AGT_GST.pptx

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SEI-CMMi SE/SW Level 5 - ISO 9001:2008 - ISO/IEC 27001:2005 0

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SEI-CMMi SE/SW Level 5 - ISO 9001:2008 - ISO/IEC 27001:2005
Purpose of GST
Current Tax Regime in INDIA
•The current indirect tax system is plagued with multiplicity of taxes - at different rates - at multiple points.
•Absence of any setting off mechanism results in cascading effect of these taxes.
•Procurement of Goods is influenced by the Fiscal Considerations.
Proposed GST Plan
• Based on the Principle of “One Country, One Tax”.
•Seamless utilization of Input Credits, lower cost to End Customer.
• Free Movement of Goods, Qualitative Considerations to have Prime Importance.

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Overview of Taxes in India
Master Data Changes In MM
Overview of GST
Existing Indirect Taxes v/s GST Comparisons
GST Scenarios for MM
AGENDA

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Taxes to be replaced by GST
 Excise Duty
 Excise Duty levied under the Medicinal &
Toiletries Preparation Act
 Countervailing Duty in lieu of Excise Duty
 Special Additional Duty of Customs
 Service tax
 CST
 Surcharges & Cesses (relating to supply of
goods & services)
 VAT
 Entry tax
 Luxury tax
 Tax on entertainment and amusement
levied and collected by Panchayat /
Municipality / Regional Council / District
Council
 Taxes on lottery, betting & gambling
 State cesses & surcharges (relating to supply
of goods & services)
 Basic Customs Duty and Export Duties
 Terminal taxes on goods or passengers,
carried by railway, sea or air; taxes on
railway fares and freights
 Taxes other than Stamp Duties on
transactions in stock exchanges and futures
markets
 R&D Cess
 Stamp Duties
 Taxes on lands and buildings
 Taxes on consumption or sale of electricity
 Taxes on goods and passengers carried by
road or on inland waterways
 Tolls
 Taxes on professions, trades, callings and
employments

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Proposed GST Structure in India
 GST to overhaul the existing Indirect tax structure in India
 To be levied on all supply of goods and services within India.
 Proposed implementation of dual GST model in India to include the following components
 Central GST (CGST) - Levied by the Central government on supply of goods and services within a State
 State GST (SGST) - Levied by the State government on supply of goods and services within a State
 Integrated GST (IGST) - Levied by the Central government on inter-State supply of goods and service but revenue may
be shared with relevant destination State governments
 Centre and States to levy GST on common
base (CGST & SGST)
 Integrated-GST (IGST) on inter-state supplies /
import of goods and services

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Overview - GST Framework in India
Taxation on destination based consumption principles
Taxable event of ‘supply’ as against manufacture (excise), sales (VAT) and services (Service Tax)
Dual GST(Central GST and State GST) to apply concurrently on supply of all goods and services
Integrated GST (IGST) on inter-State transactions including stock transfers
Imports subject to IGST; Exports zero-rated
Seamless input tax credit in the supply chain process

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Existing Indirect Tax Structure versus Model GST Law
Existing Indirect Tax structure Versus Model GST Law
Multiple levies based on various activities–Central Excise on
manufacture, Service Tax on provision of service, VAT on
sale, etc.
Levy on ‘Supply’ of goods and services; Subsume most of
current indirect taxes into a Single GST levy.
Taxable event would arise at the place of provision of
Services.
Place of Supply is prescribed for both goods and services.
Valuation rules differ across legislations both at Centre and
State levels including Maximum Retail Price (MRP) based
valuation.
Transaction value to be adopted.
Different rate of tax on goods and services. Uniform rate of tax on goods and services.
Restriction on cross-utilization of credits. Seamless cross-utilization of credits allowed.
Separate registration under each law. PAN based all-India registration.
Lesser time limit allowed for revision of returns filed.
substantial broader time limit prescribed for filing revised
returns.
Reverse charge provisions for services. Reverse charge provisions for both goods and services.

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Current Scenario GST Scenario
Sale price to distributor 500,000 Sale price to distributor 500,000
Excise duty @ 12.5% (cost) 62,500 IGST @ 18% (credit) 90,000
CST on sale @ 2% (cost) 11,250 - -
Cost to distributor 573,750 Cost to distributor 500,000
Margin of distributor 30,000 Margin of distributor 30,000
Sale price of distributor to end customers 603,750 Sale price of distributor to end
customers 530,000
VAT on sale @ 14.50% (cost) 87,544 CGST @ 9 % (credit or cost) 2,700
- - SGST @ 9 % (credit or cost) 2,700
Cost to end customer/ business customer 691,294 Cost to end customer/ business customer 535,400
Cost benefit to Customer: 155,894
Note :- In Current Scenario, Credit can be set-off between the chain of Mfg-to Mfg only, no ITC to distributors.
In GST even the Distributor can claim the ITC on Purchase of Goods, due to which the final product is less
costlier than in current tax regime.
Product Pricing Comparison – An Example

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GST - Master Data Maintenance
HSN (Harmonized System of tariff Nomenclature)/SAC Service Accounting Codes) for Services
• An internationally standardized system of classifying products.
• Used to fix rate of tax on various products at the time of supply.
• Supply invoices to capture HSN codes in case of goods and SAC in case of services.
• Nature of goods / services will be identified through the submission of HSN / SAC in the
monthly return.
• SAC will be prefixed with “S” in order to differentiate between the HSN and SAC.
• HSN codes at 8 digit level and Accounting codes for services will be mandatory in case of exports
and imports

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GST Invoice, Debit & Credit Note
 Tax invoice should contain the following information
 A consecutive serial number containing only alphabets and/or
numerals, unique for a financial year at registration level
 GST registration number to be captured for each Registered
Customer and Vendor
 HSN code / accounting code
 Quantity sold
 Value of the goods sold
 Tax base amount (TV) –The amount on which tax is charged
 Tax charged
 Debit Memo /Credit Memo is also considered as a tax invoice if
issued post the time of supply of goods or services for price change or
any other reason.
BILL To:
Thank you for
your business

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GST –ITC Utilization & Set-Off
State 2
State 1
CGST + SGST
IGST
IGST
IGST
Stock Transfer Service Sale
Customer Customer
Customer
Input
Output
Utilization of Input Tax Credit
CGST
CGST IGST
SGST
SGST IGST
IGST
IGST CGST SGST

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SAP Readiness for GST Rollout - Tax Registration
GSTIN – GST Identification number
 Single registration for CGST, SGST and IGST
 Individual registration to be obtained in each state of business
establishment
 PAN based registration number – Up to 15 characters in length
Excise Registration
(Plant)
Service Tax
Registration
Service
Provider
GST Registration at what level?
Sales
Office
VAT
Registration
DEPOT
Excise Registration
(Depot)
State Code – Each State has been allotted a unique two digit code e.g ’27’ for the
state of Maharashtra
13th digit would be alpha-numeric (1-9 and then A-Z) and would be assigned
depending on the number of registrations a legal entity has within one State.
Significance
• Should be printed on the Supply Invoice
• GSTIN of ship to party ( Dealer / supplier ) should be provided in the monthly return
• Input GST credit of the recipient of goods / services is auto populated in GST portal
based on the GSTIN provided by the supplier.

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GST Returns
S/N Return/Ledger Applicable for Due date
1 GSTR 1 Outward supplies made by taxpayer (other than
compounding taxpayer and ISD)
10th of the next month
2 GSTR 2 Inward supplies received by a taxpayer (other than
compounding taxpayer/ISD) - auto populated
3 GSTR 3 Monthly return (other than compounding taxpayer and
ISD) – auto populated
4 GSTR 4 Quarterly return for compounding Taxpayer 18th of the month following the quarter
5 GSTR 5 Periodic return by Non-Resident Foreign taxpayer Last day of registration
6 GSTR 6 Return for Input Service Distributor (ISD) 15th of the next month
7 GSTR 7 Return for Tax Deducted at Source 10th of the next month
8 GSTR 8 Annual Return By 31st December of next FY
9 Electronic Credit Ledger – auto populated from GSTR 2 Continuous
10 Electronic Cash Ledger – basis payment of tax Continuous
11 Electronic Tax Liability ledger Continuous

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The following diagram shared by GST Network (GSTN) offers this clarity

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Material Master Changes

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Material Master Changes
• HSN/SAC code
For Goods the
HSN code will be
stored in Control
code field of
foreign data Tab.

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Vendor Master Changes

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Service Master Changes
• For Services, the
SAC code will be
stored in Tax
tariff code of
Service master.

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GST impact – A bird’s eye view
Manufacturer
Service Imports
Imports
Outside INDIA
INDIA State 1
INDIA State 2
BCD, CVD & AED
Excise, VAT
Service Tax
Excise, VAT
Excise Duty, CST
Excise, VAT
Excise Duty, CST
Service Tax
Service Tax under Reverse Charge
1 2
3
4
5
6
7
8
9

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Intrastate Procurement: Goods
RECEIPT
ORDER
INVOICE
PAYMENT
HSN Code
Material
Manufacturing
Unit
GST
Vendor
Purchase
Order Creation
RM stock A/c Dr.
GR/IR Clearing A/c Cr.
Goods
Receipt
Invoice
Verification
GR/IR Clearing A/c Dr.
Input CGST A/c Dr.
Input SGST A/c Dr.
Vendor Payable A/c Cr.
Vendor
Payment
Vendor Payable A/c Dr.
Bank A/c Cr.
One Transaction will be Reduced
Currently Excise Tax posting happens after GRN.
In GST Tax entry will be post at time of Invoice

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Interstate Procurement: Goods
RECEIPT
ORDER
INVOICE
PAYMENT
HSN Code
Material
Manufacturing
Unit
GST
Vendor
Purchase
Order Creation
RM stock A/c Dr.
Goods
Receipt
Invoice
Verification
Input IGST A/c Dr.
Vendor
Payment
Bank A/c Cr.
One Transaction will be Reduced.
Currently Excise Tax posting happens after GRN.
In GST Tax entry will be post at time of Invoice

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Domestic Procurement: Services
RECEIPT
ORDER
INVOICE
PAYMENT
SAC Code
Service
Organization
Service
Vendor
Purchase Order
Creation
Service Exp. A/c Dr.
SR/IR Clearing A/c Cr.
Service
Receipt
Invoice
Receipt
SR/IR Clearing A/c Dr.
Input CGST A/c Dr.
Input SGST A/c Dr.
Vendor
Payment
Bank A/c Cr.
Intra State
Services
Inter State
Services
SR/IR Clearing A/c Dr.
Input IGST A/c Dr.
The process will remain same as existing, only the
Tax components are changing.

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Import Procurement:
RECEIPT
ORDER
CUSTOM
INVOICE
PAYMENT
INVOICE
HSN Code
Material
Manufacturing
Unit
Import
Vendor
Purchase
Order Creation
Invoice
Verification
Vendor
Payment
Bank A/c Cr.
Customs Vendor A/c Dr.
Bank A/c Cr.
Customs Duty Clg. A/c Dr.
Input IGST A/c Dr.
Customs Vendor A/c Cr.
Custom
Invoice
Verification
Customs Duty
Payment
RM stock A/c Dr.
BCD Inventorised
Customs Duty Clg. A/c Cr.
Goods
Receipt
Here the Tax Components like CVD
and AED are Replaced with IGST.
One Transaction will be Reduced
Currently Excise Tax posting happens after
GRN. In GST Tax entry will be post at time of
Invoice

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Stock Transfer – Interstate
SENDER
@
Plant
1
RECEIVER
@
Plant
2
ST
ORDER
Material Mfg. Location
STO Creation
GST Control A/c Dr. .(
Our Assumption is it will be
in the nature of Balance
Sheet A/c)
IGST Input A/c Dr.
Inter Plant Sales A/c
Cr.(This is Inter Plant
vendor A/c)
Inbound GST
Invoice
Goods
Receipt
Plant 2 RM stock A/c Dr.
Plant 1 RM stock A/c Cr.
Goods
Issue
Outbound GST
Invoice
Inter Plant Sales A/c Dr.
(This is Inter Plant
Customer A/c)
GST Control A/c Cr.(
Our Assumption is it will
be in the nature of
Balance Sheet A/c)
IGST Payable A/c Cr.
Stock Transfer will be treated as
Customer And Vendor Transaction

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Subcontracting – With Full payment of Duty
GOODS
TRANSFER
RECEIPT
ORDER
Subcontracting
Order Creation
Material – Excisable
Vendor – Non-Exempt
Tax Code – zero tax code
GST Clg A/c Dr.
IGST payable A/c Cr.
Transfer Posting
Create GST
Invoice for other
Movements
Goods Sent to
Subcontractor
Goods Received
back from
Subcontractor
Goods
Receipt
Capture
Subcontractor
GST Invoice
GST Input A/c Dr.
GST Clg A/c Cr.
Subcontractor
Invoice
posting
IGST Payable A/c Dr.
Bank A/c Cr.
IGST
Payment

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Subcontracting – Without payment of Duty
GOODS
TRANSFER
RECEIPT
ORDER
Subcontracting
Order Creation
Material – Excisable
Vendor – Non-Exempt
Tax Code – zero tax code
Transfer Posting
Create GST
Challan for other
Movements
Goods Sent to
Subcontractor
Goods Received
back from
Subcontractor
Goods
Receipt
Capture
Subcontractor
GST Challan
Subcontractor
Invoice
posting

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GST in a Nutshell!!!
 Based on the Principle of “One Country, One Tax ,”
 GST is an Comprehensive tax to be charged on both Goods and Services.
 HSN Code for Goods and SAC Code for Services.
 Transaction Value (TV) to be used as base for Calculation of Taxes.
 Exports will continue be Nil Rated.
 Seamless Utilization of Input Tax Credit (ITC).
 CGST & SGST for Intrastate Transactions and IGST For Interstate Transactions and Imports.
 4 Slabs of GST proposed at 5%,12%,18% and 28%
 Emphasis on Quality of goods on account of Free Movement of Goods.
 Single Registration for CGST, SGST, IGST.
 Filing of Return to be Portal based.

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