Create Accounts Payable Invoice Enabling LCM

Follow the instructions in this section to create Accounts Payable Invoice Enabling LCM

Follow these steps:

1. Create BOE invoice:
   For importing goods to India, you must create the BOE invoice to calculate the taxes payable to customs authority at the port of entry in INR currency. The invoice should calculate the basic customs duty based on the assessable value, surcharge (e.g. for education cess and higher education cess) on the customs duty, and IGST on the sum of the assessable value, customs duty, and surcharge. The BOE invoice details are as follows.

   • Payables Invoice Header.
     This table displays the details of Payables Invoice Header for the BOE invoice:

     Supplier	Supplier Site	Invoice Currency	Total Amount
     Customs Authority	Port of landing	INR	1142916

   • Payables Invoice Line.
     1. Enter these details for Line 1 of the BOE invoice::

        This table displays the details for Payables Invoice Line 1:

        Line Amount	Assessable Value	Transaction Business Category	Landed Cost	Charge Name	Reference Type	Value	Total Amount
        0	6060000	IMPORT OF GOODS_BOEINV	Enabled	BOE charge	PO number	11	1142916
        Total in INR							1142916

     2. Save and validate the Payables invoice.
   • Tax Determination Process

     The SA_IN_GST_CUSTOMS is levied at 12% on assessable value (6060000*12%=727200INR).

     The SA_IN_GST_SURCHARGE is levied at 10% on custom duty (727200*10%=72720 INR).

     The SA_IN_GST_IGST is levied on the sum of the assessable value, customs duty, and surcharge [(6060000+727200+72720)*5%=342996].

     The non recoverable IGST=342996*60%=205797.6.

     The tax engine searches for the transaction business category in the transaction line and determines the tax and tax rate.

   • Tax Lines

     This table displays details of those tax lines that are created upon successful completion of the tax determination process.

     Tax Line	Rate Name	Rate	Tax Amount	Tax Regime	Tax Name	Tax Status
     1	SA_IN_GST_CUSTOM_12 %	12%	727200	SA_IN_GST	SA_IN_GST_CUSTOMS	STANDARD
     2	SA_IN_GST_SURCHARGE_ 10%	10%	72720	SA_IN_GST	SA_IN_GST_SURCHARGE	STANDARD
     3	SA_IN_GST_IGST_5%	5%	342996	SA_IN_GST	SA_IN_GST_IGST	STANDARD

     Review tax details and post to ledger.

2. Create invoice for freight to the port of entry.

   When you create the BOE invoice, the assessable value contains the freight charge to the port of entry. You don’t need to calculate custom duty and IGST for the freight invoice. However, the invoice for freight charge that is incurred while receiving material ownership must have the Landed Cost enabled and allocated to item cost. The invoice is paid to the freight supplier.

   Here the supplier is Air India. The invoice details are as follows.

   • Payables Invoice Header.
     This table displays the details of Payables Invoice Header for the BOE invoice:

     Supplier	Supplier Site	Invoice Currency	Exchange Rate	Total Amount
     Air India	Port of landing	USD	60	1000

   • Payables Invoice Line.
     1. Enter these details for Line 1 of the invoice::
        This table displays the details of Line 1:

        Line Amount	Assessable Value	Transaction Business Category	Landed Cost	Charge Name	Reference Type	Value	Total Amount in USD
        1000	1000	PURCHASE_TRANSACTION/IMPORT OF GOODS_ORDERIN V	Enabled	India Freight	PO number	11	1000
        Total in INR							1000

        Note: The invoice is applicable to the Not Applicable rule for normal GST. You don’t need calculate the tax.

     2. Save the Payables invoice, validate, and post it to ledger.

3. Create invoice for freight from the airport to final destination.

   You don't need to calculate the custom duty if you incur the freight from the airport to the final destination, but you must calculate the normal IGST.

   If you incur the freight while receiving the material ownership, you must enable the landed cost and add it to item cost. The invoice is paid to the freight supplier.

   For the given case, the supplier is DHL, a foreign supplier who isn’t registered in India. So, the tax is self-assessed. Assume that the self-assessed tax is 100% recoverable. The invoice details are as below.

   • Payables Invoice Header
     This table displays the details of the supplier:

     Supplier	Supplier Site	Invoice Currency	Exchange Rate	Total Amount in USD
     DHL	Port of landing	USD	60	8000

   • Payables Invoice Line
     This table displays the details of the invoice line 1:

     Line Amount	Assessable Value	TransactionBusiness Category	Landed Cost	Charge Name	Reference Type	Value	Total Amount
     8000	8000	NULL	Enabled	India Freight	PO number	11	8000
     	Total in USD						1000

     Save the invoice and determine tax.
   • Tax Determination Process

     You must calculate the normal IGST for the invoice, and the tax for the invoice is self-assessed due to the unregistered supplier.

   • Tax Lines

     This table displays details of those tax lines that are created upon successful completion of the tax determination process.

     Tax Line	Rate	Tax Amount	Tax Regime	Tax Name	Self-assessed	Tax Status
     1	18%	1440	SA_IN_GST	Normal IGST	Yes	STANDARD

     Validate the invoice and post to ledger.

4. Run the process Transfer Costs to Cost Management

   You must transfer the cost information from Payables to Cost Management via Transfer Costs to Cost Management process. The invoices flagged for landed cost management are transferred to Landed Cost Management.