Subcontracting config process with GST ( Interview Q & A ) in SAP MM

 Subcontracting Process in GST: India.

Concept of Subcontracting process:-

Subcontracting is a process of providing components/goods to vendors and receiving finished products.

With an aim to bring in uniformity in the tax structure, the GOI rolled out GST.

As we are aware of the changes proposed by SAP after the introduction of GST in India, new Transactions came into the the picture and the process of reconciliation of Challans.

Step by Step process:-

The process is as follows:

1. Create a Subcontracting PO(Item Category L), also maintain the component for the same.
2. Issue goods to the Vendor using MIGO.(541 Mvt Type)
3. Now create a Challan for the 541 material document using T-code J1IGSUBCON.
4. Now post a Goods Receipt for the goods

Now reconcile the challan for the consumed material using J1IGRECON Tcode.

As per GST Law, we can run Subcontracting process in one of the following ways:

1-         With Challan.

            2-    Without Challan (with Invoice.

Subcontracting Configuration for GST:-

·              Define Shipping Data for Plants: Assign Sales Organization, Distribution Challan and Division should be maintained for Supplying Plant from which the components are to be delivered. Table view – V_001W_IV, T. Code – SM30 Or SPRP -> SAP Ref. IMG -> Materials Managment -> Purchasing -> Purchase Order -> Set up Stock Transport Order -> Define Shipping Data for Plants

·              New Billing Type define – ZSN SC Challan (No Taxes), ZSP – SC Invoice (with Taxes)

·              Classify Subcontracting Billing Types: Maintain View J_1IG_V_SUBINV through Code – SM30 – Company Code, Sales Type, Billing Type, Billing Class – ZSN for Create Challan and ZSP for Create Invoice

·              Use the existing SD Pricing Procedure or define a new Pricing Procedure for Subcontracting process

·              Set up “Delivery to Billing Type” Copy Control. Copied with Billing Type “FX” and Sales Order “OR.

Accounting Entries at the time of Goods Receipt:

BSX – Stock A/C for Assembly/ Semi-Finished  – Dr.                          11000

BSV – Change in Subcontracting Stock    Cr.          11000-

FRL – Subcontracting Charges     Dr.          10000

WRX – GR/IR Clearing (Semi-Finished) A/C           Cr.          10000-

BSX- Stock A/C for Components                                Cr.          1000

GBB-VBO Consumption A/C for Components     Dr.          1000.

Accounting Entries at the time of Invoice Receipt:

GR/IR Semi Finished Clearing A/C             Dr.          10000

IGST or SGST/CGST Taxes A/C                    Dr.          900, 900 (CGST/SGST) or 1800 (IGST)

Vendor A/C        Cr.          11800

T. Code - MBLB To display Stock to Subcontractor.

              ME2O Issue component to Vendor.