Goods & Service
Tax - Proposal
Giridhar Darak
Senior Consultant
2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
GST - Agenda
GST Overview
Areas of Impact GST in SAP
Clarifications and Prerequisites
COE Initiatives, Roadmap and Effort Estimation
Questions and Answers
2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
GST - Agenda
GST Overview
Areas of Impact GST in SAP
Clarifications and Prerequisites
COE Initiatives, Roadmap and Effort Estimation
Questions and Answers
2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
Preface to GST
Goods and Service Tax (GST) is a comprehensive tax levy on manufacture, sale
and consumption of goods and service at a national level.
GST is a tax on goods and services with value addition at each stage having
comprehensive and continuous chain of set-of benefits from the producers/
service providers point up to the retailers level where only the final consumer
should bear the tax.
GST structure will include 3 types of Taxes viz. CGST (Central GST) SGST
(State GST) and IGST (Integrated GST) and assumed returns to be filed in a
single portal governed by Central Government.
GST is a destination based tax where the benefit will always go to the state
where the Goods and Services are finally consumed.
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Goods and Service Tax
Goods and Services Tax (GST), is a consumption based tax levied on supply of
goods and services
Dual GST model:
SGST
CGST
IGST model: For interstate transactions
IGST, Combination of ( SGST + CGST )
Coverage:
Applicable to all goods an services other than those excluded
Alcohol and most Petroleum products to be outside GST
Tobacco products to be part of GST with non-creditable levy besides GST
Imports to be treated on par with inter-state sale
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Why GST?
Multiple indirect taxes at Central and State levels
Multiple taxable events
Absence of uniform classification principles leading to difference in tax rates
for same/similar commodities in different states
Cascading effect Central and State Taxes not recoverable against one
another
Exemptions from taxresults in distorted credit chain and inverted duty
structure
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Features of GST
Intrastate transactions
Dual GST comprising Central GST and State GST to operate
concurrently on supply of goods and services for consideration
Taxable event of supply as against manufacture (excise) and sales
(VAT)
Inter-state transactions to be covered under Integrated GST (IGST) model
IGST would be aggregate of CGST and SGST
Centre would levy IGST on all inter-state transactions
Exports would be zero-rated
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Features of GST
Input tax Credits (ITC)
Input CGST and SGST recoverable against output CGST and SGST
respectively
Cross utilization of CGST and SGST credit not permitted except under
IGST
However, input IGST recoverable against output IGST, CGST and SGST
Refund of unutilized accumulated ITC allowed to exporters
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How GST benefits?
To Government:
Reduction in number of taxes at Centre /State level
Increased tax collections due to wider tax base
To Businesses:
Reduction in cascading effect of multiple taxes
Seamless input tax credits
To Consumers:
Reduction in incidence of taxes on goods (long-term)
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GST Administrations and IT Strategy
In addition to common registration, returns, and challans, the Common GST
portal will provision for selected information needs of states.
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GST - Agenda
GST Overview
Areas of Impact GST in SAP
Clarifications and Prerequisites
COE Initiatives, Roadmap and Effort Estimation
Questions and Answers
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GST - Areas of Impact
Tax Registration - Define GST Registration levels
Master Data Maintenance - Business Partner Tax Data, GST
Accounts
Tax Configuration & Computation - Configure Tax and Pricing
procedures; Tax computation
Document Numbering - Outgoing Invoice Numbering
GST Tax Postings - GST Input and Output Tax postings
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GST - Areas of Impact
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Business Process Localization - Extend Support to currently
localized Business Processes
Utilization - Input tax credit utilization against payable for GST
Taxes
Reporting - Tax Register
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Tax Registration
GSTIN GST Registration Identification
Based on Latest, following points needs to be taken care w r t Tax Registration
Single registration for CGST, SGST and IGST
Assumed to be PAN based registration may be up to 15 Character in Length
Individual registration to be obtained in each State of business establishment.
Capturing GST registration at Business Place Level, in the combination of
Company Code and Business Place.
GST Registration Proposed Solution
Business Place will be used in SAP to capture GST Registration Number.
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GST: Impact on Tax Entity
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Capture GST registration at Business Place level
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Master Data Maintenance
Business Partner Tax Data:
Since in GST only Sales data needs to be uploaded in Central Portal and
Purchase Data will be taken form the Registrar from whom the Purchase was
made, we need to update GST Reg No of all the customers and vendors in their
respective masters. We need to update the field under Tax information grid
through LSMW or BDC.
GST Tax Accounts:
Separate tax A/P and A/R accumulation might be required at Business Place
level.
To be defined for CGST, SGST and IGST separately.
Tax Accounts Proposed Solution
Tax Accounts will be determined based on Business Place for both Procurement
and Sales in T Code J_1IT030K_V / OB40.
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Vendor GST Registration- Proposed Solution
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Customer GST Registration- Proposed Solution
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Tax Account - Proposed Solution
Business Place based G/L account determination Both for MM and SD
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Tax Configuration & Computation:
Applicable Taxes for Different types of Transactions.
Intra-State transactions CGST and SGST is applicable
Inter-State and Import Transactions IGST Applicable
Export Transactions Zero Rates (No Tax)
Region level rate variations may exist
Proposed Solution in SAP
To take care of all these transactions mentioned above we need to configure
New Conditions types for (CGST, SGST and IGST), Access Sequence, Account
Keys, Tax Codes and Account determinations for the same.
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Tax Configuration and Computation- Proposed
Solution
Tax Procedure New Condition Types Access Sequence, Account Keys, Tax Codes and
Account determinations
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Tax Configuration and Computation- Proposed
Solution
Cont
SD Pricing Procedure New Condition Types Access Sequence, Account Keys,
Tax Codes and Account determinations
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Tax Configuration and Computation- Proposed
Solution
SD Access Sequence
MM Access Sequence
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Cont
Document Numbering:
The Logic for having New Document Number
New Document numbering is required for Outgoing document numbers which
will be done by creating a documents class (as suggested by SAP) and will in
turn needs to be assigned to Document types.
Number ranges needs to be assigned with the combination of Company Code,
Business Place and Document Class.
Proposed Solution in SAP
Create a Document Class in SAP and assign the same to Document Type and
maintain Number range based on Company Code Business Place and
Document Class
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Document Numbering- Proposed Solution
Maintain Document Class
Assign Document class to Document Types
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Document Numbering- Proposed Solution
Assign Number Range to Business Place
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GST Tax Postings
Scenarios for GST Tax Posting
Separate accumulation of credit and payables for
CGST
SGST
IGST
Separate accumulation at Business Place level,
Automatic Tax posting to respective accounts from business processes.
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GST Tax Postings - Proposed Solution
Billing (A/R) Accounting Document
Vendor Invoice (A/P) Accounting Document
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Taxes to be subsumed in GST
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GST : Impact of Tax Applicability
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Business Process Localization
Business Process Mapping and Accounting
Business Processes for Sales Order, Purchase Order, Sub Contracting, Stock
Transfer etc. will be taken care by creating new Conditions type and Account
keys for Automatic account posting for the relevant business process.
Accounting entry will posted either separately for Taxes or for GST Invoices or
can be posted for both at the time of GST Invoice verification or GST
Commercial invoice generation.
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GST : Impact on GST utilization
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Utilization
Utilization of Input Tax Credit (ITC) would be as under.
Input CGST to be utilized against output CGST and IGST
Input SGST to be utilized against output SGST and IGST
Input IGST to be utilized against output IGST, CGST and SGST
Pls note Utilization accounts and amounts will be determined
based on the Company Code and Business Place combinations.
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Utilization - Proposed Solution
New Utilization program to handle GST credit utilization Business Place
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Utilization - Proposed Solution
Cross Utilization as per GST rules
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GST Report
As of now, there is no information on the format of the report to be filed, but one
thing is sure that returns needs to filed in soft copy on central portal maintained
by central government and may be report format will be uniform across all the
industries.
GST report will be developed in line with statutory requirement, however existing
Tax Reports which are available in R/3 can be used and fine tuned to suffice the
statutory requirement. If requires new reports can be developed.
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Tax Register - Proposed Solution
Tax on Sales and Purchases GST
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GST - Agenda
GST Overview
Areas of Impact GST in SAP
Clarifications and Prerequisites
COE Initiatives, Roadmap and Effort Estimation
Questions and Answers
39
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Points need clarifications.
Registration still there is a dilemma whether registration is at central level or
state level.. However I feel PAN based means it should be at central level.
Thresh hold limit Exemption Limit for registration differs between central and
state and among the states.
GST on Sub contract No clarifications as of now on how sub contract
process will be dealt in GST.
GST on Stock Transfer - Stock transfer within state having single registration.
GST on Capital Goods whether full credit will be available in the year of
acquisition or part in current year and balance in following years.
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Pre requisites for GST implementation
SAP
SAP APPL
APPL Rel.
Rel.
SAP
SAP ERP
ERP 6.0
6.0 (600)
(600)
SAP
SAP ERP
ERP 6.0
6.0 EHP2
EHP2 (602)
(602)
SAP
SAP ERP
ERP 6.0
6.0 EHP3
EHP3 (603)
(603)
SAP
SAP ERP
ERP 6.0
6.0 EHP4
EHP4 (604)
(604)
SAP
SAP ERP
ERP 6.0
6.0 EHP5
EHP5 (605)
(605)
SAP
SAP ERP
ERP 6.0
6.0 EHP6
EHP6 (606)
(606)
Tax
Tax Procedure
Procedure should
should be
be Condition
Condition
Based
Based tax
tax procedure.
procedure. In
In Formula
Formula based
based
tax
tax procedure,
procedure, number
number of
of tax
tax codes
codes
will
will increase,
increase, which
which will
will be
be limitation
limitation to
to
the
the GST
GST solution
solution in
in future.
future. TAXINN
TAXINN
procedure
procedure is
is condition
condition based
based tax
tax
procedure.
procedure.
Current SAP System
Landscape & System
Configuration
Support
Support Pack
Pack
SP26
SP26
SP16
SP16
SP15
SP15
SP16
SP16
SP13
SP13
SP14
SP14
SAP
SAP ERP
ERP 6.0
6.0 EHP6
EHP6 For
For HANA
HANA
(616
SP16
(616
SAP
SAP HANA)
HANA)
SP16
SAP
SP07
SAP ERP
ERP 6.0
6.0 EHP7
EHP7 (617)
(617)
SP07
TAX
procedure
TAXINJ /
TAXINN?
ECC6.0
Enhancement
Pack level
As per required
Support Pack
No Action
Required
Less Than
required Pack
TAXINJ
Technical
Upgrade to
ECC6.0, EHP2
SP16 and above
Migrate to
TAXINN
Procedure
Migration to GST
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TAXINN
No Action
Required
GST - Agenda
GST Overview
Areas of Impact GST in SAP
Clarifications and Prerequisites
COE Initiatives, Roadmap and Effort Estimation
Questions and Answers
42
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CoE initiatives for GST implementation
Ready templates for GST implementation
Preparing Question Bank for
understanding
customers
business w.r.t. GST
Preparing List of scenarios
Preparing Business process
Document with Process Flow
for all possible scenarios
Configuration and testing of
all processes in CoE system
Preparing
Document
Configuration
Training
all
Delivery
consultants on GST Migration
and support
Key Deliverables
Key
Key Deliverable
Deliverable to
to Projects
Projects
1.
1. Process
Process catalogue
catalogue
2.
2. Question
Question Bank
Bank for
for requirements
requirements
3.
3. Master
Master data
data templates
templates
4.
4. L1,
L1, L2
L2 Training
Training on
on GST
GST
5.
5. Business
Business process
process Document
Document with
with
Process
Process flow
flow diagram
diagram
6.
6. Test
Test case
case document,
document,
7.
7. SAP
SAP Tutor
Tutor for
for each
each process
process
8.
8. Configuration
Configuration document
document
9.
9. Cut
Cut over
over strategy
strategy document
document
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Preparing Master data templates for
capturing GST relevant information's in
Material, vendor and customer master
Preparing Test case documents per
scenarios, and One recording per
process
Preparing cut over strategy
document
Overall Activities for GST Implementation
Overall Activities for GST Implementation
S. No Activities to be performed
Resource
Understanding current Business Processes and Organization
structure, Tax Procedure, Pricing Procedure etc.
Configuration of GST in SAP system
Creating Business Processes for Handling GST processes
Updating of Master data required for GST (Tax codes, Condition
records, Materials, Vendor, Customer Master)
UAT Integration Testing of all GST Processes
Organization wide training Top Mgt, Super user
End User Training on GST
Go Live and support
SAP FI, MM
and SD
SAP FI, MM
and SD
SAP FI, MM
and SD
SAP FI, MM
and SD
SAP FI, MM
and SD
SAP FI, MM
and SD
SAP FI, MM
and SD
SAP FI, MM
and SD
Tentative Timeline
1 Week
2 Weeks
1 Week
1 Week
2Weeks
2 Days
3 Days
2 Weeks
Note Above requirements are considered as pure configuration in standard SAP. No ABAP efforts
considered for any report or enhancement
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GST - Agenda
GST Overview
Areas of Impact GST in SAP
Clarifications and Prerequisites
COE Initiatives, Roadmap and Effort Estimation
Questions and Answers
45
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Comprehensive Comparison
Comparison between Multiple Indirect tax laws and
proposed one law.
Particulars
Manufacturer to Wholesaler
Cost of Production
Add: Profit Margin
Manufacturer Price
Add: Excise Duty @ 12%
Total Value(a)
Add: VAT @ 12.5%
Add: CGST @ 12%
Add: SGST @ 12%
Invoice Value
Wholesaler to Retailer
COG to Wholesaler(a)
Add: Profit Margin@10%
Total Value(b)
Add: VAT @ 12.5%
Add: CGST @ 12%
Add: SGST @ 12%
Invoice Value
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Without GST With GST
in INR
5000
2000
7000
840
7840
980
8820
5000
2000
7000
0
7000
0
840
840
8680
7840
784
8624
1078
7000
700
7700
0
924
924
9702
9548
Retailer to Consumer:
COG to Retailer (b)
8624
7700
Add: Profit Margin @ 10%
862.4
770
Total Value(c)
9486.4
8470
Add: VAT @ 12.5%
1185.8
Add: CGST @ 12%
1016.4
Add: SGST @ 12%
1016.4
Total Price to the Final consumer
10672.2
10502.8
Cost saving to consumer
169.4
% Cost Saving
1.59%
Notes: Input tax credit available to wholesaler is Rs.980 and
Rs.1,680 in case of without GST and with GST respectively
Likewise Input tax credit available to Retailer is Rs.1,078 and
Rs.1,848 in case of without GST and with GST respectively.
In case, VAT rate is also considered to be 12%, the saving to
consumer would be 1.15%
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