Goods and Services Tax - India: Solution Proposal

Solution Proposal PUBLIC
2016-10-10
Goods and Services Tax - India

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PUBLIC Goods and Services Tax - India

2 2016 SAP SE or an SAP affiliate company. All rights reserved. Typographic Conventions
Contents
1 Introduction ...................................................................................................................................4
2 Master Data .................................................................................................................................... 5

2.1 Tax registration (GSTIN: GST Identification Number) ....................................................................... 5
2.2 Customer Master ................................................................................................................................... 6
2.3 Vendor Master........................................................................................................................................ 8
2.4 Material Master ...................................................................................................................................... 9
2.5 Business Place ...................................................................................................................................... 11
2.6 Tax Account.......................................................................................................................................... 12
3 Tax Configuration and Computation ........................................................................................ 13
4 Document Numbering ................................................................................................................. 15
5 Business Transactions ................................................................................................................ 16

5.1 Procurement ........................................................................................................................................ 16
5.2 Sales ...................................................................................................................................................... 17
6 Pricing ........................................................................................................................................... 18
6.1 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
6.2 Sales ......................................................................................................................................................29
6.2.1 Domestic (Inter and Intra state) ........................................................................................29
6.2.2 Sales - Exports .................................................................................................................... 30
7 GST Tax Postings ........................................................................................................................ 31
8 Utilization .....................................................................................................................................32
9 Reporting ......................................................................................................................................33
Goods and Services Tax - India PUBLIC

Contents 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 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 6 for SAP ERP 6.0, Version for SAP HANA
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

4 2016 SAP SE or an SAP affiliate company. All rights reserved. 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.

Master Data 2016 SAP SE or an SAP affiliate company. All rights reserved. 5
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.

6 2016 SAP SE or an SAP affiliate company. All rights reserved. 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.

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.

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.

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.

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.

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
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

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

Tax Configuration and Computation 2016 SAP SE or an SAP affiliate company. All rights reserved. 13
SD Pricing Procedure

14 2016 SAP SE or an SAP affiliate company. All rights reserved. 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

Document Numbering 2016 SAP SE or an SAP affiliate company. All rights reserved. 15
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,

16 2016 SAP SE or an SAP affiliate company. All rights reserved. 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

Business Transactions 2016 SAP SE or an SAP affiliate company. All rights reserved. 17
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

18 2016 SAP SE or an SAP affiliate company. All rights reserved. Pricing
6.1.2 Domestic Procurement Interstate
Access Sequence
Tax Procedure
6.1.3 Procurement- for capital goods
Access Sequence

Pricing 2016 SAP SE or an SAP affiliate company. All rights reserved. 19
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.

The tax lines will be posted to BSET table.

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

Stock transfer order
Outbound Delivery

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 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 J1IF01-
Creation of Challan 57F4 and J1IFQ- Reconciliation of Challan) for GST requirements.

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.

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.

6.2 Sales
6.2.1 Domestic (Inter and Intra state)
Access Sequence

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.

7 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.

GST Tax Postings 2016 SAP SE or an SAP affiliate company. All rights reserved. 31
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

32 2016 SAP SE or an SAP affiliate company. All rights reserved. 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)

Reporting 2016 SAP SE or an SAP affiliate company. All rights reserved. 33
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Solution Proposal PUBLIC

Goods and Services Tax - India

Type Style Description

Example Emphasized words or expressions.

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

PUBLIC Goods and Services Tax - India

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

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

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

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

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

Goods and Services Tax - India PUBLIC

PUBLIC Goods and Services Tax - India

2.1 Tax registration (GSTIN: GST Identification Number)

Single registration for CGST, SGST and IGST

Goods and Services Tax - India PUBLIC

PUBLIC Goods and Services Tax - India

Goods and Services Tax - India PUBLIC

Types of Vendors (Compounding, Non-registered, etc.)

PUBLIC Goods and Services Tax - India

Goods and Services Tax - India PUBLIC

PUBLIC Goods and Services Tax - India

Multiple business places must be created based on the region/state of operation.

The plants can be assigned to the business place.

Goods and Services Tax - India PUBLIC

Expected transaction key and description

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

PUBLIC Goods and Services Tax - India

Condition Types required

Goods and Services Tax - India PUBLIC

PUBLIC Goods and Services Tax - India

Unique sequential numbering may be required for outgoing GST invoices

Assign Document class to Document Types

Assign Number Range to Business Place

Goods and Services Tax - India PUBLIC

PUBLIC Goods and Services Tax - India

Goods and Services Tax - India PUBLIC

6.1.1 Domestic Procurement Intrastate

PUBLIC Goods and Services Tax - India

6.1.3 Procurement- for capital goods

Goods and Services Tax - India PUBLIC

6.1.4 Procurement Import

Tax setup will be similar to that of Domestic Procurement -

PUBLIC Goods and Services Tax - India

PUBLIC Goods and Services Tax - India

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

We recommend STO to be handled through SD route only.

Goods and Services Tax - India PUBLIC

PUBLIC Goods and Services Tax - India

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