Transition cut-over Malolan Pathanki November 23, 2016
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Agenda
Transition GST Rules Open transactions
Business Impact Process Commercial Users
Cut over Customization Master data Tax and Pricing procedure
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Transition GST Rules Open transactions
Transition GST Rules Registration Existing VAT/Excise registration automatically carried over to GST (no central registration like service tax, individual state level is needed) Final registration after submitting relevant documents
Existing credits Existing credits (VAT/CENVAT) carry forward to GST Balance of credits (VAT/CENVAT) on capital goods carry forward to GST
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Transition GST Rules Moving into GST (previously exempted, composition to normal etc.,) Credit for closing stock on the appointed date Normal to consumption – credit on closing stock to be reversed
Fall out of transactions prior to appointed date Previously exempted, chargeable under GST returned after appointed date: – Within 6 months from appointed date, no impact in GST. If more than, 6 months, GST rules become applicable
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Transition GST Rules Fall out of transactions prior to appointed date Duty and taxes paid goods returned after appointed date: – Within 6 months from appointed date no impact in GST, credit of earlier paid duty and taxes allowed. If returned after 6 months from appointed date, then, GST is applicable Job work (inputs, semi finished/finished goods) returned after appointed date: – Returned within 6 months from appointed date, no impact on GST. After 6 months from appointed date, GST liability to be discharged both by Principal / Sub-contractor
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Transition GST Rules Fall out of transactions prior to appointed date Goods sent on approval basis returned after appointed date: – Within 6 months from appointed date, no impact in GST. If more than, 6 months, GST rules become applicable – If not returned within 6 months from appointed date, GST to be discharged by supplier Payments no impact in GST provided transactions have been charged with VAT/EXICSE as applicable
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Transition GST Rules Follow up transactions prior to appointed date CR/DR notes chargeable under GST
Refund/Recovery/Proceedings/Revision under previous Law Refunds as per previous law and no credit allowed under GST Recovery of demand arising out of proceedings/revision etc., to be proceeded as per GST rules
Agents Reversal of credit by Principal, stock on appointed date declared by Agent and Principal
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Transition Open transactions Outbound
Billing document tax calculation based on billing date (no need to close and open new documents) Customer return of previous period sales, after appointed date - GST transition rule Customer return of outbound after appointed date, GST applicable, customer to issue GST invoice CR/DR note for previous period sales, issued after appointed date - GST transition rule (GST applicable) CR/DR not for outbound after appointed date, GST applicable Advances received prior to appointed date (without taxes/duties) adjusted in invoice after appointed date, GST applicable on full invoice value Advances received after appointed date, GST applicable on advances
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Transition Open transactions Inbound
Invoice document tax calculation based on document date (no need to close and open new documents) Vendor return of previous period purchase, after appointed date - GST transition rule Vendor return of inbound after appointed date, GST applicable, GST invoice to be raised CR/DR note for previous period purchase, after appointed date - GST transition rule (GST applicable) CR/DR not of inbound after appointed date, GST applicable Advances paid prior to appointed date (without taxes/duties) adjusted in invoice after appointed date, GST applicable on full invoice value Advances paid after appointed date, GST applicable on advances
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Business impact Process Commercial
users
Business impact Process
Stock transfer (specifically inter-state) Sub-contracting process Time of supply - Advances and adjustment to invoices Third party sales Services input/output – use of service masters, decision on Tax at PO line item or Service line Input tax throughout value chain
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Business impact Process Interaction with GSTN network Input tax reconciliation process Accounting for inward supplies (short/excess quantity, rate differences etc.,) – Net accounting VS Gross accounting Point of supply – specific impact due to consumption base GST Reverse charge (no clarity on scenario of applicability)
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Business impact Commercial
Logistic network Long term contracts Work contracts (treated as composite services under GST) Sub contract agreements
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Business impact Users
Tax impacts and analysis Return preparation process Payment process ITC reconciliation process System transaction changes Condition record maintenance (specifically for STO and SC)
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Cutover Customization Master data
Tax and pricing procedure
Cutover Customizations
Business place and GSTIN number maintenance GST new condition types, classification etc., GST new accounting key Vendor / Customer / Material classification GST invoice number settings Sub contract – chargeable settings Changes for STO settings
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Cutover Customizations Tax procedure changes Pricing procedure changes (mainly SD and some extent MM)
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Cutover Master data
Vendor master (GSTIN, Classification etc.,) – (Decision of multiple or goods supplier partner function) Customer master (GSTIN, Classification etc.,) Material master (HSN, Classification etc.,) Sub contract – chargeable – changes to material master if any, Vendor info records etc., Service master (SAC, Classification etc.,) New GL accounts (number of GL accounts depending on control and visibility)
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Cutover Master data New condition records Delimiting existing condition records
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Cutover Testing
Communication with business partner for ITC clarifications Approval process for GST transition Tax calculations for all new inbound and outbound scenario Tax calculations on open item and subsequent transactions
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Cutover Moving changes to production
All customizations by second week of March Tax and pricing procedure by 28th or 29th of March All master data by second week of March and confirmation with business partners New condition records and delimiting existing condition rec
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Contact information: Malolan Pathanki Principal Consultant
[email protected]
Thank you
Local Solutions. Global Success.
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