GST is a simple, powerful and unified system of tax that will subsume a host of Central and State indirect taxes. GST is a tax based on destination This means that it is assessed based at the place of purchase for the product or service instead of the place of the company. GST will reduce the current indirect tax system’s tax-on-tax cascading effect. As per the implementation plan, GST has been rolled out in India in a phased manner. The new tax regime was completed during the first half of 2017.In this article, we’ll examine the changes that impact the SAP system and gst India implementation
Table of Contents
Introduction of GST India implementation
The introduction of Goods and Service Tax (GST) in India in April 2012 promises to be among the largest and most significant changes to Indian indirect taxation. the fiscal structure of India is federal, with the ability to levy taxes and duties shared between Union Governments and States Governments. The Goods tax and Service tax (GST), which the Government implemented in 2012, is already to replace the current tax on consumerism, which is indirect. GST will apply to both services and goods. In the case of items, the tax will be based on the destination, whereas for service tax, the taxes will be based on consumption. GST is assessed and collected at every step of the production, processing or trading of the value of the added value at that stage. GST proposes the set-off of taxes paid on capital goods/inputs and services.
GST can be described as the tax on products and services. It is evaluated at each point of sale or service delivery.. In this case, when it comes to the selling or the service being provided, the vendor or service provider can take advantage of the input credit for the tax that he paid when purchasing the item or purchasing the service.
To ensure that they are aligned with the new tax system and update the various software solutions in all locations to conform to the new structure, as well as to train all staff to use the new system and ensure a smooth transition from the previous tax regime, will have a significant impact on the entire process of businesses operating in the country, including those involved in supply chain distribution and sourcing decisions, Inventory costs, pricing policy accounting, and transaction management are all things to consider. GST, as a structure-based shift, has necessitated considerable infrastructure reorganisation at the firm level for sap software and apps. The first and most important stage is to thoroughly appreciate the magnitude and significance of the transformation.
GST :A Closer look
What is GST ?
GST, also known as Goods and Services Tax (GST), is a tax that covers all taxes on sales, manufacturing, and consumption of services and goods that includes a A complete chain of benefits that can be set-off from the point of view of the producer from the perspective of the service provider up to the retailer. Although the taxable item supply of goods or services and supply of services, GST is essentially a tax only on the value of the item.
In addition, at every stage, the supplier at each stage is allowed to offset using a tax credit mechanism the GST payable on the purchase of services and goods that are set affable on the GST that is due on the sale of goods and services. Only the GST imposed by the last supplier in the supply chain will be borne by the end customer, with set-off benefits available for all prior stages. When items and services travel through a supply chain under the GST system, they are not differentiated. GST is a destination-based consumption tax that is levied on the imports of both goods and services, but it is not levied on export transactions. GST is a taxation system.
Scope of GST Change in SAP
SAP has release solution notes on DDIC changes screen changes Master Data and other transactional data.
Prerequisites of GST implementation
Since it is now that the GST Bill is passed, SAP has release he solutions or proposals part of the system implementation to meet country specific legal requirement. it is be available on the service market place. As of now, until the solution is delivered to the customers, the following prerequisites must be adhered to by them in accordance with the guidelines.
- Customers are advised to maintain minimum support pack levels according to the note 1175384(Component includes SAP_APPL) for further assistance for changes to the law that affect India Logistics and Indirect Taxes.
- It is required for all customers to use TAXINN as their tax procedure and not TAXINJ since GST will be dependent on TAXINN. Customers who use TAXINJ must switch to TAXINN.
Note: Please be aware the Tax Migration solution to TAXINJ in to TAXINN Solution was provided by SAP as CONSULTING Solution. ( If appropriate ) Check/plan with your consultants accordingly. Take note of all that is written in the link below about SAP’s current GST preparedness.
- OSS 2252781 – FAQ about Transferring tax procedure between TAXINJ to TAXINN for GST
- OSS 2014164 – GST Migration from TAXINJ to TAXINN in India
- OSS 2167294 – Prerequisite Note for SAP Note 2153807
- OSS 2153807 – Improvements to tax code update programs to Purchase Orders and Scheduling
- Agreement 2161911 – Purchase Order display and display of invoice/cancel issue
SAP will continue to update this note as soon as SAP has any pertinent details regarding GST.Refer to the below notes for information on Tax Migration Activties.However, it’s advisable to go through GST model law for better understanding
GST Notes for SAP Implementation
A complete listing of SAP Notes for GST solution and the order in which they should be used are listed below. The list will be updated as soon as there is a new note released.
- OSS 240502 – Modifications to Master data DDIC actions
- OSS 2385575 –GST India Changes to Master data
- OSS 2407980 –Amendments to the tax procedure and pricing procedures
- OSS 2415115 –GST India Changes to Transaction information Data Dictionary activities
- OSS 2417506 – Utilities
Many more notes are available that are based on various business circumstances and their consequences. For additional information, please go to support.sap.com.
GST Configuration in SAP
Befor staring implementation Check that you’ve made the following steps:
- Configured TAXINN (with A/R condition types)
- Defined OB40 settings according to customers’ requirement
- Changed the tax procedure in OBBG
Since all our pricing procedure’s condition types are not changed, the pricing procedure determination and condition types mapping to valuation fields of COPA is not impacted. Set up SD Pricing procedure that includes access sequences that cover all sets of conditions types.
Excise conditions: If customers also utilize pricing formulas/routines to deal with relevant excise conditions in the SD Pricing procedure (Control through J1ID) Remove the formulas from the pricing procedure and modify the customer’s SD pricing procedures in accordance with the requirements of the business.
tax code-based rate determination for conditions. This must be done in accordance with TAXINN created in the SD Procedure according to the business requirements
Maintain required SD relevant access sequence to any (JGSO) taxes. Maintain conditions records that reflect appropriate tax rates and access levels within the VK11 transaction for all necessary ( actual items) tax cases relevant to taxes (Excise, VAT, Services CST, and VAT ), in accordance with the customers’ business needs Sales tax/Service taxes
In SD the tax codes are required for all tax output record conditions (transaction VK11) in the respective tax conditions (non-excise).
If the G/L accounts are in accordance with the tax code of OB40, it is necessary to update that information with the latest TAXINN tax code . Customers should make a decision to confirm this according to the need. If customers are using an alternative GST G/L accounts determination that allows G/L accounts to be kept in accordance with tax codes found in the J_1IT030K_V View, they must to change the information. This must be done according to the customer requirements.
Business Place
The business location is an organizational element below the level of company code which is used primarily to report taxes on purchases and sales.Taxes on purchases and sales are applied locally in some nations.
- OSS Note 603325 – TDS is calculated using a section code.
- GSTIN Registration
- State wise individual registrations
- PAN based up to 15 characters in length
Changes Vendor Master:
New Fields have been added to help GST registration number for Vendors. Check out the screen-shorts below.
- Format Validation
- Length –15 char
- State code for 2 char
Individual vendor master for each region OR Goods Supplier Partners
GST Classification of Vendor-For Tax Calculation as well as Reporting
Changes Customer Master
Similarly to vendor master data, new fields have been added to customer master data such as GST Partner for issuing Invoice Recipient Partner function (Bill-to-Party)
GST Classification of Customer-For Tax Calculation as well as Reporting
Material Master
HSN code used for tax determination in Purchase & Sales transactions
- For Tax Calculation as well as Reporting
- For each invoice line item, this information must be recorded.
- Chapter Id for excisable materials in India specific J1ID table
- Reporting
- Few HSNs to be kept outside GST regime
- Applicable for Service Master also
Configuration for Sales and Distribution
GST-relevant fields that were introduced during the implementation of the OSS note must be maintained in a new condition table.
Condition Tables
- Condition table maintenance (Execute the transaction V/03)
Reference combination: Country/PlntRegion/TaxCl1Cust/TaxCl.Mat/Region/Ctrl code
Reference combination: PlntRegion/Region/TaxCl1Cust/Material
Reference combination: PlntRegion/Region/TaxCl1Cust/Activity
Access Sequence
New Access Sequence needs to maintain with GST relevant condition tables.
- Maintenance of the Access Sequence (V/07 transaction
Reference access sequence created – JGSO – IN: GST for output taxes
Field Assignment
Condition types
The new four condition types must comply with GST-related conditions for State GST, Central GST, Integrated GST, and Union GST.Create the following tax output condition types for GST
JOCG – IN:Central GST – OP
JOSG – IN: State GST – OP
JOIG – IN:Integrated GST-OP
JOUG – IN:Union Ter. GST-OP
Accounting Keys
We must define account key as the key that identifies the assignment of various types of GL.
- Execute the transaction OV34
Accounting keys for Deductible condition types
Pricing Procedure
Now we need to update the existing pricing procedure, which is a procedure in which we control the execution of GST condition types in the order you specify.
- Update Pricing Procedure – ZINXXX (Execute the transaction V/08 )
Classify Condition Types
We specify which condition types will be used for which types of taxes (Sale or Purchase).
- Using the SM30 transaction, classify the condition types in the view – J 1IEXCDEFN.
According to the GST Regulations, India Business has keep distinct sequential numbers .It is recommended to choose an unique prefix for each the official document number range in accordance with Business Place .This makes it easier to report of GSTR-1 number ranges. For example, Sales Export Invoice and Sales Domestic Invoice. Sales Proforma invoice, Advance Receipt Voucher Voucher, Invoice for non-registered person receiving inward supply, Invoice for an unregistered individual inward supply , payment voucher Special Tax invoice (ISD) and Inter-unit Transfer (Same GSTIN) and Sales Debit Memo Notes on Sales Credit Memo. Unique sequential numbering could be required for incoming GST invoices
ODN Document Numbering
The government may establish criteria for legal numbering. It could be, for instance.
- Registration level
- Plant level
- Document type (Invoice / Credit Memo)
- A combination of above
- Any other criteria
This can be achieved by using the existing ODN (Official document Numbering) functionality as below
Maintain Document Classes:
- Enter the transaction code SM30.
- Select the table/view – V_DOCCLS. Click on the Edit button
- Enter the country’s key in the form “IN”
Assign document types to Document Classes
- Perform your transaction using the code SM30.
- Input the Table/View J_1IG_V_T003_I. Click on the Edit button.
- Click on New Entries button.
- Make sure you keep the entries in line with the requirements of your business. The reference entries are listed below.
Maintain Number Groups:
- Enter your transaction using the code SM30.
- Input the Table/View J_1IG_V_NUMGRP. Click on the Edit button.
- Click on New Entriesbutton.
- Continue to maintain the number of groups.
- Execute the transaction code SNRO.
- The object’s name should be J_1IG_ODN Then click Intervals on the toolbar.
- Choose the group of numbers from the F4help and then click the edit interval button
- Keep the intervals of number ranges in accordance with your requirements. Make sure that the ‘EXTERNAL’ indicator has not been set.
Maintain Number Ranges for Official Document:
Assign Number Ranges to Business Places
- Execute the transaction code SM30.
- Enter the following Table/View – J_1IG_V_OFNUM and click on edit button.
- Click on New Entries button.
- The number ranges should be assigned for the combinations of the Company code Business Place, official document class.
The screenshot below is for demonstration purposes only. The screenshot below is intended for demonstration purposes.
Conclusion
We hope you enjoyed this article on GST India Implementation. We hope article has helped you learn more about this SAP SD GST implementation. Thank you for reading!
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