How normally Supplier VAT (input tax) handled in Accounting point of view?

Question

Dear Experts,
We have a scenario for one of our Group companies to handle Tax entries.
The mateials imported have to be charged with VAT 10% and to be paid to Government not to vendors. Is it possible to handle it thru tax procedure? Thru PO pricing procedure we are able to handle it. But the  client talking about Tax procedures.
Example of complete purchase cycle.
Total material Price 1000
Frieght 200
Now the Tax 10% to be applied on the CIF price (material price + Fright i.e. on 1200/-)
How accounting entries for Goods receipts to be created, whether the tax amount will be updated to material cost?
If not what are accounting entries normally to be created during GRN?
What entries to be created during LIV?
Thanks in advance.

Answer 1

Dear Sangravi,
This can be done in the following way..
Create a vendor with the name of government for VAT.
In pricing procedure create a condition type which acts on the cumulative amount of CIF (i.e. cost, insurance or Freight) which is of percentage calculation. consider this as of type "delivery condition" then automatically the cost incurred will be posted on material.
while creating PO, enter this condition type in condition tabs with the created vendor condition detail screen.
Make a GR, then we need to do Invoice verification for this by taking "delivery cost".
Payment will be made for the same by accounts department.
Note:
1. For the same if you want the system to hit different G/L account instead of GR/IR account you can maintain it by creating a new Account reference and maintain the same with required G/L account in OBYC. Feel free to ask any questions on this.
2. The only extra step or burden for the user is he need to create a Delivery Invoice though he will not receive any invoice from the government. Where in he can maintain any internal reference in the reference field of the Invoice through transaction MIRO.
Regards
Lakshminath Gunda.