GST India

Implementation Steps and Guidlines

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Table of Contents
Introduction Functional Design .................................................................................................................... 3
Scope and references ................................................................................................................................. 3
Scope / Reference .................................................................................................................................. 3
Prerequisites ........................................................................................................................................... 4
Assumptions ........................................................................................................................................... 4
Functional Requirements ........................................................................................................................... 4
Understanding for India GST .................................................................................................................. 4
Steps for GST India Implementations. .................................................................................................... 6
IT infrastructure for GST ......................................................................................................................... 9
Current Status of GSTN Implementation .............................................................................................. 12

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Introduction

Functional Design

Scope and references

Scope / Reference

The Constitution (One Hundred and Twenty Second Amendment) Bill, 2014, or the Goods and Service Tax
(GST) bill in India has been passed by the lower and upper house of the Parliament on August 03, 2016.
The expected GST implementation is 1st April, 2017.
At present,
1. More than 50% of the states have ratified the bill
2. The President has provided his assent to the bill
3. GST council is formed
The next steps:
Legislations for CGST, SGST, and IGST acts
Final details of the law need to be published
The model GST law is currently available for public consumption and we are expecting the details of the
law to be available soon, along with the details of GSTN. SAP is currently working on a solution design
based on the Model GST law. However, the final solution from SAP can be made available only after the
final law is available.
This contains information about the legal change of The Goods and Service Tax for India
This information is based on legislation and regulations which is subject to change at any time by the
respective authorities and are therefore not binding. The information will be updated if necessary.

Business Background/Impact

The introduction of the Goods and Service Tax will replace the existing indirect taxes in India
The Mandatory Prerequisites to consume the GST solution provided by SAP are
1. Minimum support pack that the customer should be on is provided in the following note -
https://launchpad.support.sap.com/#/notes/1175384
2. TAXINN is the default tax procedure. Please refer to the following FAQ note related to the migration of
the tax procedure - https://launchpad.support.sap.com/#/notes/2252781.

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Prerequisites

Assumptions

References

Legal change is currently not yet published. However, a model law is available in the following
link.
http://www.cbec.gov.in/htdocs-cbec/deptt_offcr/model-gst-law.pdf

Functional Requirements

Understanding for India GST

The high level things you would probably need to do for a customer:
1. Ensure a condition based tax procedure is used. SAP's proposed roadmap is for
TAXINN.
2. The Govt has said that the Outgoing invoice will be validated by GST Network, so the
same would probably be an interface to GST Network, something like a Golden tax in
China
3. The GST in india will be a dual structure tax regime, so you will need to set up the
requisite condition types in your tax procedure and in your sales schema.
4. If we are not on TAXINN, you will need to migrate to TAXINN given as per roadmap by
SAP.
5. Every GST No will be at state level, so configuration change will be required for the
same to be set up as Business Place in SAP.
6. We will have to be on the required SP Level as per the details which will be provided
by SAP.
7. There will be some amount of overlap for VAT and GST Regime expected, so we need
to plan for a transition time for the tax applicability and how to migrate the open
documents from VAT to GST. Of course, this will also depend on legal guidance on GST
from the Govt and it is still under works.

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8. The GST will have three components: CGST, SGST and IGST. The transaction within a
state will attract CGST+SGST. The transaction between two states will have IGST. For
Imports into India, Custom Duty+IGST will be applicable.
9. Every state will have a unique GST Registeration No and that will be the basis for
taking the GST credit.
10. All other indirect taxation like Excise, Service Tax, Entry Tax, Octroi etc will be
subsumed by GST
11. There are eight returns which are proposed as part of GST right from GSTR -1 uptill
GSTR-8. GSTR -1 will contain details of Sales from Commercial Invoices and GSTR -2 will
contain details from Purchases made. GSTR-3 will provide details for monthly credit or
liability.
There are still lot of open points from a functional perspective where Supplier and seller
are listed in State A and State B, but the goods are supplied in State C, so how the credit
mechanism will work. Additionally, certain products like Petroleum Products are outside
the scope of GST, so how to track such goods in GST returns. Additionally, there is no
clarity on the details of invoices if they can be sent from SAP to GSTN Network through
an automated utility. Some of the states are also contemplating removal of SGST
component for certain industries which in my view negates the purpose of one tax and
brings back the same old tax structure with a new name, but again these are nitti griti
we will have to wait and see.

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Steps for GST India Implementations.

Below are the attached OSS note which we need to implement in the System with the
below specific steps.

1.0 We need to implement SAP Note 1175384.

1175384 Minimum
Support Package(SP) level to obtain support for legal change in India Logistics and Indirect taxes(CIN).pdf

2.0 After we need to Implement the SAP Note 2167294 for DDIC Note .

2167294.pdf

3.0 Improvement in Tax Code Update Program for PO/ SLA and Contracts
OSS Note 2153807

2153807.pdf

Below Manual Changes need to apply as bellows;

1. Manual Changes for ELOGS

Manual_Changes_E
log.docx

2. Manual changes or Text Elements

Manual_changes_T
ext_Elements.docx

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3. Manual Changes Tax code for J_1ITCJCMAP

Manual_Changes_T
ax_Code_for_J_1ITCJCMAP.docx

4. Manual changes View Screen

Manual_changes_vi
ew _screen.docx

5. Changes Checks in Tables

Change_check_tabl
e.pdf

6. Manual steps for Tcode Creations

Manual_steps_for_T
code_creation.docx

7. After updating the above all Manual Steps for adding Error log in PO
update program.
Go to Transaction SLG0 and click on New entry tab
Enter Object as J1ITAXUPDLOG and Object Text as India Localization: Tax Migration log
Press Enter and select the entered Object.
Double click on Sub-Objects and again press New Entries Tab.
Now enter J1ITAUPDPO under object Colomn and Tax Migration log for Purchase order in Sub-
object text.
Press Enter and Save.

8. Finally validate the below document and if required make the concern
changes.

Manual_Changes_T
able.docx

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4.0 Purchase Order / Invoice Display or Cancel Issue OSS note.2161911

2161911.pdf

1. Apply Manual changes present in attachment

Function Module.docx

Function
Module.docx

2. Implement the corrections relevant for release and validate in MR8M.

VAT_Report_change PO_MR8M_DISPLAY
s.pdf Ver6.pdf

5.0 TAXINJ to TAXINN Migration OSS Note : 2014164

2014164.pdf

Solution for TAXINJ to TAXINN should implement based on the below

document.

TAXINJ_TAXINN_Sol
n.pdf

6.0 FAQ on Tax procedure migration from TAXINJ to TAXINN OSS Note 2252781
(Information)

2252781.pdf

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7.0 Goods and Service Tax India OSS Note 2194689 (Information)

2194689.pdf

IT infrastructure for GST

Desirable features of Goods & Service Tax Network (GSTN)

Simplicity for taxpayers: The process of filing of tax returns and payment of tax
should be simple and uniform and should be independent of taxpayers location and
size of business. In addition, the compliance process should not place any undue
burden on the taxpayer and should be an integral part of his business process.
Respect autonomy of states: The design of the IT system should respect the
constitutional autonomy of the states. Several business processes will be re-
engineered as a new IT system for GST is put into place. There should be no dilution of
the autonomy of states as a result of the IT system, or the re-engineering. On the
contrary, it should strengthen the autonomy of states. This is a key factor in the design
of the IT system presented in the rest of this document.
Uniformity of policy administration: The business processes surrounding GST need
to be standardized. Uniformity of policy administration across states and centre will
lead to a better taxpayer experience, and cut down costs of compliance as well as tax
administration.

Enable digitization and automation of the whole chain: All the business processes
surrounding GST should be automated to the extent possible, and all documents
processed electronically. This will lead to faster processing and reconciliation of tax
information and enable risk based scrutiny by tax authorities. For small taxpayers,
facilitation centres can be set up to ease the migration.

Reduce leakages: A fully electronic GST can dramatically increase tax collections by
reducing leakages. Tools such as matching the input tax credit, data mining and
pattern detection will deter tax evasion and thus increase collections.
Leverage existing investments: Existing IT investments of states should
be leveraged. The Mission Mode Project on Commercial Tax should be
aligned with the GST implementation going forward.

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 Stakeholders
Small taxpayers: Much of the economic activity in India is concentrated
among small taxpayers. They may not have the skill or the resources to effectively
migrate to GST. Thus, adequate preparations must be done to ensure smooth
migration for small taxpayers to GST. This includes extensive consultations, setting up
of facilitation centres, education and training.
Corporate taxpayers: Corporate taxpayers may operate across various states and
typically have sophisticated IT systems for accounting, e-filing returns, payments
etc. Common file formats and message specifications should be released early to
allow IT vendors that provide software to corporate taxpayers to modify and release
updated versions with GST support.
State tax authorities: The state tax authorities would be responsible for collecting
SGST. Common file formats, interfaces, and policy administration will enable
accurate and timely assessment, and risk-based investigations resulting in enhanced
productivity and revenues.
CBEC: CBEC would be responsible for collecting CGST and IGST. Common file
formats, interfaces, and policy administration will increase the productivity of CBEC.
It will allow for accurate and timely assessment, risk-based investigations and
facilitate IGST settlement by Centre at agreed time intervals
RBI: The Reserve Bank of India will facilitate the interface with various banks to
facilitate movement of states and centers funds. The processes of funds settlements
and documentary compliance are independent
Banks: Banks will accept duty from the taxpayers and process challans. All tax
collections (whether physical or electronic) will happen at bank branches, or through the
banks IT systems. Banks will route the tax collected to the concerned authorities
through the RBI channel
Other Stakeholders include CAG, GSTN, TRPs and facilitation agencies

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 Workflows
Registration: A unique ID is necessary to identify each taxpayer. The PAN based ID
should be common to both the states and the centre. A common PAN-based taxpayer
registration has several benefits including a unified view of taxpayers for all tax
authorities. A PAN based registration system has already been implemented in
CBEC and several states are also capturing PAN data
Returns: Both, the states and centre require taxpayers to file periodic returns to assess
whether the taxpayers have computed, collected, and deposited their taxes correctly.
ITC credit can also be verified on the basis of the returns filed and revenues
reconciled against challan data from banks
Challans: Challans are the payment instruments used by taxpayers to actually pay
their taxes. Challans are deposited at collecting banks and are forwarded by
them to the tax administrations
IGST: Under GST, inter-state trade will be leviable to IGST. Under IGST, the tax paid
by the selling dealer in the exporting state will be available as ITC to the purchasing
dealer in the importing state. This requires verification of ITC claims and transfer of
funds from one state to another. Further, in an interstate business to consumer
transaction, tax collected in one state has to be transferred to another state as
finalized by the business processes. Thus, periodic inter-state settlement is required.
In addition, there are several other workflows such as processing refunds, taxpayer
audits, and appeals. It is reiterated that the core services envisaged through common
portal are limited to registration, payments and returns in the first phase. Other value
added services will be added subsequently based on the needs of the Stakeholders.
The IT infrastructure should be designed taking into account all stakeholders (Figure 2),
and all related workflows.

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Current Status of GSTN Implementation

The Ministry of Finance, with the concurrence of the Empowered Committee of State
Finance Ministers, has set up an Empowered Group on IT Infrastructure for GST with,
inter alia, the mandate of approving the Solution architecture of the Com mon GST
portal to be set up, Suggesting the modalities for setting up of a National Information
Utility (NIU / SPV) and evaluating the suitability of the existing NIUs namely NSDL &
NPCL for incubating the NIU/SPV for GST portal.
The Empowered Group on IT Infrastructure for GST in its first meeting evaluated the
feasibility of incubating the NIU, called GSTN, in NSDL and came to the conclusion
that NSDL is well suited for this purpose. The scope of the project and implementation
strategy is being worked out with the NSDL.

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