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1. How would the transition to GST impact an Enterprise Resource Planning (ERP) system?

GSTs impact on ERP systems are multi-fold, as detailed below:

Adaptability: The ERP system needs to be checked for the appropriate version and upgraded if required. The necessary
upgrade notes may need to be implemented to make the system GST compliant.

Business process refinement: All tax-related inward and outward processes will be required to be reviewed, and as
applicable, aligned as per GST requirements. Business processes, such as interstate stock transfers, subcontracting, etc.,
will need to be closely evaluated, taxes may be levied on such transactions as part of GST. In addition to this, the
process for tax utilisation at the month-end will be required to be set up as per new policies.

Tax configuration and computation: Tax calculation procedures are likely to require a major change to accommodate
the new taxation requirements. The appropriate consideration will be required so that it fulfills the requirement of
monthly tax returns. While making the configuration changes, due consideration must be given so that the system is not
only GST ready, but also scalable and adaptable to future changes in the Indian financial environment.

Document numbering: Unique sequential numbering for outgoing GST invoices numbering may be specified, these
need to be configured as per the directives by tax authorities.

Master data amendments: Various master data, such as chart of accounts, material master, vendor master, customer
masters, price masters, etc., need to be updated as per the new taxation requirements. The vendor and customer GST
registration numbers will be mandatory for availing or passing the credits, and reporting purpose.

Reporting and printing requirements: The appropriate reports will need to be developed based on regulatory
requirements. The necessary changes may also be required in the existing forms, such as contracts, purchase orders,
quotations, invoices, etc., to reflect the correct taxes.

Impact on interfaces: The impact on any interfaces with third party tools, if any, should be analysed on a case-to-case
basis.

Tax credit migration: The tax credits from existing deductible taxes, such as excise, service tax, Value Added Tax
(VAT). etc., will need to be updated or distributed to the appropriate account as per the directives of the new tax system.

Closure/reversal of partially open transactions: Partially open transactions, such as goods received but invoice not
booked, or goods issued for sales but not received by the customer, etc. need to be closed or reversed and migrated to the
new tax system.

Migration of open transactions: Open transactions, such as contracts, purchase orders, and sales orders, need to be
migrated to the new tax system.

Managing exceptional transactional requirements: Apart from the target solution for GST, temporary provisions may
be required in the system to handle scenarios, such as returns of goods sold or purchased before GST and returned after
GST implementation, stock in transit during cutover activities, etc.

2. How can organisations prepare themselves for this transition?

It is recommended that a detailed GST impact analysis is conducted by organisations from an ERP perspective. The following are
the guidelines recommended for the impact analysis:

Business scenario coverage:

o Ascertain the existing business scenarios to be impacted by GST

o Identify any relevant business scenarios not mapped in ERP

o Validate the adequacy of the ERP organisation structure for mapping of the relevant business scenarios
Verify if the localisation version of the ERP system is updated

Ensure correctness and completeness of master data (such as vendor, customer service tax registration numbers, VAT
registration numbers, etc.)

Analyse the impact on various reports which are submitted to the tax authorities.

3. What should be the support pack level of SAP for being GST compliant?
SAP has provided the following guidelines to ensure smooth transformation to the GST regime:

SAP_APPL release Support pack


SAP ERP 6.0 (600) SP 26
EHP2 FOR SAP ERP 6.0 (602) SP 16
EHP3 FOR SAP ERP 6.0 (603) SP 15
EHP4 FOR SAP ERP 6.0 (604) SP 16
EHP5 FOR SAP ERP 6.0 (605) SP 13
EHP6 FOR SAP ERP 6.0 (606) SP 14
EHP6 FOR SAP ERP 6.0 for HANA (616- SAP HANA) SP 08
EHP7 FOR SAP ERP 6.0(617) SP 07

*Source: SAPs Solution Approach to GST, SAP, 2015

In addition to the appropriate support pack level, it is necessary that the new tax procedure, i.e. TAXINN, is implemented. Any
organisation currently on the old tax system i.e. TAXINJ is advised to upgrade this to help ensure a smooth transition to GST once
it is officially rolled out.

4. How does SAP plan to support GST migration?

Globalization Services (GS), the localisation wing of SAP SE, is looking in detail at the GST impact on business processes. SAP
is expected to be ready with a GST patch, which can be deployed in the existing systems to facilitate transition of organisations to
GST. The development of this patch is ongoing and the same likely to be released once the GST law is published.

*Source: SAP GST Preparedness, http://events.sap.com/in/gst-india-forum/en/about.html, accessed on 27 April 2016

5. Will the GST patch from SAP completely address all GST compliance requirements in the existing system?

No. Application of the GST patch is just a part of an elaborate and complex procedure. In addition to its deployment, the GST
implementation process would consist of:

Fine tuning of the business processes involving indirect taxes

Restructuring of pricing and tax configurations in line with the GST requirements

Changes to the chart of accounts and account determination

Modification to custom developments, forms, reports and interfaces

Modifications to the master data, mainly materials, vendors, customers and pricing conditions

Migration of the open sales/purchase transactions

Revaluation of stock and available tax credits in line with the GST law

Interface with GST Network (GSTN) for filing returns.

6. What is the expected time frame for transitioning to the new GST regime?
The timelines would be dependent on various factors such as the number of legal entities, complexity of business processes,
volume of master data, correctness and completeness of master data, current version of ERP systems, etc. The GST impact
analysis, as recommended, is anticipated to help in estimating these timelines to a considerable extent.

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