SAP Thought Leadership Paper

Run Simple with GST

Retail, E-Commerce & FMCG Industry
2016 SAP SE or an SAP affiliate company. All rights reserved.
Run Simple with GST Retail, E-Commerce & FMCG Industry

GST The New Beginning

Financial Year 2017-18 will be the defining year for India Inc. with the advent of
much awaited Goods and Services Tax (GST) reform. GST is expected to have a
far reaching and wide impact on business, society and general economy. It is also
expected to address the current issue of inefficiencies in the tax system, prevent
cascading impact of multi-level taxation, plug the revenue leakages and raise the
transparency levels in business. Smooth transition to the GST is one of the top
3 agenda items on the Board and Managements strategy and execution list.
With GST, the past no longer holds good and future is laden with number of
implementation challenges.

Retail, E-Commerce and FMCG industry is expected to have high level of impact
on account of intensive supply chains, wider reach to consumers in rural as well as
urban markets and high volume of upstream and downstream business sourcing
and distribution channels.

GST regime has a high level of impact on the

end to end business model of companies
engaged into Retail/E-Com/FMCG.

Supply Chain Working Capital

Phasing out of Central Sales Tax (CST) will bring Inventory management
efficiency in supply chain Input credit availability throughout the supply chain
Consolidation of multiple warehouses will lead to efficiency in working capital management

Taxationa Consumersa
Higher incidence of taxation on Sin/De-merit High level of B2B and B2C exposure
goods Free movement of goods across the nation
Gifts, free samples also taxable

Business Model
Place of supply-destination based consumption tax
Impact of phasing out of area based tax incentives
High level of FDI

2016 SAP SE or an SAP affiliate company. All rights reserved.

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Run Simple with GST Retail, E-Commerce & FMCG Industry
An organization needs to re-evaluate the
business models, business processes and carry
Impacted Processes/
Functions/Departments Impact Sub-areas
Technology and IT Systems
Working Capital
Management
Procurement to Pay (P2P),
Manufacturing
out significant changes in order to ensure
smooth sailing through the GST journey.
Upgradation and
modification in the IT
systems for
recording of transactions
making alterations in IT
masters
tax coding systems
invoicing formats
formats of sales and
purchase register etc.
Identification, recording and
efficient utilization of the
input tax credit
End to end visibility of the
inventory across the re-
modelled supply chain
Set-off of service tax paid
on rental payments and
other services as inputs
Potential tax savings on
procurements on account
of discontinuance of various
types of taxes such as
Central sales tax, State
entry taxes etc.
Wider selection
opportunities of vendors
across states
Renegotiation of the
transportation and logistics
contracts
Transition of the vendors to
the new tax model
Supply of raw materials/
inputs to the vendors
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Key Imperatives SAP S/4HANA Solutions
Developing technological TAXINN with GST
changes to adapt Compliance
improved taxation system SAP GRC Access
and required forms, Control, Process Control
formats, records and SAP Master Data
coding system Governance
SAP TAO
Understanding and SAP Cash Management
evaluation of the on SAP S/4HANA
elimination of cascading
impact of the taxes on
working capital
efficiencies
Realignment of the SAP Business Planning
Procurement Function add-on on SAP S/4HANA
and its impact on various SAP Predictive Analytics
types of taxation SAP Profitability and Cost
Educating vendors for Management
realignment initiatives SAP Net Margin Analysis
and design agreements on SAP S/4HANA
accordingly SAP GRC Access
Recalibrated supply chain Control, Process Control
design
Comprehensive review of
the existing supply chain
and modelling of the
required supply chain
with scenario analysis
2016 SAP SE or an SAP affiliate company. All rights reserved.
Run Simple with GST Retail, E-Commerce & FMCG Industry

Impacted Processes/
Functions/Departments Impact Sub-areas Key Imperatives SAP S/4HANA Solutions

Consolidation of the End to end visibility of the

warehousing, logistics and
distribution facilities
Stock transfers across states
will become less complex
Withdrawals of area based
incentives impacting cost of
sourcing
supply chain
Build adequate flexibility
in the overall supply chain
Review the volume and
value of interstate
movement of the
products

Order to Cash (O2C) Valuation of inventory,
products and services
Withdrawals of area based
incentives impacting the
pricing of key products
Re-modelling of the pricing
of products impacting
dealers and commissions
Understanding valuation,
accounting and reporting
impact on inventories
Formulation of a new
geography linked
distribution plan
Distributor education and
awareness, transition plan
SAP Business Planning
add-on on SAP S/4HANA
SAP Predictive Analytics
SAP Profitability and Cost
Management
SAP Net Margin Analysis
on SAP S/4HANA
SAP GRC Access
Control, Process Control

Record to Report (R2R) Accurate recording and
reporting of the tax credits
Correct administration of
the taxable and exempt
inputs/products
Generation of multiple
reports and returns and
timely filing
Manpower skills SAP GRC Access
development to adapt to Control, Process Control
the new reporting SAP Master Data
systems Governance
Initiatives for increasing SAP S/4HANA
awareness of the key SAP Financial Closing
reporting requirements Cockpit
across business functions SAP Receivables
Establishment of strong Management
internal controls for SAP Disclosure & Notes
apprehending Management
transactions recording, SAP Shared Services
reviewing and reporting Framework

Tax and Compliance Dual compliance structure Ensuring coordination SAP Shared Services
Management CGST and SGST with Central and State Framework
Tax compliance with Authorities for
multiple authorities at compliance related
Centre and State level queries
Collaboration with
multiple business
functions to ensure tax
compliances
Ensuring technology
readiness

2016 SAP SE or an SAP affiliate company. All rights reserved.

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Run Simple with GST Retail, E-Commerce & FMCG Industry
Impacted Processes/
Functions/Departments Impact Sub-areas
Business Planning and Accurate planning and
Forecasting management of Goods and
Services
Distributors profitability
and efficiency analysis
Business Planning and Accurate planning and
Forecasting management of volume
Channel partner profitability
and efficiency analysis
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Key Imperatives SAP S/4HANA Solutions
Formulation of robust SAP Business Planning
budget and operations add-on on SAP S/4HANA
plan incorporating the SAP Predictive Analytics
impact of GST regime SAP Profitability and Cost
Frequent review, Management
monitoring and sharing
insights with business to
reframe operational
strategy
Understand, evaluate and
guide business team for
leveraging opportunities
and margin expansion
and monitor realization
Evaluate impact of GST
on key capital investment
decisions
Formulation of robust SAP Business Planning
budget and operations add-on ON SAP
plan incorporating the S/4HANA
impact of GST regime SAP Predictive Analytics
Frequent review, SAP Profitability and Cost
monitoring and sharing Management
insights with business to
reframe operations
strategy
Recording and reporting
of the savings in supply
chain costs
Understand, evaluate and
guide business team for
leveraging opportunities
arising due to GST
implementation like
expansion of margin,
better realizations etc.
Evaluate impact of GST
on key capital investment
decisions
2016 SAP SE or an SAP affiliate company. All rights reserved.
Run Simple with GST Retail, E-Commerce & FMCG Industry

SAP S/4HANA, with its capabilities to manage
high volume of business data and management
reporting, will serve as a business enabler and
help the Retail/E-commerce/FMCG companies
to sail through the requirements of GST
smoothly. It will help the Retail/E-commerce/
FMCG companies to maintain proper records
and matching of the inward supplies with the
outward supplies of the vendor and for accurate
determination of the tax liability. The cost of
documentation and compliance will be under
control through implementation of technology
solution offered by SAP S/4HANA.

For more information on GST,

visit: http://sap.com/india/simpleGST

Note: The material and the information therein related to taxation are proprietary to Dun & Bradstreet Information Services India Private Limited.
Any content that has mention of SAP products/services is owned by SAP.

2016 SAP SE or an SAP affiliate company. All rights reserved.

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Run Simple with GST Retail, E-Commerce & FMCG Industry

2016 SAP SE or an SAP affiliate company. All rights reserved.

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