invoice.
A new GST tab is provided with GST Vendor Classification field under CIN details

To view GST classification maintained for a vendor use t code XK03 or YMR192.
Material Master

Harmonized System of Nomenclature

HSN (Harmonized
System of
Nomenclature) code
shall be used for
classifying the
goods under the GST
regime. HSN code is
same as earlier
Excise Chapter id. It
shall now be
maintained at plant
level as against
earlier in J1id table
at client level.

Note: New PO creation will not be allowed for codified materials without HSN
Code. So user must ensure that HSN code is updated in material master, if not
then same can be updated using YMCN.

Material Classification

Material classification shall be used to identify whether a material is Taxable under GST,
exempted or Non-taxable.
To view the maintained HSN code and material classification for a material use tcode MM03
or YM78.

In PO HSN code will be populated from material master. In case of non-codified material
procurement, user has to enter the relevant HSN code while creating PO.
In case of service, user has to enter relevant SAC code against services at item level in
place of HSN code, in the same field i.e “Control code”
 Capturing of 4 digit (or
more) HSN is now available
in YMCN.

Note: If certain HSN

code is not available
while creating material
master, then user shall
raise a request in
Solution manager
along with its
description (within 70
char) for creating HSN
code master.

HSN code can be modified if

required using tcode YMCN.
User needs to generate a
request and after approval of
the same by Finance user HSN
code will be updated in
material master against the
request plant code.
Purchase Types

Following are the different types of purchase which have been defined under GST

Works Contract
Works contract means a contract for building, construction, fabrication, completion,
erection, installation, fitting out, improvement, modification, repair, maintenance,
renovation, alteration or commissioning of any immovable property wherein transfer of
property in goods (whether as goods or in some other form) is involved in the execution of
such contract.

Services only

Services which are not covered in Works contract – to be reviewed

Material only

Only material supply items without clubbing of any other material or services in one
particular line item

Mixed Supply

Mixed supply means two or more individual supplies of goods or services, or any
combination thereof, made in conjunction with each other by a taxable person for a single
price where such supply does not constitute a composite supply.

Composite Supply

Composite supply means a supply made by a taxable person to a recipient consisting of two
or more taxable supplies of goods or services or both, or any combination thereof, which
are naturally bundled and supplied in conjunction with each other in the ordinary course of
business, one of which is a principal supply
Principal supply means the supply of goods or services which constitutes the predominant
element of a composite supply and to which any other supply forming part of that composite
supply is ancillary
Determination of Taxes

GST type will be determined by the regions of receiving plant and invoicing party.
 In case vendor and receiving plant exist in same state then system will pick Intra State
tax components (CGST+SGST)
 Otherwise Inter State (IGST) taxes will be populated

This will be done in background through requirement routine in Tax Procedure by the
system.

Tax Codes

User needs to select appropriate tax codes depending upon the nature of ITC and Tax rate.
 ITC(Input Tax Credit) Nil

 These tax codes will be used where there is no Input Tax credit available as
per GST

 ITC(NIL) NON GST PRODUCT

 These tax codes will be used where there is no Input Tax credit available
because the output product is not included in GST presently, but maybe
included in future. E.g. MS, HSD.

 ITC(PROPORTIONATE)

 These tax codes will be used where Input Tax credit is available, but output
product is a pool of GST/Non-GST products. Here proportionate ITC will be
applicable as per turnover.

 ITC (100%)

 These tax codes will be used where 100% Input tax credit is available.

G0 GST-NIL
GE GST-5%,ITC(NIL%)
GF GST-5%,ITC(NIL) NON GST PRODUCT
GH GST-5%,ITC(PROPORTIONATE)
GI GST-5%,ITC(100%)
GJ GST-12%,ITC(NIL%)
GL GST-12%,ITC(NIL) NON GST PRODUCT
GM GST-12%,ITC(PROPORTIONATE)
 GN GST-12%,ITC(100%)
GO GST-18%,ITC(NIL%)
GP GST-18%,ITC(NIL) NON GST PRODUCT
GQ GST-18%,ITC(PROPORTIONATE)
GR GST-18%,ITC(100%)
GS GST-28%,ITC(NIL%)
GT GST-28%,ITC(NIL) NON GST PRODUCT
GU GST-28%,ITC(PROPORTIONATE)
GV GST-28%,ITC(100%)

Reverse Charge Mechanism (RCM)

In GST regime, RCM calculation will be taken care in purchase documents only. This will be
applicable for all unregistered vendors. The RCM can be viewed in purchase documents
under taxes, in the invoice tab
Purchase Document Creation

Contract Creation

Follow existing process of contract creation, in addition to that add invoicing party in the
header.

Taxes don’t need to be put in the contract

Note: In case of Pipelines, Contracts should be either created without plant codes
or with location specific plant code like 9251, 9211etc. (not with the existing
common plant codes like 9250, 9210 for every location), so that system should be
able to pick correct plant region in call-up POs.

Creation of Call- up PO

As call-up POs are created with reference to valid Contract, the system copies data from
Contact to POs. So, invoicing party and receiving plant code (if maintained) will be copied
from Contact. However, Invoice party (Invoice presented by partner) can be modified in call-
up PO provided PAN number of main vendor matches with invoicing party vendor PAN
number.

In the invoice Tab the tax rates will come based on the selected tax code and the regions of
invoicing party and receiving plant.
The Tax code will determine the tax rate and the treatment of ITC (ITC available/not available
/proportionate), whereas receiving plant region and invoicing party region will determine
that type of GST i.e. CGST+SGST or IGST.
Note: If Invoicing Vendor is different than call-up has to be created based on
different Invoicing Vendor.

Example: Contract is placed on L&T Mumbai by marketing HO for supplying Valves to

different Plants in different states. In this case contract will be created from MHO, and Call-
up PO will be created from different Plants. For Karnataka State office L&T may decide to
issue invoice from Chennai, in this case the Invoicing Vendor in PO has to be chosen as
Vendor code of L&T for Chennai

Note: System check has been put to check on PAN of Main Vendor & Invoicing
Vendor

During goods receipt there is no change in process and accounting document will be posted
in background, with the taxes if ITC not available and without taxes if ITC available.
PO on Non Registered Vendor

In case of non-registered Vendors the Vendor classification will be “0”. As vendor is non-
registered, RCM shall be applicable and hence in this case the “Invoice” tab will come with
reverse charge.

In the “Condition” Tab, the taxes will come, however this will not be paid to Vendor.

PO under Works Contract

The PO has to be created with Material and Services and the Tax rate will be the rate
applicable on the principle supply
Note: In case of pipelines for collective purchases user must create PO with
separate item for each receiving location’s plant code.

Open PO Handling

For Migration of Open PO please refer “cutover Strategy” followed by User manual of YMC154
Both these documents are available in YMM & SAP Shared folder.
Purchase Document Prints
New message types GST & GSTP have been created for printing GST taxes along with other
GST relevant information like GST Registration Number of Plant, PAN of vendor etc.
In ME9K (Contract)

In ME9F (Purchase Order)

Pipelines GST migration methodology

New plant code for each location

In current scenario, for a given pipeline there is only one plant code to cater all its locations,
due to which it is difficult to determine correct destination region. As GST is destination
based taxation, receiving location region is an important parameter to determine tax
component (IGST, CGST+SGST). In SAP destination region is determined by receiving plant
region, so to address the issue new plant codes have been created for each location for a
give pipeline where Good & Services are being received from Vendors. In GST regime even
stock transfer may attract GST.
Activities to be carried out before GST implantation

Extension of existing materials of respective locations needs to be extended in there

new plant codes

Example: Material 4116453174 (PIPECOAT, CS, ERW, API5L, X60, BE, 12IN, 11.1) which
is currently available in 9230/REV4 needs to be extended to Plant 9234/REVN

Action: COIS will extend the material in new plant codes based on the information received
from user department.

Transfer of existing stock in new plants.

Example: Current stock of Material 4116453174 (PIPECOAT, CS, ERW, API5L, X60, BE,
12IN, 11.1) which is 176.84 M available in 9230/REV4 needs to be transferred to Plant
9234/REVN

Action: After extension of such material in new plant codes, Material dept. user can directly
transfer material stocks from existing plant/storage-location to new plant/storage-location
using tcode MB1B with mvt type 301. Use MB52 to know the current stock of material in a
given plant & storage location.

Project with multi-state delivery of Goods and Services

Activities to be carried out in ongoing projects

 New WBS has to be inserted in the Project
 In this WBS the Plant code for the particular State has to be included
 Accordingly the network & activity with the Plant code has to be added
 Business area need to be maintained for new WBS
Open POs of projects
 In existing PO, a new Line has to be inserted for quantity relevant for new WBS
 In this line the Plant code for the particular state has to be used
 This will determine the taxes ( IGST, CGST+SGST)
 The reference of RFQ has to be removed for these cases
Method: Closing existing PO line item on processed quantities and transferring remain
quantities in new line item manually or through T-code YMC154 with new GST tax code and
WBS.