SAP_GST_Draft_Solution_Proposal_v1

Solution Proposal 2016-10-10

Goods and Services Tax - India

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Keys on the keyboard, for example, F 2 or E N T E R .

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Goods and Services Tax - India Typographic Conventions

Contents

1

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

2 2.1 2.2 2.3 2.4 2.5 2.6

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

3

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

4

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

5 5.1 5.2

Business Transactions ................................................................................................................ 16 Procurement ........................................................................................................................................ 16 Sales ...................................................................................................................................................... 17

6 6.1

Pricing ........................................................................................................................................... 18 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 Sales ......................................................................................................................................................29 6.2.1 Domestic (Inter and Intra state) ........................................................................................29 6.2.2 Sales - Exports .................................................................................................................... 30

6.2

7

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

8

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

9

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

Goods and Services Tax - India Contents

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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 3 for SAP ERP 6.0



SAP Enhancement Package 4 for SAP ERP 6.0



SAP Enhancement Package 5 for SAP ERP 6.0



SAP Enhancement Package 6 for SAP ERP 6.0



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



SAP Enhancement Package 7 for SAP ERP 6.0



SAP Enhancement Package 8 for SAP ERP 6.0



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/#/notes/2252781

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Goods and Services Tax - India Introduction

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.

Goods and Services Tax - India 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. 

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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Goods and Services Tax - India Master Data



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.

Goods and Services Tax - India 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.



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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Goods and Services Tax - India 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.



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.

Goods and Services Tax - India Master Data

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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.

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Goods and Services Tax - India 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.

Goods and Services Tax - India Master Data

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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

12

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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Goods and Services Tax - India Master Data

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

Goods and Services Tax - India Tax Configuration and Computation

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SD Pricing Procedure

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Goods and Services Tax - India Tax Configuration and Computation

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

Goods and Services Tax - India Document Numbering

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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,

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Goods and Services Tax - India Business Transactions

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

Goods and Services Tax - India Business Transactions

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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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Goods and Services Tax - India Pricing

6.1.2

Domestic Procurement Interstate

Access Sequence

Tax Procedure

6.1.3

Procurement- for capital goods

Access Sequence

Goods and Services Tax - India 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 scenario. To CVD line (IGST in GST scenario), add your non-zero tax code.

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Goods and Services Tax - India Pricing

Goods and Services Tax - India Pricing

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The tax lines will be posted to BSET table.

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Goods and Services Tax - India Pricing

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 STO

OBD

Billing (VF01) Outgoing GST Invoice Receiver Goods Receipt

Capture Incoming GST invoice

Goods and Services Tax - India Pricing

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Stock transfer order

Outbound Delivery

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Goods and Services Tax - India 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

Goods and Services Tax - India Pricing

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Goods Receipt

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

6.1.6

G/L Acc. Description

Amount

Currency

Debit/Credit

Inter site sales

1100

INR

CR

GST Control

1000

INR

DR

Input IGST

100

INR

DR

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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Goods and Services Tax - India Pricing

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.

Goods and Services Tax - India Pricing

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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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Goods and Services Tax - India Pricing

6.2 6.2.1

Sales Domestic (Inter and Intra state)

Access Sequence

Goods and Services Tax - India 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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Goods and Services Tax - India Pricing

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

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.

Goods and Services Tax - India GST Tax Postings

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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

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Goods and Services Tax - India Utilization

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)

Goods and Services Tax - India Reporting

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