Reverse Charge for Purchased Goods

When you enter receipts for purchase orders, the Landed Cost Selection program (P43291) retrieves the landed cost rules from the Item/Supplier Cost Components table (F75I791) and calculates GST if GST is applicable to the transactions based on the GST rule set up in the GST Rule Setup table (F75I802). During this process, the system also checks whether reverse charge is applicable to the transactions in the F75I802 table.

If reverse charge applies to the purchase goods, the Landed Cost Selection program calculates the GST amounts that the purchaser must pay to the supplier using the provider's percentage in the F75I802 table. The system enters the calculated reverse charge GST information in the GST Reverse Charge Information table (F75I808). You can review the calculated reverse charge stored in the F75I808 table.

See Reviewing Reverse Charge Information for Goods.

When you match the receipts with the vouchers, the system creates journal entries for the transactions, debiting this GST amount (that you pay to the supplier) in the intermediate accounts that you have set up in the GST Account Master Setup program (P75I805). The system credits the amount in the credit accounts for the AAI item 4385 (Cost/Expense Adjustments) for inventory items, and in the AAI item 4315 (Non-Inventory) for non-inventory transactions.