1 GOODS & SERVICE TAX The New Tax Approach
2. TOPICS
What is GST
System of Administration
Benefits
GST Structure
Sample Calculation
Impact
Solution Approach & System Changes(SAP)
Challenges
3. WHAT IS GST ?
Stands for Goods & Service Tax
One Unified tax for the whole nation
Destination based Tax
Credit available at every stage
Substitution of all indirect taxes levied by State and Centre
Proposed system will take the form of Dual GST ,which is concurrently charged
by Centre as well as State.
4. SYSTEM OF ADMINISTRATION-GSTN NETWORK
A common and shared IT infrastructure
A G2B portal (Government to Business)
All the core functions will take place here
(Registrations,Returns,Challans,Payments)
System of Truth
One stop shop for the tax payer
Tax payers will need upload invoices by 10th of every month
5. BENEFITS
Easy Compliance – A single platform to view registrations ,returns and payments
for the tax payers
Uniformity – A uniform tax structure all through out the supply chain • Removal of
Cascading
Improved Competition
Relief in overall tax burden
Single and transparent tax proportionate to the value of goods & services
Better control
Improved Tax Revenue
Cross Utilization Allowed
6. STRUCTURE
CGST(Centre) SGST(State)
Central Excise Duty VAT/Sales Tax
Add. Excise Duty Entertainment tax
Add. Customs Duty (CVD) Luxury Tax
Special Additional Duty of State Cesses & Surcharges
Customs
Surcharges & Cesses Octroi & Entry Tax
Service Tax Purchase tax
IGST=CGST + SGST on all inter-state transactions of supply of taxable goods &
services
7. CALCULATION EXAMPLE WITHIN THE SATE
8. CALCULATION EXAMPLE :INTERSTATE
9. IMPACT
Existing Registrations
Vendors (Vendor’s vendors)
Customers (Customer’s Customer)
Logistic Network
Purchase Scenarios
Sales Scenarios
Utilization
Inter-Company Transfers
Various Reporting Requirements
Infrastructure change in order to connect with GSTN Portal
10. SOLUTION APPROACH
Need to get the registrations for your plants in various states
Gather registration data as well as classification data for vendors as well as
customers
Gather HSN codes/SAC codes as well as classification data for material /services
List down all existing purchasing processes and Sales processes
List down all the outputs used in the current processes
Need to access impact on the third party applications used in Procurement, Sales
/ Logistics
Gather data about the applicable GST rates
Need to check the infrastructure for connectivity between the system and GSTN
portal
Assess Reporting requirements, since the reporting needs to be done at Item
level.
11. PRE-REQUISITES
• SP Level as per SAP Note 1175384
• Default Tax Procedure should be TAXINN Other related SAP Notes:
• 2014164 –TAXINJ to TAXINN • 2039117-Master Note
• 2167294 –Upload Tools • 2252781 –FAQs on TAXINJ & TAXINN
• 2194689 – IN:GST • 2386062 – SAP ASP for GSTN Portal
12. SYSTEM CHANGES
Master Data Changes
Vendors:
• GSTN numbers to be captured (15 CHARS)-This will be done under CIN tab ,in a
new field “GSTN Number". Incase of multiple registrations , the partner function
Goods Supplier (GS) can be used.
• Vendor Classification- A new field under CIN tab to classify vendors
Customers:
• GSTN Numbers- A new field ,same as Vendor Master
• Customer Classification – Will be done under tax Classification
• A new partner function called GST Partner to map multiple locations for customers
(Ship to)
Material Master:
• Purchasing View – Tax Indicator to classify the materials
• Control Code – To map the HSN numbers.
• Sales View- Tax Classification to be used to classify the materials.
Service Master:
• Tax Tariff Code – Will be used to map the SAC codes.
• Tax Indicator – Classification of Services
13. SYSTEM CHANGES
Tax Configuration:
• New Conditions types to be mapped in the existing procedure
• New Access Sequences
• Separate Transaction keys
Account Determination:
• Needs to be set for business place
• Separate Ledgers for the different tax components per business place.
14. SYSTEM CHANGES
Processes:
• Local Purchase - GST needs to be captured during goods receipts
• Subcontracting – Need to pay GST while transferring the material to the Vendor
• Services – Here the SAC codes need to be reported at line item level. Hence there
will be a change
• Stock Transfers – GST impact needs to captured during goods receipts in the
receiving plant.There will be different Billing Type in VF01
• Imports – BCD + IGST
• Tobacco,Alocohol,Petroleum excluded
• Zero Rating for Exports
15. SYSTEM CHANGES -REPORT
• GSTR1 – Outward supplies made by tax payer , to be reported by 10th of every
month
• GSTR2- Inward supplies received by a tax payer , 15ht of the month
• GSTR3 – Monthly return,20th of the month
16. UTILIZATION
• New Transaction to be build for the GST utilization
• The system of truth will be the GSTN Portal ,and not SAP .
Credit of Can be utilized against
CGST CGST&SGST
SGST SGST & CGST
IGST IGST,SGST & CGST
17. SAP’S ROADMAP
• SAP Notes and System Level Changes
18. CHALLENGES
• Connectivity between the ERP systems and GSTN Portal
• Understanding the working of GSTN Portal • Cutover Data Strategy
• Change Management for the User community
• Need information on reverse charge for Service Tax in the GST Regime
• Cesses and Surcharges if any
