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What is changing

Given the enactment of four central GST Bills [i.e. Central GST (CGST), Integrated GST (IGST), Union Territory GST (UTGST) and the bill to Compensate the States] on 12 April 2017, and with the clear road map being laid down for passage of State GST (SGST) laws in the respective State assemblies, the Government of India seems to be on course to implement GST with effect from 1 July 2017. Till date, eight states have passed the SGST law, while other States are expected to do it by end of May 2017.


GST: AREAS OF IMPACT

Tax Registration

  • Define GST Registration Levels

Master Data Maintenance

  • Business partner tax data, GST Accounts

Tax Configuration & Computation

  • Configured Tax & Pricing procedures, Tax Computation

Document Numbering

  • Outgoing Invoice Numbering

GST tax posting

  • GST Input & Output tax posting

GST tax posting

  • Input tax credit utilization against payable for GST Taxes

Reporting

  • Tax Register


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.



MASTER DATA

Business Partner Tax Data:
Since in GST, only Sales data needs to be uploaded in GSTN Central Portal and Purchase Data will be taken form the Register from whom the Purchase was made, we need to update GST Reg No of all the customers and vendors in their respective SAP Masters.

GST Tax Accounts: Separate tax A/P and A/R accumulation will be required at GST registration (Business Place) level To be defined for CGST, SGST and IGST separately



TAX CONFIGURATION & COMPUTING

  • Applicable Taxes for Different types of Transactions.
  • Intra-State transactions – CGST and SGST is applicable
  • Inter-State and Import Transactions – IGST Applicable
  • Export Transactions – Zero Rates (No Tax)
  • Region level rate variations may exist
  • To take care of all these transactions mentioned above we need to configure New Conditions types for (CGST, SGST and IGST), Access Sequences, Account Keys, Tax Codes and Account determinations for the same


DOCUMENT NUMBERING

Unique sequential numbering for outgoing GST invoices
Criteria for legal numbering may be specified by Government

Logic for having New Document Number Separate tax A/P and A/R accumulation will be required at GST registration (Business Place) level To be defined for CGST, SGST and IGST separately



BUSINESS PROCESS LOCALIZATION

  • Business Process Mapping and Accounting
  • Business Processes that will be configured based on the inputs from CTM, Sales Processes, Procurement Processes, Stock Transfers, Subcontracting, Others
  • Accounting entry will posted either separately for Taxes or for GST Invoices or can be posted for both at the time of GST Invoice verification or GST Commercial invoice generation.


GST TAX POSTING

  • Scenarios for GST Tax Posting
  • Separate accumulation of credit and payables for CGST • SGST • IGST
  • Separate accumulation at Registration level
  • Automatic Tax posting to respective accounts from business processes.


UTILIZATION OF INPUT TAX CREDIT
Utilization of Input Tax Credit (ITC) would be as under.

  • 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
  • Utilization accounts and amounts will be determined based on the Company Code and Business Place combinations.


GST REPORTING

  • GST reports will be needed in line with the statutory requirements
  • Tax registers, CGST, SGST, IGST, Registration level segregation


GSTN PORTAL

  • Suppliers will upload their Sales Data to GSTN
  • Match the same with the receipt data in their systems.
  • Identify exceptions – Invoice in GSTN not in ERP, Goods in Transit, Value Mismatch, Material not Received
  • Identify exceptions – Invoice in ERP not in GSTN. Material received not uploaded by supplier
  • Upload the exceptions on to the GSTN Portal. (Unregistered Suppliers)
  • GSTN Authorities will provide: Standard API will be provided for upload download of data, between ERP & GSTN Portal




Goods and Services tax (GST) has been identified as one of most important tax reform post-independence. It is a tax trigger, which will lead to business transformation for the industry.


Business Rules

  • Differentiation between Manufacturing, Trading & Service Sales
  • New Definition is “Supply of Goods & Services”. No Differentiation between Sales, Stock transfer, intercompany transfer pricing, Service sales etc
  • Imports are simplified with only 2 Tax rates
  • Boundaries for Cross utilization of Credit

Place of taxation

  • From Source to Destination based taxation
  • Each Business entity whether part of sales under consideration or without consideration will have to be registered separately under GST regime
  • Whether source is within India or Outside India Rules remain same

IT involvement

  • Government is launching GSTN Portal for upload and download of document level information
  • GSTN will also support clearing house for reconciliation of balances between different States and Central Govt.
  • Minimum 37 Returns to be uploaded by each GST registered business entity every year


What is Challenges?

SYSTEM CHALLENGES

  • Complex rules to manage special conditions – Invoice based reconciliation

  • GST will impact entire supply chain and related financial accounting which will be new to present business users

  • SAP customizations, Master Data changes and process mapping may pose additional challenges for GST enablement

  • Regression testing of SAP and all connected systems including Government portal (GSTN system).

  • Managing transition scenarios such as Taxable Goods / Services sold Before 1 July 2017 and Returned on or after 1 July2017

  • Sub optimal implementation of GST may result in cash flow issues for organization

  • Inaccurate & delayed GST returns can attract penalty


BUSINESS CHALLENGES

  • Optimization of Organization Structure

  • Compliance across Business Partner ecosystem

  • Pricing optimization and competitiveness

  • Adoption to required IT Framework

  • Adherence to timelines for Return filing

  • Development of IT objects for internal and external reporting and compliance

  • Industry Sector specific impact assessment and optimization

  • Process optimization to improve efficiency and maintain competitiveness

  • Accurate prediction of place of taxation, type of Goods /Services, Rates applicable and business processes applicable