Determining GST

Special Economic Zone (SEZ) Units Purchasing Goods and Services from outside SEZ

Special Economic Zone business units that procure goods and services from outside the economic zone should set up their systems as follows:

1. A new Supplier Tax Category, for example – SEZ should be created:

   No.	Description	SEZ Unit	Business Cycle	Tax Transaction Type	Trading Partner SEZ status	Trading Partner Tax Category
   1	PSFT user	SEZ Unit	Procure to Pay	Domestic	Supplier is Non-SEZ unit	Supplier Tax category = ‘SEZ’
   2.	PSFT user	Non-SEZ Unit	Procure to Pay	Domestic	Supplier is SEZ unit	Supplier Tax category = ‘SEZ’

2. Create a new tax determination rule for every state where a business unit procures goods and services from non SEZ areas within the same state.

   • The following Tax Determination Rule is for intrastate supplies of goods and services between SEZ units and Non-SEZ Units within the same state:

     Field	Value
     Tax Transaction Type	Domestic
     Tax Authority	KAINTRA
     Trading Partner Tax Category	SEZ
     Tax Code	KAIGST

   • The following Tax Determination Rule is for interstate supplies of goods and services between SEZ units and Non-SEZ units between states:

     Field	Value
     Tax Transaction Type	Domestic
     Tax Authority	KAINTER
     Trading Partner Tax Category	SEZ
     Item Tax Category	Any
     Tax Code	KAIGST

Reverse Charge Applicability

In PeopleSoft Accounts Payable there are three scenarios in which Reverse Charge may apply:

1. Imports to India

2. Intrastate purchases where Supplier is not registered for GST

3. Item of goods or services (as may be notified by the GST council) is marked as Reverse Charge Applicable on the Item Tax Applicability page.

Where Reverse charge is applicable on one, more, or all voucher lines, the voucher will be marked as Reverse Charge Applicable and GST on the transaction will be displayed on the Tax Calculation page with the Reverse Charge Indicator check box enabled. A GST Reverse Charges Header link appears on the Invoice Information page and the total reverse charges on the transaction in Monetary and Base currencies are displayed when the voucher is saved.

Where reverse charge is applicable on a voucher the GST is determined as usual. However the voucher gross amount will not include the GST on Reverse Charge. The GST amount on Reverse Charge basis should be copied to a third party voucher using the Copy Voucher functionality and paid to the GST authority. The overall amount at the Header level will be rounded off to the nearest rupee value when voucher transaction currency is INR.

When voucher transaction currency is INR the overall amount at the Header level will be rounded off to the nearest rupee, and the same will be adjusted to the tax amount of the voucher’s last distribution line.

Advances Paid to Suppliers on Reverse Charge Applicable Transactions

Prepaid vouchers can be used normally for the purpose of making Advance payments on reverse charge applicable transactions. In such cases a GST on Advance link appears on the Invoice Information page once the prepaid voucher is classified as reverse charge applicable, determined based on the Reverse Charges criteria. Clicking the link opens the Tax Calculations page showing all calculations, which occur normally as a regular voucher.

On such advance payments, GST on provisional basis will be determined and accounted to the debit of provisional input credit accounts as set up at the Tax Calculation code levels. The HSN/SAC codes are updated based on the Global setup and users can override the values. HSN/SAC Codes field cannot be blank on Reverse Charge applicable prepaid vouchers.

When reverse charge applicable advances are applied to a regular voucher, it is necessary that all of the following three conditions are met:

1. Regular Voucher is Reverse Charge applicable and

2. Ship From - Ship To Country values of the GST advance should match the Ship From - Ship To Country values on the regular voucher and

3. Ship From - Ship To State values of the GST advance should match the Ship From - Ship To State values on the regular voucher.

GST advances are applied to an eligible regular voucher that has Automatic Prepayment enabled, based on the criteria mentioned above. In case of Manual Prepayment, validation checks are performed to restrict the GST Advances from applying to the regular voucher – if the above criteria are not met.

Withholding Calculations

The Withholding Calculation engine processes GST scenarios and is enabled to include both manual as well as automatic application of prepayment. This is processed regardless of charges such as Freight, Miscellaneous, India Taxes (GST), Discount, irrespective of whether they are part of the Withholding calculation or not. The AP_WTHDCALC program applies TDS and regular schedule based on the TDS applicability on regular vouchers.