PRIMUS Techsystems Pvt Ltd

Getting GST ready...

Preparation for implementing major tax
transformation GST Goods and Service
Tax in SAP for our customers in India.
2015

Contents
GST Background , Timelines and key questions

Initial Analysis - GST Challenges and High level Impacts

GST Implementation Approach

14

GST - Checkpoints - What Customers can do now

18

Way Forward

21

2015 PRIMUS Techsystems Private Limited

Background
Timelines and Key Questions

2015 PRIMUS Techsystems Private Limited

Background
The Goods and Service Tax (GST) is one of the most significant tax reform in India. It
is expected to replace our current complex Central and State indirect taxes to create
a common market for India with a seamless indirect tax regime.

Based on the present draft, country can expect to have three types of GST namely
Central GST (CGST), State GST(SGST) and Integrated GST (IGST) within the GST
credit chain. Furthermore an additional 1% origin tax on supply of inter-state goods
outside the GST credit chain.
While the Empowered Committee of Finance Ministers on GST feels confident with
the progress and action plan of GST Network Company (GSTN), the required IT
platform, is expected to be ready by the time GST is introduced, industry needs to be
equally prepared for the big transition. The big overhaul will affect how the companies
operate their businesses, presenting significant opportunities for long-term revenue
and margin improvement.
GST will be transformational will affect every part of business right from Financial
Reporting, Tax Accounting, Supply Chain, technology enablement and contracts
redesign. Training people within the company and its business eco-system will be
fundamental for the readiness for the new regime.
To enable a successful implementation, there is a role to play together by Business
Users, Financial Advisors and IT Partner of a company. The inter-dependencies need
to be identified upfront at project initiation and plans to put in place to manage them.
2015 PRIMUS Techsystems Private Limited

Timelines

GST Preparation

FY beginning

Jule 2015 onwards

1 April 2015
Edu.Cess and Higher Edu.cess removed
Excise Duty changed to 14.5% (April 15)
Service tax changed to 14% (May 15)

FY beginning
1 April 2016
GST will be tentatively
effective

Critical to understand impact at this stage so planning is important to handle smooth

transition.
2015 PRIMUS Techsystems Private Limited

GST & SAP Landscape Key Questions

Compliance to legal requirements?
What needs to be done in systems and
processes to comply with GST regulations?

CEO

CFO

LOB

Efficiency that reduces time and costs?

Is the solution design efficient to automate
accounting for GST input and output tax and
provide accurate data for tax returns &
auditing ?

CIO

EMPLOYEE

MANAGER

EMPLOYEE

2015 PRIMUS Techsystems Private Limited

Flexibility to respond to the pace of

business?
How to achieve a standard GST compliant
SAP solution which support the pace of
running business?

Initial Analysis:
GST Challenges and Impact

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Business Challenges
as the rules and egovernace system is still getting ready for change
Pressure from the authorities for Legal Compliance /
Penalties on late submission and incorrect reporting /

Demand for accurate GST reporting

Deadlines for submitting GST returns /Cash
Management & Tax Liability

Impacts entire sales and purchase

transactions and resultant Data Integrity /
Master Data changes and validations
Complex rules (e.g. Cross-border services,
Transition Rules, mixed supply)
Industry specific GST requirements in case
of exemptions of EOU, SEZs and Exemptions
in states
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IT Challenges
Need to deliver a standardized approach to
supporting GST for SAP users with no system
downtime to drive business continuity
Consistent upgrade path for GST functionality

Total Cost of Development for GST

implementation will need changes in the
Forms like Excise Invoices, Challans,
Purchase Order and statutory reports.
Maximized use of standard SAP
functionality to reduce future maintenance.

High pressure from government to ascertain

compliance versus high effort , restricted time line
and limited budget
2015 PRIMUS Techsystems Private Limited

GST Compliant system Challenges

Inaccurate & delayed GST returns can attract penalty
Complex rules to manage special conditions Invoice based reconcillation
GST will impact entire supply chain and related financial accounting which will be new
to present business users including accountants and purchase/sales/excise users.
SAP customizations, Master Data changes and process mapping may pose additional
challenges for GST enablement
Regression testing of SAP and all connected systems including government portal
(GSTN system).
Managing transition scenarios such as Taxable Goods / Services Sold Before 1 April
2016 and Returned On Or After 1 April 2016
Sub optimal implementation of GST can even result in cash flow issues for
organization

2015 PRIMUS Techsystems Private Limited

10

Multiple business areas will be impacted by GST

Summary of key business impacts

Sourcing

Inter-State procurement could prove to be a viable strategy

This may also open opportunities to consolidate suppliers/vendors

Distribution

Changes in tax system could also warrant changes in distribution arrangements

Current arrangements for distribution of finished goods may no longer be optimal
with the removal of the concept of excise duty on manufacturing

Pricing and
profitability

Taxation and landed cost resulting from the new GST structure would require repricing of products
Margins or price mark-ups would also need to be reexamined

Cash flow

Removal of excise duty on manufacturing can result in improvements in cash flow

and inventory costs since GST will now be paid at the time of sale/supply rather
than at the time or removal of goods from factory

System
changes and
transaction
management

Required changes affect multiple areas including master data, supply chain
transactions, Audit and Reporting
Open transactions and balances will need to be migrated on the cut-off date to
ensure smooth transition to GST
Changes to supply chain reports (e.g., purchase register, sales register, services
register), other tax reports and forms (e.g., invoices, purchase orders)
Enhanced need for reconciliation of data with suppliers, government and other
partners

Training

Training and education of employees to understand new compliance

requirements under GST to ensure a smooth transition

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GST Impact in SAP System- Summary

SAP Materials Management (Procure to Pay)
Material/Service Master
Purchase orders
Purchase Info Records
Debit/Credit Notes
SAP Sales & Distribution (Order to Cash)
Sales Orders
Distribution Channel
Sales Area
Billing Schedule
Invoicing
Delivery

Subsequent Credit /Debit

Invoices

Pricing (Types of Conditions)

Debit/Credit Notes

SAP Financial Accounting

Accounts Payable and Receivables
Management of Master Records
Invoices and Credit Notes

Invoicing (Non-PO)
Billing (Non-SO)
General Voucher

SAP Forms & Master Data

SAP FI, SD, MM, G/L Reports
Vendor, Customer

Other Statutory Reporting

G/L Account Reporting

SAP Human Capital Management

Employee Benefits
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Petty Cash
G/L Account

Travel & Expenses

12

Companies should proactively identify areas

impacted and prepare and test business scenarios
to measure impacts

Understand key areas of impact in their business

Prepare different scenarios for the application of

GST

Continually track policy development regarding

GST and update prepared scenarios accordingly

Identify issues and concerns needing

representation to the authorities and develop a
strategy for effective management of these

Prepare a business and IT transition roadmap and

align relevant teams

Prepare IT systems to build and test process

scenarios

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13

GST Implementation Approach

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GST Implementation Framework

SAP Implementation Services

Subset of Activities

Goal

Phase

Assessment Phase
Discovery
Understand the
scope
Impact on
Developments
/Forms/Reports

Master Data
Analysis

Evaluation

Design

Realization

Go Live

Deliver Impact
and Approach
report

Develop the
solution design

Running GST

Stabilize &
evolve GST
operations

Identify
Business and
process
improvement
potential

Define
implementation
approach
Perform change
Review Business impact analysis
processes
Identify
Scope of GST
implementation
implementation
risks
System
configuration
impacts

2015 PRIMUS Techsystems Private Limited

Define GST related

processes based
on SAP best
practices

Assess data
complexity
Identify Delta

requirements (
technical &
functional)
Validate
organizational

configuration
Define Governance
and support model

Manage

configuration

changes
Run Integration
& acceptance
tests
Conduct

Planning for
production

support and
cutover

Provide Key user

Trainings
Quality check:
Final preparation

Execute cutover
Start of
production

Adopt GST
improvements
quickly

Monitor live
environment
Close open
issues
Quality check:
Go Live

Support
Continuity &
sustainability
Manage
continuous
improvement
Manage new
business
requirements
Adopt new
and changes
to GST
compliance

15

GST Implementation Key Activities

Project Phase

Description

Discovery

Analysis on current Configurations

Analysis on current Master Data setup
Technical Feasibility analysis.( SAP version ,
Support Pack Level and etc)
High-level analysis on As-Is transactions

Mass updates for Master Data

Managing open transactions during transition
period
Managing Tax re-determinations

Realization

Regression testing
Load testing
Embedded test scenarios

Realization /Post Go Live

Rapid GST end user training content creations

Rapid GST demo creations
Rapid GST Exam creations

Post Go live

Exception reports on deviations

Transaction accuracy analysis
GST Compliance analysis

Realization

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16

Approach Benefits
Visibility of GST impact on SAP across entire business process.
Road map for GST implementation provides clear insights to system
changes, cost and time line.
Risk reduction and assured legal compliance
Reduced manual intervention in AP/AR and full benefit of input tax
credit
Recommendation in line with standard SAP / best practice guidelines

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17

GST - Checkpoints

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18

What Customers can do now..Summary of checkpoints

Master Data
Review

Review General Ledger Master Records (New GL requirement need to

understand)
Review Customer Master Records & Update for GST Registrations #
Review Vendor Master Records & Vendor Maser Update for GST Registration #
Review Material Master Records
Review Service Master Records
Review Pricing Structures of Purchase and Sales
Review external interfaces - EDI or Automated Sales/Purchase Order creations
Review Custom Programs Auto POs, Auto GRs or Auto Invoice Bookings

Organizational structure based on new GST Registrations

Review supplier base and categories
Change of Tax classification in the existing PO
Procure to Pay process How to maximize Input Tax Credit
Supplier Invoice Management & Record keeping
Material classifications
Order to Cash Process Output Tax determination, Tax Benefits
Change of Tax classification in the existing SO
Payment terms
Financial Accounting Process

Business
Process
Review

Configurations

Purchase Pricing Procedures

Sales Pricing Procedures
FI TAX Procedure and Account Assignment Configuration
Reports, Enhancements, Forms & GST impact
3rd Party interfaces (Inbound & Outbound)

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19

What Customers can do now.. Summary of checkpoints

General
Training and
Awareness

Enterprise wide GST Awareness & readiness

Project Team training
Key User and End User Training
Change Management

Testing,
Regression testing to ensure non GST functions works properly
Cutover and
Availability of business / IT team
GO-Live needs Trial cutover, Technical Go live, Business Validation
Business Go live & Post go live support
Transition
related
Requirements

Taxable Goods / Service Sold Before 1 April 2016 and Returned On

Or After 1 April 2016
Taxable Service Provided Before 1 April 2016 and Terminated On Or
After 1 April 2016
Progressive And Periodic Supply Spanning GST Implementation
Long Term contracts
How to switch off current tax configuration

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20

Way forward

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Steps Ahead?

4
3

2
1

GST Implementation
Configuration, Unit Testing
Integration and Regression Testing,
Cutover , GO-Live and monitor transition
Adopt new and changes to GST compliance
Approach Finalization
Align Teams for awareness and overview training
Review the results with the team and understand views.
Proof of Concept System Design and Test Run with limited info
Proof of concept for the system preparation as per the guidelines by SAP
with pre-requisite basic patch level updation.

Assessment Phase - Discovery of Impact

Impact on Developments /Forms/Reports, Master Data Analysis
Review Business processes to understand process and system configuration impacts.
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22

Thank You

PRIMUS Techsystems Private Limited

This material has been prepared by PRIMUS Techsystems Private Limited (PRIMUS) and contains general information only. This information is not
intended to constitute professional advice or services or is to be relied upon as the sole basis for any decision which may affect you or your business.
Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional
adviser. The information contained in this material is intended solely for you thereby, any disclosure, copy or further distribution of this material or the
contents thereof may be unlawful and is strictly prohibited.
PRIMUS shall not be responsible for any loss whatsoever sustained by any person who relies on this material.
2015 PRIMUS Techsystems Private Limited

Email: sam.c@primustechsys.com