sap draft solution for gst india

Solution Proposal

2016-10-10

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Goods and Services Tax - India

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© 2016 SAP SE or an SAP affiliate company. All rights reserved.


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Contents

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© 2016 SAP SE or an SAP affiliate company. All rights reserved. 3

Contents

1 Introduction ................................................................................................................................... 4

2 Master Data .................................................................................................................................... 5 2.1 Tax registration (GSTIN: GST Identification Number) ....................................................................... 5 2.2 Customer Master ................................................................................................................................... 6 2.3 Vendor Master........................................................................................................................................ 8 2.4 Material Master ...................................................................................................................................... 9 2.5 Business Place ...................................................................................................................................... 11 2.6 Tax Account.......................................................................................................................................... 12

3 Tax Configuration and Computation ........................................................................................ 13

4 Document Numbering ................................................................................................................. 15

5 Business Transactions ................................................................................................................ 16 5.1 Procurement ........................................................................................................................................ 16 5.2 Sales ...................................................................................................................................................... 17

6 Pricing ........................................................................................................................................... 18 6.1 Procurement ........................................................................................................................................ 18

6.1.1 Domestic Procurement Intrastate ..................................................................................... 18 6.1.2 Domestic Procurement Interstate ..................................................................................... 19 6.1.3 Procurement- for capital goods ......................................................................................... 19 6.1.4 Procurement – Import ....................................................................................................... 20 6.1.5 Stock Transfer Order .......................................................................................................... 23 6.1.6 Subcontracting/Job Work .................................................................................................. 26 6.1.7 Services ................................................................................................................................ 28

6.2 Sales ...................................................................................................................................................... 29 6.2.1 Domestic (Inter and Intra state) ........................................................................................ 29 6.2.2 Sales - Exports .................................................................................................................... 30

7 GST Tax Postings ........................................................................................................................ 31

8 Utilization ..................................................................................................................................... 32

9 Reporting ...................................................................................................................................... 33

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Introduction

1 Introduction

Disclaimer: This document is a draft, and provided as a courtesy. This document is not to be considered final, and

all information contained herein is subject to change. As such, this document is not to be quoted, cited in any

reference, or used by anyone for any purpose other than as a draft document.

The introduction of Goods and Services Tax will replace the existing indirect taxes in India. One Support has been

updated with the GST Legal change announcement details.

https://launchpad.support.sap.com/#/legalchangenotification/detail/GSCBIN-348

The GST solution will be made available in the following releases:

SAP ERP 6.0

SAP Enhancement Package 2 for SAP ERP 6.0





SAP Enhancement Package 6 for SAP ERP 6.0, Version for SAP HANA



SAP S/4HANA, on-premise edition 1511

The mandatory prerequisites to consume the GST solution to be provided by SAP are:

Minimum Support Package that the customer should be on is provided in the following note

https://launchpad.support.sap.com/#/notes/1175384

TAXINN is the default tax procedure. Please refer to the FAQ note related to the migration of the tax

procedure.


https://launchpad.support.sap.com/#/legalchangenotification/detail/GSCBIN-348




Master Data

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2 Master Data

2.1 Tax registration (GSTIN: GST Identification Number)

Single registration for CGST, SGST and IGST

Individual registration to be obtained in each state of business establishment

PAN based registration number – Up to 15 characters in length

Multiple business places must be created per the region of operation. The relevant plants must be assigned to

their corresponding business places i.e. region wise association. A new field will be provided to store the GSTIN of

the business.

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Master Data

2.2 Customer Master

To identify and manage the various registration numbers (GSTIN) of the customer regions, the main customer

must be extended using a Goods Recipient account group, per region of business. Each of these will have the

region and the corresponding registration number.

Data relevant for GST which is to be captured in customer master are mentioned below.

GSTIN

The registration number to be saved in the Tax number 3(KNA1-STCD3) field of customer master. This

field will be enabled for one time customers as well.


Master Data

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Type of customers (Non-registered Govt entities, Compounding etc.): The standard tax classification field will be used for categorizing the customers.

Together with the Tax classification of the material, pricing can be controlled.

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Master Data

2.3 Vendor Master

The vendor master has to be extended as Goods Suppliers based on their region of operation. This

will ensure in storing GSTIN for each of these regions.

Data relevant for GST to be captured at vendor master are mentioned below.

GSTIN

The GST registration number to be saved in the Tax number 3(LFA1-STCD3) field of vendor master. This field

will be enabled for one time vendors as well.

Types of Vendors (Compounding, Non-registered, etc.)

A new field/table will be provided under CIN details Tab (Vendor master data) for identification.


Master Data

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2.4 Material Master

Classification of materials:

The fields Tax indicator for material and/or material group under Purchasing tab may be used.

Capital/Raw classification

A new indicator may be introduced based on further clarity by Govt.

HSN/SAC code

For Goods the HSN code will be stored in Control code field of foreign data Tab.

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Master Data

For Services, the SAC code will be stored in Tax tariff code of Service master.

Classification of Services:

The fields Tax indicator for services and/or services group under Basic Data tab may be used.


Master Data

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2.5 Business Place

Multiple business places must be created based on the region/state of operation.

The relevant plants must be assigned to their corresponding business places i.e. region/state wise association. A

new field will be provided to store the GSTIN of the business.

As the GST registration is unique to each state, the plant(s) in the same region must be assigned to state specific

business place.

The plants can be assigned to the business place.

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Master Data

2.6 Tax Account

Business Place based G/L account determination: For Input and output, condition type wise transaction key to be

created and business place wise G/L to be created and assigned.

Expected transaction key and description

Transaction Key Description

JIC Input CGST

JII Input IGST

JIS Input SGST

JIR Input GST Reverse Charge

JOC Output CGST

JOI Output IGST

JOS Output SGST


Tax Configuration and Computation

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3 Tax Configuration and Computation

Condition Types required

Intra-state transactions

o CGST and SGST applicable

Inter-state/Import transactions

o IGST applicable

Deductible and Non Deductible

Reverse Charge Conditions

Export Transactions

o Zero rated (Expected)

Region level rate variations may exist

New condition types/access sequences for pricing and account determination planned detailed below.

Tax Procedure

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Tax Configuration and Computation

SD Pricing Procedure


Document Numbering

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4 Document Numbering

Unique sequential numbering may be required for outgoing GST invoices

Criteria for legal numbering may be specified by Govt.

It could be for example

o Registration level

o Plant level

o Document type (Invoice / Credit Memo)

o A combination of above

o Any other criteria

This can be achieved by using the existing ODN (Official document Numbering) functionality.

Assign Document class to Document Types

Assign Number Range to Business Place

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Business Transactions

5 Business Transactions

5.1 Procurement

In normal procurement scenario based on the Goods Supplier (GS) partner and receiving plant that you select in

the Purchase Order, system identifies transaction as intrastate or interstate, and calculates the taxes accordingly.

Goods supplier partner selected flows in the Goods Receipt document, which will then be passed on to invoice

verification to identify their GS Region and receiving plant region, and then taxes are calculated accordingly.

At the time of Invoice creation, if the captured goods supplier partner differs from the Purchase Order goods

supplier, the user can change the goods supplier in the relevant invoice verification (MIRO) transaction. To do so,

we plan to introduce a new editable field (called GST Partner) in the header data under the Basic Data tab. This

new field will default the goods supplier partner vendor that you select in the purchase order. If the user wants to

change this, the user will have the provision to search for the correct vendor code in the field help search.

Note

This design may change depending on the technical feasibility.

In the case of service purchase orders, we also expect a requirement to change the receiving plant region. That is,

if the service offered region is different to that of the receiving plant region maintained in the service order, the

user will be provided with a new editable field (called Actual Place of Supply) in the header data to select service

provided region in the field help search.

Note

This design may change depending on the technical feasibility and more clarity on the law in this area.

The business transactions are classified as intrastate or interstate, and based on the region of the selected GST

partner and the receiving plant, the taxes are calculated in the relevant invoice verification transaction,


Business Transactions

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5.2 Sales

As per the standard SAP partner determination technique, the sales order line items will be assigned an

appropriate Ship-to party, which will be used for creating individual delivery documents. These deliveries/orders

can then be used for billing per region.

Line item 10

Line item 11

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Pricing

6 Pricing

The proposed sample access sequences / condition types/ accounting keys/ tax codes for major business

transaction are listed below.

6.1 Procurement

6.1.1 Domestic Procurement Intrastate

Access Sequence

Tax Procedure


Pricing

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6.1.2 Domestic Procurement Interstate

Access Sequence

Tax Procedure

6.1.3 Procurement- for capital goods

Access Sequence

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Pricing

Tax Procedure

6.1.4 Procurement – Import

Tax setup will be similar to that of Domestic Procurement -

Access Sequence

Tax Procedure

Maintain condition record for condition JIIG (inter-state GST) at a zero rate, for such a combination that it only

triggers for import scenario.

To CVD line (IGST in GST scenario), add your non-zero tax code.


Pricing

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Pricing

The tax lines will be posted to BSET table.


Pricing

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6.1.5 Stock Transfer Order

In GST regime major process change expected in Stock Transfer process. The STO would require a Tax Invoice if

stock transfers are happening between two GST Registration numbers.

NOTE: Need of an account posting of intra-company STO is still under discussion.

We recommend STO to be handled through SD route only.

STO via SD

For stock transfer between the various plants (belonging to different GSTIN), a GST invoice will be created along

with the Goods issue document.

Sender

Receiver

STO

OBD

Billing (VF01)

Outgoing GST

Invoice

Goods Receipt

Capture Incoming

GST invoice

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Pricing

Stock transfer order

Outbound Delivery


Pricing

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Outbound GST invoice creation

Billing details screen (Tcode: VF01)

A new billing document type may be provided for these invoices.

Outgoing GST invoice accounting entry

G/L Acc. Description Amount Currency Debit/Credit

Inter site sales 1100 INR DR

GST Control 1000 INR CR

IGST Payable 100 INR CR

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Pricing

Goods Receipt

Next step will be to capture the GST invoice. The GST Invoice with an account payable line.

G/L Acc. Description Amount Currency Debit/Credit

Inter site sales 1100 INR CR

GST Control 1000 INR DR

Input IGST 100 INR DR

6.1.6 Subcontracting/Job Work

Purchase Order components

The existing Subcontracting process remains the same. We may develop new transactions (similar to J1IF01-

Creation of Challan 57F4 and J1IFQ- Reconciliation of Challan) for GST requirements.


Pricing

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Purchase Order Taxes

Transfer Posting

Good Receipt

NOTE

As an alternate solution for subcontracting, the subcontractor can be defined as an additional place of supply. For

such scenarios, the STO process can be followed.

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Pricing

6.1.7 Services

Existing process of Service Order Creation Service Entry Creation continues. SAC Code will be fetched from the

Service Master and Tax classification indicator would be used to determine the tax.

Based on the Plant Region and Goods Supplier Region, intra state or Interstate would be determined.


Pricing

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6.2 Sales

6.2.1 Domestic (Inter and Intra state)

Access Sequence

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Pricing

Pricing Procedure

6.2.2 Sales - Exports

It is anticipated that the exports will be zero rated.

Export with GST

More clarity is awaited regarding the ARE-1, Excise bond and Proof of exports.

Export without GST

Taxes to be determined but at zero rate.


GST Tax Postings

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7 GST Tax Postings

Separate accumulation of credit and payables for

o CGST

o SGST

o IGST

Separate accumulation at Registration level

As accounting key are part of the procedure, automatic tax posting to respective accounts from business

processes.

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Utilization

8 Utilization

Utilization of Input tax credit would be as under

o Input CGST to be utilized against output CGST and IGST

o Input SGST to be utilized against output SGST and IGST

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

New Utilization program to handle GST credit utilization is planned.

Selection criteria for reporting would be as above.

Cross utilization as per GST rules


Reporting

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9 Reporting

Reporting for GST comprises of several GSTR Reports (from GSTR 1 till GSTR 12). These reports are

supposed to be generated by GSTN system based on data submitted by Tax Payers and their business

partners.

Standard Tax Registers are available in SAP system to view the summary of GST Input and output taxes via

Advance Return for Tax on Sales/ Purchases ( Tcode : F.12)

www.sap.com/contactsap


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