Agt GST

© 2016 AG Technologies All rights reserved
SEI-CMMi SE/SW Level 5 - ISO 9001:2008 - ISO/IEC 27001:2005 1

Purpose of GST
Current Tax Regime in INDIA
• The current indirect tax system is plagued with multiplicity of taxes - at different rates - at multiple
points.
• Absence of any setting off mechanism results in cascading effect of these taxes.
• Procurement of Goods is influenced by the Fiscal Considerations.
Proposed GST Plan
• Based on the Principle of “One Country, One Tax”.
• Seamless utilization of Input Credits, lower cost to End Customer.
• Free Movement of Goods, Qualitative Considerations to have Prime Importance.

AGENDA
Overview of Taxes in India
Overview of GST
Existing Indirect Taxes v/s GST Comparisons
Master Data Changes In MM
GST Scenarios for MM

Taxes to be replaced by GST
Central Taxes State Taxes
Excise Duty VAT
Excise Duty levied under the Medicinal & Entry tax
Toiletries Preparation Act Luxury tax
Countervailing Duty in lieu of Excise Duty Tax on entertainment and amusement
Current Indirect taxes that Special Additional Duty of Customs levied and collected by Panchayat /
may be subsumed in GST Service tax Municipality / Regional Council / District
CST Council
Surcharges & Cesses (relating to supply of Taxes on lottery, betting & gambling
goods & services) State cesses & surcharges (relating to supply
of goods & services)
Central Taxes State Taxes

BasicCustoms Duty and Export Duties Stamp Duties
Terminal taxes on goods or passengers, Taxes on lands and buildings
carried by railway, sea or air; taxes on Taxes on consumption or sale of electricity

Current Indirect taxes that Taxes on goods and passengers carried by
railway fares and freights
may not be subsumed in Taxes other than Stamp Duties on road or on inland waterways
GST transactions in stock exchanges and futures Tolls
markets Taxes on professions, trades, callings and

R&D Cess employments

Proposed GST Structure in India
 GST to overhaul the existing Indirect tax structure in India
 To be levied on all supply of goods and services within India.
 Proposed implementation of dual GST model in India to include the following components
 Central GST (CGST) - Levied by the Central government on supply of goods and services within a State
 State GST (SGST) - Levied by the State government on supply of goods and services within a State
 Integrated GST (IGST) - Levied by the Central government on inter-State supply of goods and service but revenue may
be shared with relevant destination State governments
Indian
GST
Dual-GST Inter-state supplies / import of goods & services

 Centre and States to levy GST on common  Integrated-GST (IGST) on inter-state supplies / import
base (CGST & SGST) of goods and services

Overview - GST Framework in India
Taxation on destination based consumption principles
Taxable event of ‘supply’ as against manufacture (excise), sales (VAT) and services (Service Tax)
Dual GST(Central GST and State GST) to apply concurrently on supply of all goods and services
Integrated GST (IGST) on inter-State transactions including stock transfers
Imports subject to IGST; Exports zero-rated
Seamless input tax credit in the supply chain process

Existing Indirect Tax Structure versus Model GST Law
Existing Indirect Tax structure Versus Model GST Law
Multiple levies based on various activities–Central Excise on
Levy on ‘Supply’ of goods and services; Subsume most of
manufacture, Service Tax on provision of service, VAT on
current indirect taxes into a Single GST levy.
sale, etc.
Taxable event would arise at the place of provision of
Place of Supply is prescribed for both goods and services.
Services.
Valuation rules differ across legislations both at Centre and

State levels including Maximum Retail Price (MRP) based Transaction value to be adopted.
valuation.
Different rate of tax on goods and services. Uniform rate of tax on goods and services.
Restriction on cross-utilization of credits. Seamless cross-utilization of credits allowed.
Separate registration under each law. PAN based all-India registration.

substantial broader time limit prescribed for filing revised
Lesser time limit allowed for revision of returns filed.
returns.
Reverse charge provisions for services. Reverse charge provisions for both goods and services.

Product Pricing Comparison – An Example
Current Scenario GST Scenario
Sale price to distributor 500,000 Sale price to distributor 500,000
Excise duty @ 12.5% (cost) 62,500 IGST @ 18% (credit) 90,000
CST on sale @ 2% (cost) 11,250 - -
Cost to distributor 573,750 Cost to distributor 500,000
Margin of distributor 30,000 Margin of distributor 30,000
Sale price of distributor to end customers 603,750 Sale price of distributor to end
customers 530,000
VAT on sale @ 14.50% (cost) 87,544 CGST @ 9 % (credit or cost) 2,700
- - SGST @ 9 % (credit or cost) 2,700
Cost to end customer/ business customer 691,294 Cost to end customer/ business customer 535,400
Cost benefit to Customer: 155,894
Note :- In Current Scenario, Credit can be set-off between the chain of Mfg-to Mfg only, no ITC to distributors.
In GST even the Distributor can claim the ITC on Purchase of Goods, due to which the final product is less
costlier than in current tax regime.
GST - Master Data Maintenance
HSN (Harmonized System of tariff Nomenclature)/SAC Service Accounting Codes) for Services
• An internationally standardized system of classifying products.
• Used to fix rate of tax on various products at the time of supply.
• Supply invoices to capture HSN codes in case of goods and SAC in case of services.
• Nature of goods / services will be identified through the submission of HSN / SAC in the
monthly return.
• SAC will be prefixed with “S” in order to differentiate between the HSN and SAC.
• HSN codes at 8 digit level and Accounting codes for services will be mandatory in case of
exports and imports

GST Invoice, Debit & Credit Note
 Tax invoice should contain the following information
 A consecutive serial number containing only alphabets and/or
numerals, unique for a financial year at registration level
BILL To:
 GST registration number to be captured for each Registered
Customer and Vendor
 HSN code / accounting code
 Quantity sold Thank you for
 Value of the goods sold your business
 Tax base amount (TV) –The amount on which tax is charged
 Tax charged
 Debit Memo /Credit Memo is also considered as a tax invoice if issued

post the time of supply of goods or services for price change or any
other reason.

GST –ITC Utilization & Set-Off
CGST + SGST Input
Output
Customer
State 1
State 2
IGST Utilization of Input Tax Credit

IGST
IGST
ITC
CGST SGST IGST
Customer Customer CGST IGST SGST IGST IGST CGST SGST

Stock Transfer Service Sale

SAP Readiness for GST Rollout - Tax Registration
GSTIN – GST Identification number Service
Provider
 Single registration for CGST, SGST and IGST
 Individual registration to be obtained in each state of business
establishment Excise Registration Service Tax
(Plant) Registration
 PAN based registration number – Up to 15 characters in length
State Code – Each State has been allotted a unique two digit code e.g ’27’ for the
state of Maharashtra
GST Registration at what level?
13th digit would be alpha-numeric (1-9 and then A-Z) and would be assigned
depending on the number of registrations a legal entity has within one State.
Significance DEPOT
Sales
• Should be printed on the Supply Invoice Office
• GSTIN of ship to party ( Dealer / supplier ) should be provided in the monthly return
• Input GST credit of the recipient of goods / services is auto populated in GST portal
Excise Registration VAT
based on the GSTIN provided by the supplier. Registration
(Depot)

GST Returns
S/N Return/Ledger Applicable for Due date
1 GSTR 1 Outward supplies made by taxpayer (other than 10th of the next month
compounding taxpayer and ISD)
2 GSTR 2 Inward supplies received by a taxpayer (other than 15th of the next month
compounding taxpayer/ISD) - auto populated
3 GSTR 3 Monthly return (other than compounding taxpayer and 20th of the next month
ISD) – auto populated
4 GSTR 4 Quarterly return for compounding Taxpayer 18th of the month following the quarter
5 GSTR 5 Periodic return by Non-Resident Foreign taxpayer Last day of registration
6 GSTR 6 Return for Input Service Distributor (ISD) 15th of the next month
7 GSTR 7 Return for Tax Deducted at Source 10th of the next month
8 GSTR 8 Annual Return By 31st December of next FY
9 Electronic Credit Ledger – auto populated from GSTR 2 Continuous
10 Electronic Cash Ledger – basis payment of tax Continuous
11 Electronic Tax Liability ledger Continuous

The following diagram shared by GST Network (GSTN) offers this clarity

Material Master Changes

Material Master Changes
• HSN/SAC code
For Goods the
HSN code will be
stored in Control
code field of
foreign data Tab.

Vendor Master Changes

Service Master Changes
• For Services, the

SAC code will be
stored in Tax
tariff code of
Service master.

GST impact – A bird’s eye view
Service Tax under Reverse Charge
Overseas
Vendor IGST:18% Overseas
(creditable) Service provider
BCD, CVD & AED
Imports
BCD + IGST:18/20% Service Imports
(creditable)
Outside INDIA
1 2
INDIA State 1 Excise, VAT Excise, VAT
Local GST:18% GST:18% 9 Local Customer
Vendor(RM) (creditable) 3
(creditable)
Manufacturer
Service Tax
Local Service GST:18% 4
Provider (creditable)
7 IGST: 18%
Excise, VAT 6
(creditable)
Local GST:18% 5 IGST:18%
Vendor(Capital) (creditable) (creditable)
Excise Duty, CST
8
INDIA State 2 Service Tax
IGST:18%
(creditable)
Inter-State Inter-State Inter-State sale to
Vendor service provider customer
Excise Duty, CST

Intrastate Procurement: Goods
HSN Code Manufacturing GST
Material Unit Vendor
ORDER
Purchase
Order Creation
RM stock A/c Dr.

GR/IR Clearing A/c Cr.
RECEIPT
One Transaction will be Reduced

Goods Currently Excise Tax posting happens after GRN.
Receipt
In GST Tax entry will be post at time of Invoice
GR/IR Clearing A/c Dr.

INVOICE
Input CGST A/c Dr.

Invoice Input SGST A/c Dr.
Vendor Payable A/c Cr.
Verification
PAYMENT
Vendor Payable A/c Dr.

Vendor Bank A/c Cr.
Payment

Interstate Procurement: Goods
HSN Code Manufacturing GST
ORDER
Purchase
Order Creation
RM stock A/c Dr.

GR/IR Clearing A/c Cr.
RECEIPT
One Transaction will be Reduced.

Goods Currently Excise Tax posting happens after GRN.
Receipt In GST Tax entry will be post at time of Invoice

INVOICE
Input IGST A/c Dr.

Invoice Vendor Payable A/c Cr.
Verification
PAYMENT

Vendor Bank A/c Cr.
Payment

Domestic Procurement: Services
SAC Code Service
Organization
Service Vendor The process will remain same as existing, only the
ORDER
Tax components are changing.
Purchase Order
Creation
Service Exp. A/c Dr.

SR/IR Clearing A/c Cr.
RECEIPT
Service
Receipt
Intra State Inter State

Services Services
SR/IR Clearing A/c Dr.

INVOICE
Invoice SR/IR Clearing A/c Dr.

Input CGST A/c Dr. Input IGST A/c Dr.
Input SGST A/c Dr. Receipt

Vendor
PAYMENT
Bank A/c Cr.

Payment

Import Procurement:
HSN Code Manufacturing Import
Here the Tax Components like CVD
ORDER
and AED are Replaced with IGST.

Purchase
Order Creation
Customs Duty Clg. A/c Dr.

Custom Customs Vendor A/c Dr.
CUSTOM
INVOICE
Input IGST A/c Dr.

Invoice Customs Vendor A/c Cr. Customs Duty Bank A/c Cr.
Verification Payment
RM stock A/c Dr.

BCD Inventorised
One Transaction will be Reduced GR/IR Clearing A/c Cr.
Customs Duty Clg. A/c Cr.
RECEIPT
Currently Excise Tax posting happens after Goods

GRN. In GST Tax entry will be post at time of Receipt
Invoice
INVOICE

Invoice Vendor Payable A/c Cr.
Verification

PAYMENT
Vendor Bank A/c Cr.

Payment

Stock Transfer – Interstate
Material Mfg. Location
ST ORDER
STO Creation
Plant 2 RM stock A/c Dr.

Plant 1 RM stock A/c Cr.
SENDER @ Plant 1
Goods Inter Plant Sales A/c Dr.

Issue (This is Inter Plant
Customer A/c)
GST Control A/c Cr.
( Our Assumption is it will
Outbound GST
be in the nature of
Invoice Balance Sheet A/c)
IGST Payable A/c Cr.
RECEIVER @ Plant 2
Stock Transfer will be treated as

Customer And Vendor Transaction
GST Control A/c Dr. .
( Our Assumption is it will
Goods Inbound GST
be in the nature of Balance
Receipt Invoice
Sheet A/c)
IGST Input A/c Dr.
Inter Plant Sales A/c Cr.
(This is Inter Plant vendor
A/c)

Subcontracting – With Full payment of Duty
Material – Excisable
Vendor – Non-Exempt
ORDER
Subcontracting
Order Creation Tax Code – zero tax code
GOODS TRANSFER
Transfer Posting
GST Clg A/c Dr. IGST Payable A/c Dr.

Create GST IGST payable A/c Cr. IGST Bank A/c Cr.
Invoice for other Payment
Movements
Goods Sent to
Subcontractor
Goods Received
Goods
back from
Receipt
Subcontractor
RECEIPT
GST Input A/c Dr.

GST Clg A/c Cr.
Capture
Subcontractor
GST Invoice
Subcontractor
Invoice
posting
Subcontracting – Without payment of Duty
Material – Excisable
Vendor – Non-Exempt
ORDER
Subcontracting
Order Creation Tax Code – zero tax code
GOODS TRANSFER
Transfer Posting
Create GST
Challan for other
Movements
Goods Sent to
Subcontractor
Goods Received
Goods
back from
Receipt
Subcontractor
RECEIPT
Capture
Subcontractor
GST Challan
Subcontractor
Invoice
posting
GST in a Nutshell!!!
 Based on the Principle of “One Country, One Tax ,”
 GST is an Comprehensive tax to be charged on both Goods and Services.
 HSN Code for Goods and SAC Code for Services.
 Transaction Value (TV) to be used as base for Calculation of Taxes.
 Exports will continue be Nil Rated.
 Seamless Utilization of Input Tax Credit (ITC).
 CGST & SGST for Intrastate Transactions and IGST For Interstate Transactions and Imports.
 4 Slabs of GST proposed at 5%,12%,18% and 28%
 Emphasis on Quality of goods on account of Free Movement of Goods.
 Single Registration for CGST, SGST, IGST.
 Filing of Return to be Portal based.


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© 2016 AG Technologies All rights reserved

SEI-CMMi SE/SW Level 5 - ISO 9001:2008 - ISO/IEC 27001:2005 1

• Procurement of Goods is influenced by the Fiscal Considerations.

Proposed GST Plan

• Based on the Principle of “One Country, One Tax”.

• Seamless utilization of Input Credits, lower cost to End Customer.

• Free Movement of Goods, Qualitative Considerations to have Prime Importance.

© 2016 AG Technologies All rights reserved

Overview of Taxes in India

Existing Indirect Taxes v/s GST Comparisons

Master Data Changes In MM

GST Scenarios for MM

© 2016 AG Technologies All rights reserved

goods & services) State cesses & surcharges (relating to supply

of goods & services)

Central Taxes State Taxes

carried by railway, sea or air; taxes on Taxes on consumption or sale of electricity

markets Taxes on professions, trades, callings and

© 2016 AG Technologies All rights reserved

Dual-GST Inter-state supplies / import of goods & services

© 2016 AG Technologies All rights reserved

Taxation on destination based consumption principles

Integrated GST (IGST) on inter-State transactions including stock transfers

Imports subject to IGST; Exports zero-rated

Seamless input tax credit in the supply chain process

© 2016 AG Technologies All rights reserved

Valuation rules differ across legislations both at Centre and

Restriction on cross-utilization of credits. Seamless cross-utilization of credits allowed.

Separate registration under each law. PAN based all-India registration.

© 2016 AG Technologies All rights reserved

• An internationally standardized system of classifying products.

• Used to fix rate of tax on various products at the time of supply.

© 2016 AG Technologies All rights reserved

 Debit Memo /Credit Memo is also considered as a tax invoice if issued

© 2016 AG Technologies All rights reserved

IGST Utilization of Input Tax Credit

CGST SGST IGST

Customer Customer CGST IGST SGST IGST IGST CGST SGST

© 2016 AG Technologies All rights reserved

© 2016 AG Technologies All rights reserved

5 GSTR 5 Periodic return by Non-Resident Foreign taxpayer Last day of registration

8 GSTR 8 Annual Return By 31st December of next FY

9 Electronic Credit Ledger – auto populated from GSTR 2 Continuous

10 Electronic Cash Ledger – basis payment of tax Continuous

11 Electronic Tax Liability ledger Continuous

© 2016 AG Technologies All rights reserved

© 2016 AG Technologies All rights reserved

© 2016 AG Technologies All rights reserved

© 2016 AG Technologies All rights reserved

© 2016 AG Technologies All rights reserved

• For Services, the

© 2016 AG Technologies All rights reserved

© 2016 AG Technologies All rights reserved

RM stock A/c Dr.

One Transaction will be Reduced

GR/IR Clearing A/c Dr.

Input CGST A/c Dr.

Vendor Payable A/c Dr.

© 2016 AG Technologies All rights reserved