Adding Non-Recoverable Indian Duties and Taxes to the Item Cost

When you receive raw materials from a supplier, the applicable excise duties, customs duties, and sales taxes (from the supplier excise invoice) can be split into recoverable and non-recoverable parts. The system adds the non-recoverable portion to the inventory value of the raw materials. Later, when you receive the invoice from the supplier and post it into PeopleSoft Payables, any change in the non-recoverable excise duties, custom duties, or sales taxes can be applied to the inventory stock by using the Landed Cost Extract process.

To set up non-recoverable customs duties as a landed cost, read the topic, "Setting Up Your Customs Duty Structure."

To set up non-recoverable excise duty and sales taxes as a landed cost:

1. Create or identify cost elements with the Cost Category of Landed.

   Cost elements enable you to record and report on each different type of landed cost. Use the Cost Elements page to create separate cost elements for non-recoverable excise duty and non-recoverable sales taxes.

2. Create miscellaneous charge codes to define the non-recoverable excise duty and non recoverable sales taxes.

   The charge codes use the type of VAT input non-recoverable, and select the Prorate and Landed Cost Component check boxes. The cost elements that are defined should be added to the charge codes. Use the Misc Charge/Landed Cost Definition page to define miscellaneous charge codes.

3. Enter the miscellaneous charge codes for non-recoverable excise duty and non-recoverable sales taxes to the corresponding tax components that are defined on the Tax Component page.

4. For each tax rate code, enter the recoverable percentage of the total excise duty or sales taxes in the Recoverable Tax Pct field on the Tax Rate Code page.

   The system calculates the non-recoverable percentage by subtracting the recoverable percent from 100 percent.

5. For items using standard costing, you can use the Additional Item Costs page to include the non-recoverable excise duty and sales taxes as landed costs in the cost rollup.

Non-recoverable excise duty and sales taxes are applied in this manner:

1. The system determines and calculates the excise duty and sales taxes for the PO.

2. When the raw material is received into PeopleSoft Purchasing, the internal supplier excise invoice is recorded with the total excise duty and sales taxes.

3. The Receipt Push process takes the receipt line and matches up the excise duty and sales taxes from the PO schedule line to create the receipt landed costs transactions. The receipt landed costs transactions contain only the non-recoverable portion of excise duty and sales taxes. The Receipt Push process inserts the non-recoverable excise duty and sales taxes into the Putaway staging tables.

4. The receipts (including non-recoverable excise duty and sales taxes) in the Putaway staging tables are then inserted into PeopleSoft Inventory by the Load Staged Items process and the Complete Putaway process.

5. When you receive the supplier's invoice and process it into PeopleSoft Payables, the Landed Cost Extract process passes the difference (if any) between estimated non-recoverable taxes (on the PO) and the actual non-recoverable taxes (on the voucher) to PeopleSoft Inventory, where the item is updated. This process is the same process used for all landed cost adjustments.