Purchase Process mapping for Inclusive excise/Dealer Purchases.

1. Author: Sandeep Rathod | SAP Business One 1
SAP Business One
Inclusive Excise Purchase Process Mapping
When & Where to Map this Process?
• Dealers are categorized under First Stage, Second Stage & Third Stage
• Usually Second Stage & Third Stage dealers does not have Excise registration.
So in simple words they are not liable to pay any excise to government but they
can do business with goods that are excisable
• Dealers have VAT/CST registration so they are entitled to pay VAT/CST to
government
• For E.g.: Company 'A' places a purchase order to Dealer 'B' for Item 'C'.
Dealer 'B' will contact the manufacturer to dispatch material 'C' which is excisable
to company 'A'.
Manufacturer will send the excisable bill to Dealer 'B' and Dealer 'B' will send a
bill to Company 'A' with VAT/CST tax along with original copy of excise bill
received from manufacturer.
• Company 'A' is a Manufacturer who stores and consumes excisable material for
production. Now problem is there are two vendors involved in single purchase,
excise bill is from Manufacturer & VAT/CST bill from dealer. Company 'A' needs
to account both bills with Purchase Order, GRN, Incoming excise, A/P Invoice
and Outgoing Payment created under Dealer 'B'
• Let us see how to configure this process.

2. Author: Sandeep Rathod | SAP Business One 2
• Create a G/L at Asset side under current asset
• Name the G/L as Inclusive Excise Reversal
• Create a Freight setup and link 'Inclusive of Excise' account under expense as
shown in above image.

3. Author: Sandeep Rathod | SAP Business One 3
• Create a Tax Code with combination of Excise and VAT/CST. Keep BED rate
zero
• When creating Purchase Order for Dealer select the above tax code hence
document total will not include excise amount only VAT/CST
• Create a actual Tax code required
• Both of the above Tax code needs to be created in the system

4. • While creating GRPO
• User will need to change the Tax code with actual rate present in Excise
and then add GRPO
• Create 2 UDF on incoming excise invoice document
Manufacturer Name
• Create a Transaction Notification SP
either Inclusive or exclusive
• If type specified is Inclusive the
• Assessable value per unit must be specified to calculate excise as pe
Manufacturer excise copy received
Author: Sandeep Rathod | SAP Business One
While creating GRPO company receives the excise copy from Manufacturer.
User will need to change the Tax code with actual rate present in Excise
GRPO
Create 2 UDF on incoming excise invoice document i.e. Excise type &
Name
Transaction Notification SP and force user to specify Excise Type i.e.
either Inclusive or exclusive
Inclusive then Manufacturer Name will be mandatory
Assessable value per unit must be specified to calculate excise as pe
Manufacturer excise copy received.
SAP Business One 4
company receives the excise copy from Manufacturer.
User will need to change the Tax code with actual rate present in Excise copy
Excise type &
and force user to specify Excise Type i.e.
Manufacturer Name will be mandatory
Assessable value per unit must be specified to calculate excise as per

5. Author: Sandeep Rathod | SAP Business One 5
• Journal entry which will be passed on incoming excise invoice
• When creating A/P Invoice specify total excise amount in -ve figures with Tax
code as exempted under Inclusive Excise setup

6. Author: Sandeep Rathod | SAP Business One 6
• Above Journal entry will be passed
• As you can see the overall impact of excise amount gets nullified
• Bill be matched as per Dealer's Invoice
• We need to revaluate the Item Cost since the current item cost was inclusive of
excise
• Follow the above shown path to open Inventory revaluation document

7. Author: Sandeep Rathod | SAP Business One 7
• Specify Item Code which was purchased Inclusive of Excise
• System will automatically specify the Current Cost and Stock Quantity in
Warehouse. In above e.g. Valuation method is Moving Average
• Specify Inclusive Excise G/L in G/L Increase and Decrease account
• We need to recalculate the Item Cost manually
Total Value = Current Item Cost * Quantity
Item Cost after Excise Reversal = Total value - Excise amount Quantity
• Specify the New Cost
• Adding Inventory Revaluation will Reduce the Item Cost and Inclusive Excise
Reversal G/L will be zero
Thank You!!