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Contents
Overview - GST...................................................................................................... 2
Why do we need GST?........................................................................................... 3
Justification at the Center Level..........................................................................3
Justification at the State Level............................................................................ 3
Present Indirect Tax Structure of India...................................................................4
Proposed Indirect Tax Structure of India................................................................4
Features of GST..................................................................................................... 4
Taxes to be subsumed........................................................................................ 6
Taxes not to be subsumed.................................................................................. 6
Understanding GST................................................................................................ 7
SAP Solution Approach.......................................................................................... 8
Pre-Requisite....................................................................................................... 8
GST Areas of Impact........................................................................................... 8
Cut Over & Challenges......................................................................................... 23
Migration Activities........................................................................................... 23
SAP MM (Procurement to Pay)..........................................................................23
SAP SD (Order to Cash).................................................................................... 23
SAP Financial Accounting..................................................................................23
SAP HCM & Others............................................................................................ 23
Key Challenges................................................................................................. 24
The Goods & Service Tax Bill or GST Bill, officially known as The
Constitution (One Hundred and Twenty-Second Amendment) Bill,
2014, proposes a national Value added Tax to be implemented
in India.
Goods and services tax would be levied and collected at each stage
of sale or purchase of goods or services based on the input tax
credit method. This method allows GST-registered businesses to
claim tax credit to the value of GST they paid on purchase of goods
or services as part of their normal commercial activity.
Taxable goods and services are not distinguished from one another
and are taxed at a single rate in a supply chain till the goods or
services reach the consumer.
A major defect under the State VAT is that the State is charging VAT
on the excise duty paid to the Central Government, which goes
against the principle of not levying tax on taxes.
In the present State level VAT scheme, Cenvat allowed on the goods
remains included in the value of goods to be taxed which is a
cascading effect on account of Cenvat element.
Many of the States are still continuing with various types of indirect
taxes, such as luxury tax, entertainment tax, etc.
Present Tax
Structure
Excise Duty
Taxable event is
Manufacture
Service Tax
Taxable event is
provision of Service
Sales Tax /
VAT / CST
Customs Duty
Entry Tax
Excise &
Service Tax
Tax
will be known
as CGST
Inter State
Taxable
Taxable supply
CST will be
known as
Integrated
GST (IGST)
Approx. Sum
total of CGST
& SGST
Custom Duty
In Place of
CVD & SAD,
IGST will be
charged
Import from
outside India
Features of GST
CVD/SA
D
Local
Cess &
levies
Service
Tax
Taxes
Subsumed
under GST
CST
Local
VAT
Local
Entry
tax /
Octroi
Tolls
Tax on
Vehicles
Taxes not to
be
Subsumed
under GST
Electrici
ty
Termina
l Taxes
Stamp
duty
Land &
Building
tax
Understanding GST
Instances
Retailer Sells Finished Goods: Retailer collects GST on the value added at
the third stage (sales of finished goods) and remits to the government
Consumer: Customer pays GST on the value of finished goods which is the
sum of the value added in the first to third stages.
Cost +
GST
Material
Supplier
Selling
Price
GST Output
Tax (16%)
Tot
al
GST
Input
Tax
Net GST
Payable
100
16
116
16
Manufactur
er
116
300
48
348
16
32
Wholesaler
348
500
80
580
48
32
Retailer
580
700
112
812
80
32
Consumer
812
(602)
(603)
(604)
(605)
(606)
for HANA (616-SAP
(617)
Support Pack
SP 26
SP 16
SP 15
SP 16
SP 13
SP 14
SP 08
SP 07
GST reg. no. to be captured for each registered customer & vendor
11
IGST applicable
Export transactions
Zero rated
13
14
Sales billing
`1 document
15
Purchase Vendor
Invoice
`1
16
`1
Incoming `1
GST Invoice
18
Sub-Contracting Purchase
`1 Order Components
19
Transfer`1Posting
20
Incoming GST
`1 Invoice
21
22
Utilization: Input tax credit utilization against payable for GST taxes
Input IGST to be utilized against output IGST, CGST & SGST in the
order of IGST, CGST and SGST
Utilization to`1handle GST
23
`1
24
25
Tax Codes
What is changing?
Petty Cash
General Voucher
26
Employee Benefits
Statutory reports
GL Account reports
Key Challenges
27