GST Proposal Presentation 1

Goods & Service
Tax - Proposal
Giridhar Darak
Senior Consultant
1 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

GST - Agenda
GST Overview

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.

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
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

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

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

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)

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.
GST - Agenda
GST Overview

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

GST - Areas of Impact
Business Process Localization - Extend Support to currently

6 localized Business Processes
Utilization - Input tax credit utilization against payable for GST

7 Taxes
8 Reporting - Tax Register

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.

GST: Impact on Tax Entity

Capture GST registration at Business Place level

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.
Vendor GST Registration- Proposed Solution

Customer GST Registration- Proposed Solution

Tax Account - Proposed Solution
Business Place based G/L account determination Both for MM and SD

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.

Tax Configuration and Computation- Proposed
Solution
Tax Procedure New Condition Types Access Sequence, Account Keys, Tax Codes and
Account determinations

Solution Cont
SD Pricing Procedure New Condition Types Access Sequence, Account Keys,

Tax Codes and Account determinations

Solution Cont
SD Access Sequence
MM Access Sequence

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

Document Numbering- Proposed Solution
Maintain Document Class
Assign Document class to Document Types

Document Numbering- Proposed Solution
Assign Number Range to Business Place

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.

GST Tax Postings - Proposed Solution
Billing (A/R) Accounting Document
Vendor Invoice (A/P) Accounting Document

Taxes to be subsumed in GST

GST : Impact of Tax Applicability

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.

GST : Impact on GST utilization

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.

Utilization - Proposed Solution
New Utilization program to handle GST credit utilization Business Place

Utilization - Proposed Solution
Cross Utilization as per GST rules

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.

Tax Register - Proposed Solution
Tax on Sales and Purchases GST

GST - Agenda
GST Overview

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.

Pre requisites for GST implementation
Tax
Tax Procedure
Procedure should
should be
be Condition
Condition
SAP
SAP APPL
APPL Rel.
Rel. Support
Support Pack
Pack Current SAP System Based
Based tax
tax procedure.
procedure. In
In Formula
Formula based
based
tax
tax procedure,
procedure, number
number ofof tax
tax codes
SAP
Landscape & System codes
SAP ERP
ERP 6.0
6.0 (600)
(600) SP26
SP26 will
will increase,
increase, which
which will
will be
be limitation
limitation to
to
SAP
SAP ERP
ERP 6.0
6.0 EHP2
EHP2 (602)
(602) SP16
SP16 Configuration the
the GST
GST solution
solution in
in future.
future. TAXINN
TAXINN
SAP
SAP ERP
ERP 6.0
6.0 EHP3
EHP3 (603)
(603) SP15
SP15 procedure
procedure isis condition
condition based
based tax
tax
SAP
SAP ERP
ERP 6.0
6.0 EHP4
EHP4 (604)
(604) SP16
SP16 procedure.
procedure.
SAP
SAP ERP
ERP 6.0
6.0 EHP5
EHP5 (605)
(605) SP13
SP13
SAP
SAP ERP
ERP 6.0
6.0 EHP6
EHP6 (606)
(606) SP14
SP14
SAP
SAP ERP
ERP 6.0
6.0 EHP6
EHP6 For
For HANA
HANA
(616
(616
SAP
SAP HANA)
HANA) SP16
SP16
SAP
SAP ERP
ERP 6.0
6.0 EHP7
EHP7 (617)
(617) SP07
SP07
TAX
ECC6.0 procedure
Enhancement TAXINJ /
Pack level TAXINN?
As per required Less Than

Support Pack required Pack TAXINJ TAXINN
Technical
Migrate to
No Action Upgrade to No Action
TAXINN
Required ECC6.0, EHP2 Required
Procedure
SP16 and above
Migration to GST

GST - Agenda
GST Overview

CoE initiatives for GST implementation
Ready templates for GST implementation
Preparing Question Bank for Preparing Master data templates for
understanding customers Preparing List of scenarios capturing GST relevant information's in
business w.r.t. GST Material, vendor and customer master
Preparing Business process Preparing Test case documents per

Configuration and testing of
Document with Process Flow scenarios, and One recording per
all processes in CoE system
for all possible scenarios process
Training all Delivery Preparing cut over strategy

Preparing Configuration
consultants on GST Migration document
Document
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

Overall Activities for GST Implementation
Overall Activities for GST Implementation
S. No Activities to be performed Resource Tentative Timeline
Understanding current Business Processes and Organization SAP FI, MM

1 1 Week
structure, Tax Procedure, Pricing Procedure etc. and SD
SAP FI, MM
2 Configuration of GST in SAP system 2 Weeks
and SD
SAP FI, MM
3 Creating Business Processes for Handling GST processes 1 Week
and SD
Updating of Master data required for GST (Tax codes, Condition SAP FI, MM
4 1 Week
records, Materials, Vendor, Customer Master) and SD
SAP FI, MM
5 UAT Integration Testing of all GST Processes 2Weeks
and SD
SAP FI, MM
6 Organization wide training Top Mgt, Super user 2 Days
and SD
SAP FI, MM
7 End User Training on GST 3 Days
and SD
SAP FI, MM
8 Go Live and support 2 Weeks
and SD
Note Above requirements are considered as pure configuration in standard SAP. No ABAP efforts
considered for any report or enhancement

GST - Agenda
GST Overview

Comprehensive Comparison
Comparison between Multiple Indirect tax laws and

proposed one law.
Particulars Without GST With GST Retailer to Consumer:
in INR COG to Retailer (b) 8624 7700
Add: Profit Margin @ 10% 862.4 770
Manufacturer to Wholesaler 9486.4 8470
Total Value(c)
Cost of Production 5000 5000
Add: VAT @ 12.5% 1185.8 0
Add: Profit Margin 2000 2000
Add: CGST @ 12% 1016.4
Manufacturer Price 7000 7000
840 0 Add: SGST @ 12% 1016.4
Add: Excise Duty @ 12%
Total Value(a) 7840 7000
Add: VAT @ 12.5% 980 0 Total Price to the Final consumer 10672.2 10502.8
Add: CGST @ 12% 840
Add: SGST @ 12% 840 Cost saving to consumer 169.4
% Cost Saving 1.59%
Invoice Value 8820 8680
Wholesaler to Retailer Notes: Input tax credit available to wholesaler is Rs.980 and
Rs.1,680 in case of without GST and with GST respectively
COG to Wholesaler(a) 7840 7000
Add: Profit Margin@10% 784 700
Total Value(b) 8624 7700
Likewise Input tax credit available to Retailer is Rs.1,078 and
Add: VAT @ 12.5% 1078 0
Rs.1,848 in case of without GST and with GST respectively.
Add: CGST @ 12% 924
Add: SGST @ 12% 924
In case, VAT rate is also considered to be 12%, the saving to
Invoice Value 9702 9548 consumer would be 1.15%

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Goods & Service

1 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

Areas of Impact GST in SAP

Clarifications and Prerequisites

COE Initiatives, Roadmap and Effort Estimation

Questions and Answers

2 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

Areas of Impact GST in SAP

Clarifications and Prerequisites

COE Initiatives, Roadmap and Effort Estimation

Questions and Answers

3 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

4 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

Dual GST model:

IGST model: For interstate transactions

IGST, Combination of ( SGST + CGST )

Multiple indirect taxes at Central and State levels

Multiple taxable events

Absence of uniform classification principles leading to difference in tax rates

Exemptions from taxresults in distorted credit chain and inverted duty

6 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

Dual GST comprising Central GST and State GST to operate

Inter-state transactions to be covered under Integrated GST (IGST) model

IGST would be aggregate of CGST and SGST

Exports would be zero-rated

7 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

Input tax Credits (ITC)

Refund of unutilized accumulated ITC allowed to exporters

8 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

9 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

In addition to common registration, returns, and challans, the Common GST

Areas of Impact GST in SAP

Clarifications and Prerequisites

COE Initiatives, Roadmap and Effort Estimation

Questions and Answers

11 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

Tax Registration - Define GST Registration levels

Master Data Maintenance - Business Partner Tax Data, GST

Tax Configuration & Computation - Configure Tax and Pricing

Document Numbering - Outgoing Invoice Numbering

GST Tax Postings - GST Input and Output Tax postings

12 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

Business Process Localization - Extend Support to currently

Utilization - Input tax credit utilization against payable for GST

8 Reporting - Tax Register

13 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

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

GST Registration Proposed Solution

Business Place will be used in SAP to capture GST Registration Number.

14 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

15 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

16 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

Business Partner Tax Data:

GST Tax Accounts:

Tax Accounts Proposed Solution

18 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

19 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL

Business Place based G/L account determination Both for MM and SD

20 2015 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL