SAP GST | SAP Goods and Services Tax | GST SAP India - Best Applications SAP GST | SAP Goods and Services Tax | GST SAP India - Best Applications

SAP Goods and Service Tax

The Goods and Services Tax (GST), the biggest reform in India’s indirect tax structure since the economy began to be open-up 25 years ago, at last looks set to become reality.

Once GST comes into effect, all central- and state-level taxes and levies on all goods and services will be subsumed within an integrated tax having two components: a central GST and a state GST.

This will ensure a complete, comprehensive and continuous mechanism of tax credits. Under it, there will be tax only on value addition at each stage, with the producer/seller at every stage able to set off his taxes against the central/state GST paid on his purchases. The end-consumer will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.

Implementation of GST in SAP would require focusing on multiple aspects:
  • Migration from TAXINJ to TAXINN
  • Deploying the target operating model and enhancing the various business transactions and processes.
  • Testing IT systems, updating masters and handling the cut-over and migration-related issues.
  • Implementing processes to manage the potential cash flow impact.
  • Effectively navigating through cut off/transitional issues like pre-GST stock of goods, pre-GST credit.
  • Training would be a key area of focus throughout the entire GST implementation road map. Training can be provided to the Senior Management, Business Teams, Tax Teams, Partners, etc.

Perceived Benefits to Trade

Perceived Benefits to Customer

  • Reduction in multiplicity of taxes
  • Mitigation of cascading/double taxation
  • More efficient neutralization of taxes especially for exports
  • Development of common national market
  • Simpler tax regime for CGST & SGST
    • Fewer rates and exemptions
    • Distinction between Goods & Services no longer required
  • Simpler Tax system
  • Reduction in prices of goods & services due to elimination of cascading of taxes
  • Uniform prices throughout the country
  • Transparency in taxation system
  • Increase in employment opportunities
Features of GST

The following are the high-level features of the GST:

  • Destination-based Consumption Taxation
  • Applies to all supplies of goods / services (as against manufacture, sale or provision of service) made for a consideration except –
    • Exempted goods / services – common list for CGST & SGST
    • Goods / services outside the purview of GST
    • Transactions below threshold limits
  • Dual GST having two concurrent components
  • Central GST (CGST) levied & collected by Centre
  • State GST (SGST) levied & collected by States
  • CGST & SGST on intra-State supplies of goods / services in India
  • IGST levied & collected by the Centre applicable to
    • Inter-State supplies of goods / services in India
    • Inter-state stock transfers of goods
    • Import of goods / services
    • Export of goods / services (if made on payment of GST under claim of rebate)
  • Export of goods / services – Zero rated
  • All goods or services likely to be covered under GST except:
    • Alcohol for human consumption - State Excise + VAT
    • Electricity - Electricity Duty
    • Sale / purchase of Real Estate - Stamp Duty + Property Taxes
  • Five specified petroleum Products – to be brought under GST from a later date on recommendation of GSTC
  • GST Rates – based on RNR: Four rates -
    • Merit rate - essential goods or services
    • Standard rate - goods or services in general
    • Special rate - precious metals
    • Nil rate - exempted goods or services
  • Floor rate with a small band of rates for standard rated goods / services for CGST & SGST
  • Optional Threshold exemption in both components of GST
  • Optional Compounding scheme for taxpayers having taxable turnover up to a certain threshold above the exemption
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