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With the objective of modernizing the taxation system and increasing the business efficiency, India is all set to replace all the indirect taxes levied on goods and services by the Centre and States and implement GST effective from April 2017.
GST is expected to simplify levy and administration from multiple statutes to single statute. It will widen the tax net and enable compliance while ensuring transfer of tax credit till last level (end consumer).
GST – THE GAME CHANGER is Here
Uniformity and Simplicity in taxation is indeed a brilliant idea!! However, a long hard road lies ahead for businesses.
GST will be a game changing reform for the Indian economy by creating a common Indian market and condensing the cascading effect of CENVAT and Service tax with set-offs. It will affect the Tax Incidence, Tax Payment, Tax Structure, Tax Compliance, Computation, Reporting and Credit Utilization leading to a complete revamp of the existing indirect tax system.
GST will change the entire way in which businesses are carried out in India. Therefore, it is the right time for the organizations to brace themselves up and strategize the integration of GST into their operations. In the light of business reports issued last year and the Model GST laws issued in June 2016, organizations must start examining the GST impact on their business operations. Supply chain optimization, IT, products and services pricing patterns, warehousing strategies, accounting and tax compliance systems are some of the business facets that must be re-looked at so as to synchronize with this latest key reform.
GST Impact on SAP Landscape Summary
Below are the processes / areas in SAP Landscape which are impacted by GST
Compliance Required
There are quite a few compliance requirements for GST. There will be a Unique GST number based on PAN and a Single GST registration per state (GSTN) for SGST and IGST. GST reg. no. needs to be captured for each registered Customer and Vendor. Separate GST Tax Accounts will be required for AP and AR per CGST, SGST and IGST per registration level. Outgoing GST invoices will require unique sequential numbering. Utilization of input tax credit is allowed against output tax as per the government rules. Separate registers for CGST, SGST and IGST (Registration level segregation) needs to be maintained. Besides all these, there are changes in Tax administration with introduction of GSTN and interfacing with it.
Is your SAP system ready for GST – MANDATORY SYSTEM PRE-REQUISITES
Tax Procedure should be on TAXINN
Any business system that is presently on the old and obsolete tax system “TAXINJ” is recommended to upgrade this to TAXINN to ensure a seamless transition to GST once it is rolled out officially.
SAP’s Solution Approach for GST
Globalization Services, the localization wing of SAP SE, is evaluating in detail the impact of GST on business processes. SAP is anticipated to be ready with a GST patch that can be deployed in the current systems to enable transitions of businesses of businesses to GST. The development of the GST patch is under process and the same will be released once the Indian GST law is published.
GST Implementation Services
SAP’s GST patch will not fully address all GST compliance requirements in the current system and would need GST implementation and migration services from SAP partners.
Application of GST patch is just one aspect of an elaborate and intricate procedure to become a GST- Ready organization. Therefore, services of a recognized SAP partner would be required for successful GST implementation/migration. The GST implementation process includes:
Compliance Required
There are quite a few compliance requirements for GST. There will be a Unique GST number based on PAN and a Single GST registration per state (GSTN) for SGST and IGST. GST reg. no. needs to be captured for each registered Customer and Vendor. Separate GST Tax Accounts will be required for AP and AR per CGST, SGST and IGST per registration level. Outgoing GST invoices will require unique sequential numbering. Utilization of input tax credit is allowed against output tax as per the government rules. Separate registers for CGST, SGST and IGST (Registration level segregation) needs to be maintained. Besides all these, there are changes in Tax administration with introduction of GSTN and interfacing with it.
Roadmap & Methodology
Impact Analysis and Post GST Business Process
It is advisable that you perform a detailed GST impact analysis and share with us the changes that you require for your business processes from SAP perspective. Business scenario must include determining the existing business scenario to be impacted by GST and identifying any relevant business scenarios not mapped in SAP.
Start with preparing 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 as well. Prepare a business and IT transition roadmap and align relevant teams besides preparing IT system to build and test process scenarios. Our experts will utilize this as “Requirement Document” to implement GST as per the scope pertinent for you as part of our “GST implementation services”.
Services offered
Diverse Infotech offers related to GST implementation :
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