SAP Solution Proposal GST

Solution Proposal 2016-10-06

Goods and Services Tax - India

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

F 2 or E N T E R .


Typographic Conventions

Contents

1

Introduction ...................................................................................................................................4

2

Master Data ................................................................................................ .................................... 5

2.1 2.2 2.3 2.4 2.5 2.6

Tax registration (GSTIN: GST Identification Number) .................................................................... 5 Customer Customer Master Master............................................................ ............................................................. .... 6 Vendor Vendor Master Master .......................................................................... ....................................................... 8 Material Material Master Master ................................................................................................................. ............... 9 Business Business Place ................................................................................................ ................................ 11 Tax Account Account ........................................................... ............................................................ ............ 12

3

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

4

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

5

Business Transactions ................................................................................................... ............. 16

5.1 5.2

Procurement Procurement.......................................................... ............................................................ ............ 16 Sales............................................................................................................................................... 16

6 6.1

Pricing ........................................................ .................................................................................................................... ................................................................................... ....................... 18 Procurement Procurement.......................................................... ............................................................ ............ 18 6.1.1 Domestic Domestic Procurem Procurement ent Intrast Intrastate ate ................................................................................. 18 6.1.2 6.1.3 6.1.4 6.1.5 6.1.6 6.1.7

Domestic Domestic Procurem Procurement ent Interst Interstate ate ................................................................................. 19 ProcurementProcurement- for capital capital goods goods................................................................ ..................... 19 Procurement – Import ......................................................... ..........................................20 Stock Stock Transfer Order ........................................................... .......................................... 23 Subcontract Subcontracting/J ing/Job ob Work Work ............................................................ .................................26 Services Services........................................................... ............................................................. .. 28

6.2

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

7

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

8

Utilization .....................................................................................................................................32

9

Reporting ......................................................................................................................................33


Contents

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

3

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 p urpose 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

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SAP Enhancement Package 2 for SAP ERP 6.0

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

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SAP S/4HANA, on-premise edition 1511

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

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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/#/notes/2252781

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Introduction

2

Master Data

2.1

Tax registration (GSTIN: GST Identification Number)

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Single registration for CGST, SGST and IGST

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Individual registration to be obtained in each state of business establishment

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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 GST IN of the business.


Master Data


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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.

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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.

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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.


Master Data


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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.

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Types of Vendors (Compounding, Non-registered, etc.) A new field/table will be provided under CIN details Tab (Vendor master data) for identification.

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Master Data

2.4 

Material Master

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

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Capital/Raw classification A new indicator may be introduced based on further clarity by Govt.

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


Master Data


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

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

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Master Data

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.


Master Data


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2.6

Tax Account

Business Place based G/L account determination – Both for MM and SD

View: J_1IT030K_V

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

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Master Data

3

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Tax Configuration and Computation

Intra-state transactions o

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Inter-state/Import transactions o

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CGST and SGST applicable

IGST applicable

Export Transactions o

Zero rated (Expected)

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Region level rate variations may exist

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New condition types/access sequences for pricing and account determination

Tax Procedure




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SD Pricing Procedure

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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.

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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


Document Numbering


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5

Business Transactions

5.1

Procurement

Actual Goods supplier will be captured in the Goods Receipt document, which will then be passed on to invoice verification to identify the actual place of supply and for calculation of taxes accordingly. To store the Goods supplier’s region, we intend to introduce a non -editable field on header details (Basic data tab) for the relevant IV transactions. This design may change depending on technical feasibility. Based on the region of the Goods supplier and the receiving plant, the business transaction will be classified into intra or interstate and the taxes will be determined.

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.

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Line item 10

Line item 11




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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

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Pricing

6.1.2

Domestic Procurement Interstate

Access Sequence

Tax Procedure

6.1.3

Procurement- for capital goods

Access Sequence


Pricing


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

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Pricing


Pricing


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The tax lines will be posted to BSET table.

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Pricing

6.1.5

Stock Transfer Order

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

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 STO

OBD

Outgoing GST

Receiver Goods Receipt

Capture Incoming GST invoice


Pricing


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Stock transfer order

Outbound Delivery

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Pricing

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


Pricing


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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 J1IF01Creation of Challan 57F4 and J1IFQ- Reconciliation of Challan) for GST requirements.

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Pricing

Purchase Order Taxes

Transfer Posting

Good Receipt


Pricing


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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.

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.

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Pricing

6.2

6.2.1

Sales

Domestic (Inter and Intra state)

Access Sequence


Pricing


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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.

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Pricing

7

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GST Tax Postings

Separate accumulation of credit and payables for o

CGST

o

SGST

o

IGST

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Separate accumulation at Registration level

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Automatic Tax posting to r espective accounts from business processes


GST Tax Postings


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8

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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

Cross utilization as per GST rules

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Utilization

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Reporting

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The reporting for GST is to be made to GSTN (Goods and Services Network) via GSP (GST Suvidha Provider).

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The most important forms to be reported to GSTN are: o

GSTR-1 (Outward supplies made by the taxpayer)

o

GSTR-2 (Inward Supplies/Purchases received)

o

GSTR-8 (Annual return)


Reporting


33

SAP Solution Proposal GST

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