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GST Tax Code in SAP and Code Determination

GST Tax Code in SAP

GST Tax Code in SAP : A nationwide tax reform cannot function without strict guidelines and provisions. The GST Council has devised a fool proof method of implementing this new tax regime by dividing it into three categories. GST would amalgamate various Central and State taxes into a single tax, mitigate cascading or double taxation, and facilitate a common national market. While the simplicity of the tax leads to easier administration and enforcement, enterprises have a tough time transitioning to the new system. The old taxes would be halted on the last day, and the GST would go live the next day.

GST Tax Code in SAP

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When Goods and Services Tax is implemented, there will be 3 kinds of applicable Goods and Services Taxes:

CGST: where the revenue will be collected by the central government

SGST: where the revenue will be collected by the state governments for intra-state sales

IGST: where the revenue will be collected by the central government for inter-state sales

GST Tax Code in SAP

In most cases, the tax structure under the new regime will be as follows:

Transaction New Regime Old Regime Comments
Sale within the state CGST + SGST VAT + Central Excise/Service tax Revenue will now be shared between the Centre and the State
Sale to another State IGST Central Sales Tax + Excise/Service Tax There will only be one type of tax (central) now in case of inter-state sales.

GST Tax Code in SAP

GST – The Smajo Approach

SMAJO:

  •  SAP GST Implementation impacts entire business operations within your organization (Sales, Purchase, Finance).
  • End-to-End GTS Solution approach along with connectivity to the GSTN network (Impact assessment to GST return filings through the GSTN Network)
  • Automation of GST Returns, reconciliations, tax determination, Invoice printing and comprehensive GST compliance
  • A strategic approach required for implementation to be done in Industrialized and standardized manner. Reduces Business and consulting efforts.
  • Proven track record and Expertize in Tax Migration project ensure ON-TIME project delivery and with highest standards.
  • Readiness with Templates, implementation methodologies as an added advantage.

GST Tax Code in SAP

For GST Implementation certain Technical specification needs to be fulfilled as per recommendations from SAP.

Technical specification for GST Implementation solely depends on current version of Tax Localization for your organization.

  • Two separate Tax Calculation Procedures
  • TAXINJ – Formula based taxation
  • TAXINN – Taxation based on Condition records
  • Technical activities to be carried out for each of the Tax Calculation procedures currently available in SAP there are three approaches .
    1. Migration TAXINJ to TAXINN : If your organization is still on TAXINJ procedure, then first step would be to migrated TAXINJ to TAXINN procedure.
    2. Migration to GST : If your organization is still on TAXINN procedure, then GST patch to be migrated to TAXINN procedure and apply the SAP note for GST.
    3. New (Greenfield) Implementation: If your organization is still not implemented SAP, then GST to be implemented along with SAP ERP System.

GST Tax Code in SAP

ST – Approach 1 (TAXINJ to TAXINN)
Service Pack (SP) to be applied as per SAP_APPL
Release Support Pack

  • SAP ERP 6.0 (600) SP 26
  • EHP2 FOR SAP ERP 6.0 (602) SP 16
  • EHP3 FOR SAP ERP 6.0 (603) SP 15
  • EHP4 FOR SAP ERP 6.0 (604) SP 16
  • EHP5 FOR SAP ERP 6.0 (605) SP 13
  • EHP6 FOR SAP ERP 6.0 (606) SP 14
  • EHP6 FOR SAP ERP 6.0 for HANA (616- SAP HANA) SP 08
  • EHP7 FOR SAP ERP 6.0(617) SP 07

GST Tax Code in SAP

SAP Note to be applied for Migration:

  • 2014164 – TAXINJ to TAXINN Migration.
  • 2153807 – Tax code update programs PO SA and Contract.
  • 2161911 – Purchase order display and Invoice display/cancel issue.
  • 2167294 – Prerequisite Note for SAP Note 2153807.
  • 2252781 – FAQ on Tax procedure migration from TAXINJ to TAXINN.

GST Tax Code in SAP

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Configuration:

Configure TAXINN Procedure and 0ther prerequisite configuration for TAXINN.

Master Data Migration/Cutover activity

Migrate tax Code in TAXINN (for Historical data and currently used tax codes).
Create new condition records for TAXINN.

Historical Data Maintenance:
Migrate Open Transactional Data , open purchase order, open sales order and open FI documents if any.

GST Tax Code in SAP

GST – Approach 2 ( TAXINN to GST)

If the TAXINN procedure exist in the system :

  1. The Government of India is planning to introduce GST on July 01, 2017,
  2. This is a draft note and is not for productive use. Ensure that you apply changes proposed in this note only in a sandbox system as it is in DRAFT status.
  3. The Note contains information based on the draft Model GST law attached with the note. The information offered is subject to change without prior notice due to factors outside/beyond the control of SAP. SAP does not take responsibility for any changes that arise in your system after implementing this note.
  4. SAP suggests that you perform an assessment on the risks involved before implementing this note.
  5. Once the final GST law is available, SAP will keep you informed regarding the details of the final solution
  6. SAP notes to be applied in sandbox for ready ness of GST

GST Tax Code in SAP

  •  2385575 – GST India – Changes to Master data
  • 2405502 – GST India – Changes to Master data- DDIC activities
  • 2407980 – GST India – Changes to tax procedure and pricing procedure
  • 2315692 – Information on GST
  • 1375438 – Globalization Collection Note

GST Tax Code in SAP

GST – Approach 3 ( GST )
New (Green) Implementation:
Below SAP notes to be applied in sandbox for ready ness of GST

  • 2385575 – GST India – Changes to Master data
  • 2405502 – GST India – Changes to Master data- DDIC activities
  • 2407980 – GST India – Changes to tax procedure and pricing procedure
  • 2315692 – Information on GST
  • 1375438 – Globalization Collection Note

GST Tax Code in SAP

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GST – Areas of Impact
• Tax registration – Define Registration level
• Master Data Maintenance – GL Accounts, Business partner Tax Data
• Tax Configuration and Computation – Configure Tax and Pricing Procedure
• Document Numbering – Outgoing Invoice Numbering
• Business Process Location – Currently Localized Business Process
• GST Tax Posting – GST Input and Output Tax Posting
• GST Tax Posting – GST Input and Output Tax Posting
• Utilization – Input tax credit utilization against payable for GST taxes
• Reporting – Tax Register

GST Tax Code in SAP

GST – Tax Registration and Master data

Tax registration – Define Registration level

  • GSTIN – GST Identification Number
  • Single registration for CGST, SGST and IGST
  • Individual registration to be obtained in each state of business establishment.
  • GST registration at Business place level

Master Data Maintenance – GL Accounts, Business partner Tax Data

  • Customer and Vendor: GST registration number to be captured for each registered customer and vendor. (Vendor and Customer GST registration field to be defined in General Data Tab field Tax Number 3 )
  • Separate tax for A/P and A/R accumulation might be required at GST level
  • Accounts to be defined for SGST CGST and IGST
  • GL Accounts to be determined at Business place level for example IGST

GST – Tax procedure and Condition records

Tax Configuration and Computation – Configure Tax and Pricing Procedure

  • For Intra-state transactions : applicable CGST and SGST.
  • For Inter-state and Import transaction : applicable IGST.
  • New Condition types, access sequence and account determination to be configured for GST example (OBQ1).
  • Condition types to be created for deductable and non deductable GST, conditions to be added in Tax calculation (OBYZ) and SD Pricing procedure (V/06 or V/08) example JINFAC.. .

GST – Document Numbering

Document Numbering – Outgoing Invoice Numbering

  • Unique sequential numbering for outgoing GST Invoices
  • Criteria for legal numbering may be specified by government
  • Numbering could be for example on Registration level, document type
  • Assignment of Number Ranges to Business place

GST – Impact on Business processess

Business Process Location – Currently Localized Business Process

  • Sales Process
  • Procurement Process
  • Stock Transfer
  • Subcontracting
  • Others

GST Tax Posting – GST Input and Output Tax Posting

Separate accumulation of credit and payables for
• CGST
• SGST
• IGST

 Separate accumulation at registration level

 Automatic Tax posting to respective GL Account from business process

GST – Utilization and Reporting

Utilization – Input tax credit utilization against payable for GST taxes

  •  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 in the order of IGST CGST and SGST

 Reporting – Tax Register

  • CGST
  • SGST
  • IGST
  • Registration level segregation

Tax Types

Specific Tax Types are available to handle GST. The following tax types on the Tax Types – Setup screen specifically relate to GST:

  • CGST
  • IGST
  • SGST
  • CessGST
  • SINCessGST

By selecting the Attribute Values option for a particular Tax Type you can enter a value into the Reverse Charge % field to determine how reverse charging is handled, especially in relation to A/P marketing document journal entries.

  • In SAP Business One, the Tax Types – Setup screen can be accessed by following the path

Main Menu → Modules Tab → Administration → Setup → Financials → Tax → Tax Types.

The background formulas for calculating the different tax types are set as default values. These background formulas can be changed through the Tax Formula – Setup screen.

  • To access the Tax Formula – Setup screen follow the path

Main Menu → Modules tab → Administration → Setup → Financials → Tax → Tax Engine Configuration → Tax Formula).

GST Tax Code in SAP

Tax Code Determination

To manage GST, four Key Fields are available in the Tax Code Determination – Setup screen.

Additional GST related Key Field options are available for selection:

  • UDF –User Defined Field
  • State From
  • State To
  •  BP Country
  • Item Tax Category
  • GST Type

The Tax Code Determination – Setup screen can be accessed by following the path

Main Menu → Modules tab → Administration → Setup → Financials → Tax → Tax Code Determination.

Withholding Tax

This section represents withholding tax changes relevant for TDS (Tax deducted at source). New dedicated withholding tax fields relevant for GST are planned for SAP. Patch deployment and delivery is subject to change.

Document Numbering

For the purposes of GST, new sub document types have been introduced for invoices and credit memos. For these new sub document types there is a different numbering series. The Document Numbering – Setup screen can be used to view and amend these settings. The document type Bill of Supply is unaffected by GST changes and remains in place for invoicing under the previous tax regimes and Excise purposes. The Document Numbering – Setup screen can be accessed by following the path Main Menu → Modules tab → Administration → System Initialization → Document Numbering

Sequence also reflects these GST attributes. The Sequence – Setup screen can be accessed by following the path Main Menu → Modules tab → Administration → Setup → Financials → Tax → Sequence

Marketing Documents

To handle GST,there are options available in the marketing documents available in SAP Business One. These options have been introduced as enhancements so as to comply with the requirements of GST. 

Where the goods are being transported in a semi knocked down or completely knocked down condition,

(a) the supplier shall issue the complete invoice before dispatch of the first consignment;

(b) the supplier shall issue a delivery challan for each of the subsequent consignments, giving reference of the invoice;

(c) each consignment shall be accompanied by copies of the corresponding delivery challan along with a duly certified copy of the invoice; and (d) the original copy of the invoice shall be sent along with the last consignment.

For transportation of goods CKD and SKD condition complete invoice to be issued before dispatch of first consignment and each subsequent consignment to be sent on a delivery challan & duly certified copy of the invoice. The original invoice shall be sent with the last consignment.

GST Tax Code in SAP

Check here to know more on GST and to download GST Billing Rules :

SL NO.  TOPICS LINK
1. Invoicing Under GST  CHECK HERE
2. Invoicing Under GST Rules CHECK HERE

Check here to know more on GST HSN Code with Rate :

SL NO.  TOPICS LINK
1. GST Rate Schedule CHECK HERE
2. GST Rate by GST Council CHECK HERE
3. GST HSN Codes Enrollnment CHECK HERE

Check here to know more on GST HSN CODE in Excel Format :

SL NO.  TOPICS LINK
1. GST HSN Code list in Excel Format CHECK HERE
2. GST Rate List with HSN Code – All Items List CHECK HERE
3. GST Invoice Format PDF CHECK HERE
4. GST Invoice Format Excel CHECK HERE
5.

HSN Code List for GST in Word

CHECK HERE 
6.  Item Wise GST Rates Decided on 18th June 2017 on Certain Services CHECK HERE

Check here to know more on GST Delivery Challan :

SL NO.  TOPICS LINK
1. GST Delivery Challan Excel format 1 CHECK HERE
2. GST Delivery Challan Excel format 2 CHECK HERE
3. GST Delivery Challan PDF format CHECK HERE

For more on GST and GST Tax Code in SAP log onto https://www.cakart.in

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