SAP GST - Goods and Service Tax –India

Smajo - Rapid Start & Road Map

Agenda

• Setting the Context

• GST Introduction
• Objectives – Impact, Current Status, benefits
• Tax Structure in India
• Existing Tax Structure in India
• Proposed Tax Structure in India
• Technical Specifications
• SAP Requirements
• Impact on Business Processes
•GST Implementation Methodology
• Company profile
• GST – Expertise, Enablers, approach
• High Level Solution approach
• GST – For Companies not on SAP recommended Patch level
GST - Introduction

• GST (Goods and Services Tax) is a comprehensive indirect tax on manufacture, sale
and consumption of goods and services throughout India.

• Levied and collected at each stage of sale or purchase of good or services based on
the input tax credit method.
GST – Business Impact

GST -
Business Impact

4
GST – Benefits

Fewer
Taxes
Improved Fewer Tax
Financials Rates and
Exemptions

Common
GST - Broadening
Market across
Benefits of Tax Base
Country

No
Optimise
Cascading
Resources
Improved of Taxes
Tax
Compliance
GST – The Smajo Approach

Why SMAJO:

 SAP GST Implementation impacts entire business

operations within your organization (Sales, Purchase,
Finance).
 End-to-End GTS Solution approach along with
Risk Mitigation -
Timely and
Cost
connectivity to the GSTN network (Impact assessment Efficient
to GST return filings through the GSTN Network) Implementation
 Automation of GST Returns, reconciliations, tax
determination, Invoice printing and comprehensive
GST compliance
 A strategic approach required for implementation to be
done in Industrialized and standardized manner. Reduces Ready to Run Strategic
Business and consulting efforts.
 Proven track record and Expertize in Tax Migration
solution Approach

project ensure ON-TIME project delivery and with

highest standards.
 Readiness with Templates, implementation
methodologies as an added advantage.
GST – Current Taxation Vs. GST

Central Levies Goods and State Levies

Services Tax
Central Excise Duty
State VAT/Purchase Tax
Excise Duty on Medicinal
and Chemical Preparation
Entertainment Tax
Additional Excise Duty on
Textile and Textile Tax on Lottery, Gambling
CGST etc.
Products

Central Sales Tax Entry Tax

Service Tax SGST Luxury Tax

CVD and SAD (on Goods Tax on Advertisement

Imports)
State-wise CESS and
CESSES and Surcharge Surcharge
(Edu., S.B.C., Krishi Kalyan)
GST – Proposed Tax Structure

Tax Structure

Direct Tax Indirect Tax = GST

(Except Custom)

Income Tax
Intra State Inter State

IGST
CGST (Central) SGST (State) (Central)

• IGST – Tax levied under the Integrated Goods and Service Tax Act, 2016
• CGST – Tax levied under the Central Goods and Service Tax Act, 2016
• SGST - Tax levied under the State Goods and Service Tax Act, 2016
GST – Technical Specifications

 For GST Implementation certain Technical specification needs to be fulfilled as per

recommendations from SAP.

 Technical specification for GST Implementation solely depends on current version of Tax
Localization for your organization.

 Two separate Tax Calculation Procedures

 TAXINJ – Formula based taxation

 TAXINN – Taxation based on Condition records

 Technical activities to be carried out for each of the Tax Calculation procedures currently
available in SAP there are three approaches .

1. Migration TAXINJ to TAXINN : If your organization is still on TAXINJ procedure, then first
step would be to migrated TAXINJ to TAXINN procedure.
2. Migration to GST : If your organization is still on TAXINN procedure, then GST patch to
be migrated to TAXINN procedure and apply the SAP note for GST.
3. New (Greenfield) Implementation: If your organization is still not implemented SAP,
then GST to be implemented along with SAP ERP System.
GST – Approach 1 (TAXINJ to TAXINN)

• Service Pack (SP) to be applied as per SAP_APPL

• Release Support Pack
SAP ERP 6.0 (600) SP 26
EHP2 FOR SAP ERP 6.0 (602) SP 16
EHP3 FOR SAP ERP 6.0 (603) SP 15
EHP4 FOR SAP ERP 6.0 (604) SP 16
EHP5 FOR SAP ERP 6.0 (605) SP 13
EHP6 FOR SAP ERP 6.0 (606) SP 14
EHP6 FOR SAP ERP 6.0 for HANA (616- SAP HANA) SP 08
EHP7 FOR SAP ERP 6.0(617) SP 07
• SAP Note to be applied for Migration:
2014164 - TAXINJ to TAXINN Migration
2153807 - Tax code update programs PO SA and Contract
2161911 - Purchase order display and Invoice display/cancel issue
2167294 - Prerequisite Note for SAP Note 2153807
2252781 - FAQ on Tax procedure migration from TAXINJ to TAXINN

• Configuration: Configure TAXINN Procedure and 0ther prerequisite configuration for TAXINN

• Master Data Migration/Cutover activity

Migrate tax Code in TAXINN (for Historical data and currently used tax codes)
Create new condition records for TAXINN

• Historical Data Maintenance:

Migrate Open Transactional Data , open purchase order, open sales order and open FI documents if any
GST – Approach 2 ( TAXINN to GST)

If the TAXINN procedure exist in the system :

 The Government of India is planning to introduce GST on July 01, 2017,

 This is a draft note and is not for productive use. Ensure that you apply changes proposed in this note
only in a sandbox system as it is in DRAFT status.

 The Note contains information based on the draft Model GST law attached with the note. The
information offered is subject to change without prior notice due to factors outside/beyond the control
of SAP. SAP does not take responsibility for any changes that arise in your system after implementing this
note.

 SAP suggests that you perform an assessment on the risks involved before implementing this note.

 Once the final GST law is available, SAP will keep you informed regarding the details of the final solution

 SAP notes to be applied in sandbox for ready ness of GST

 2385575 - GST India - Changes to Master data

 2405502 - GST India - Changes to Master data- DDIC activities
 2407980 - GST India - Changes to tax procedure and pricing procedure
 2315692 - Information on GST
 1375438 - Globalization Collection Note
GST – Approach 3 ( GST )

New (Green) Implementation:

Below SAP notes to be applied in sandbox for ready ness of GST

 2385575 - GST India - Changes to Master data

2405502 - GST India - Changes to Master data- DDIC activities
 2407980 - GST India - Changes to tax procedure and pricing procedure
 2315692 - Information on GST
 1375438 - Globalization Collection Note
GST – Areas of Impact

• Tax registration - Define Registration level

• Master Data Maintenance – GL Accounts, Business partner Tax Data

• Tax Configuration and Computation – Configure Tax and Pricing Procedure

• Document Numbering – Outgoing Invoice Numbering

• Business Process Location – Currently Localized Business Process

• GST Tax Posting – GST Input and Output Tax Posting

• GST Tax Posting – GST Input and Output Tax Posting

• Utilization – Input tax credit utilization against payable for GST taxes

• Reporting – Tax Register

GST – Tax Registration and Master data

• Tax registration - Define Registration level

 GSTIN – GST Identification Number
 Single registration for CGST, SGST and IGST
 Individual registration to be obtained in each state of business establishment.
 GST registration at Business place level

• Master Data Maintenance – GL Accounts, Business partner Tax Data

 Customer and Vendor: GST registration number to be captured for each registered customer and
vendor. (Vendor and Customer GST registration field to be defined in General Data Tab field Tax
Number 3 )
 Separate tax for A/P and A/R accumulation might be required at GST level
 Accounts to be defined for SGST CGST and IGST
 GL Accounts to be determined at Business place level for example IGST

Transacti Tax Code Business GL Account GL Description

on Key Place

JIC IN01 XXXX000 IGST – Maharashtra

JIC IN02 XXXX100 IGST - Andhra Pradesh
JIC IN03 XXXX200 IGST - Bengal
GST – Tax procedure and Condition records

• Tax Configuration and Computation – Configure Tax and Pricing Procedure

 For Intra-state transactions : applicable CGST and SGST.
 For Inter-state and Import transaction : applicable IGST.
 New Condition types, access sequence and account determination to be configured for GST
example (OBQ1).
 Condition types to be created for deductable and non deductable GST, conditions to be added in Tax
calculation (OBYZ) and SD Pricing procedure (V/06 or V/08) example JINFAC.. .

Tax type Access Condition Description Account

Sequenc deductable Key
e

Input JGSI JICG Central GST (INTRA) JIC

JISG State GST (INTRA) JIS
JIIG Integrated GST (INTER) JII
Output JGSO JOCG Central GST (INTRA) JOC
JOSG State GST (INTRA) JOS
JOIG Integrated GST (INTER) JOI
GST – Document Numbering

• Document Numbering – Outgoing Invoice Numbering

 Unique sequential numbering for outgoing GST Invoices

 Criteria for legal numbering may be specified by government
 Numbering could be for example on Registration level, document type
 Assignment of Number Ranges to Business place

Docume Docum Description Busines NO Grp No Exp Date from To

nt Class ent s Place
Types
IN RE Invoice – Gross IN01 IN01 01 01.01. 2016 - 31.12.2016

WA Goods Issue IN01 IN01 01 01.01. 2016 - 31.12.2016

WE Goods Receipts IN01 IN01 01 01.01. 2016 - 31.12.2016

WI Inventory Document IN01 IN01 01 01.01. 2016 - 31.12.2016

GST – Impact on Business processess

• Business Process Location – Currently Localized Business Process

 Sales Process
 Procurement Process
 Stock Transfer
 Subcontracting
 Others

• GST Tax Posting – GST Input and Output Tax Posting

 Separate accumulation of credit and payables for
• CGST
• SGST
• IGST
 Separate accumulation at registration level
 Automatic Tax posting to respective GL Account from business process
GST – Utilization and Reporting

• Utilization – Input tax credit utilization against payable for GST taxes
 Input CGST to be utilized against output CGST and IGST
 Input SGST to be utilized against output SGST and IGST
 Input IGST to be utilized against output IGST, CGST and SGST in the order of IGST CGST and SGST

• Reporting – Tax Register

 CGST
 SGST
 IGST
 Registration level segregation
Utilization : New Utilization program to handle GST credit utilization is planned
Reporting : Advance Return for Tax on Sales/ Purchases ( Tcode : F.12)
GST – Configuration

Create condition table for material

 Input CGST to be utilized against output CGST and IGST

 Input SGST to be utilized against output SGST and IGST
 Input IGST to be utilized against output IGST, CGST and SGST in the order of IGST CGST and SGST

• Reporting – Tax Register

 CGST
 SGST
 IGST
 Registration level segregation
GST – Solution for Companies not on SAP recommended patch
level

TAXINN Tax procedure is Mandatory for GST.

However what if you do not want to upgrade/migrate to the recommended patch
level? or have global regression constraints to migrate to the recommended SP level?
- no problem

We will do a POC in your system in the sandbox environment by applying

GST applicable notes and customized solution only to your
environment. This will mean tremendous savings to you terms of
$$$, time and effort.
GST – A complete End to End solution

We have partnered with Adaequare who are market leaders in GST automation to
have a seamless integration to the GSTN (GST Network)
GST – A complete End to End solution
Contact details

Questions ??? We will be glad to answer the same.

Anand Iyer
[email protected]
+91 9989819968

Randal Pereira
[email protected]
+91 7709151019