1 What is GST? ...................................................................................................

3
1.1.1 Why is Goods and Services Tax so Important? ........................................ 5
1.1.2 Example ................................................................................................... 6
1.1.3 Present Indirect Tax Structure of India ..................................................... 9
1.1.4 Proposed Indirect Tax Structure ............................................................... 9
1.1.5 Subsuming of Existing Taxes ................................................................. 10
1.1.6 Taxes that may or may not be subsumed............................................... 10
2 Features of Proposed GST............................................................................ 11
2.1.1 Critical Components -Model GST Law ................................................... 12
2.1.2 GST applicable on ‘supply’ ..................................................................... 12
2.1.3 GST payable as per time of supply ........................................................ 12
2.1.4 Determining Place of Supply could be the key ....................................... 13
2.1.5 Valuation in GST .................................................................................... 13
2.1.6 Input tax credit in GST ............................................................................ 14
2.1.7 Inter-State supply of goods for consideration to attract additional tax .... 14
2.1.8 Rate of GST ........................................................................................... 14
2.1.9 GST Rates on Services .......................................................................... 14
2.1.10 Time of supply ........................................................................................ 14
3 Procedural aspects ........................................................................................ 16
3.1.1 Registration ............................................................................................ 16
3.1.2 Returns ................................................................................................... 16
4 Impact of GST- An Approach in SAP ........................................................... 18
4.1.1 Mandatory System Pre-requisites .......................................................... 18
4.1.2 Implementation Approach....................................................................... 18
4.1.3 Areas of Impact ...................................................................................... 18
4.1.4 GST Registration .................................................................................... 19
4.1.5 Assigning Business Place to Plant ......................................................... 20
4.1.6 Tax Registration- Proposed Solution ...................................................... 20
4.1.7 Vendor GST Registration ....................................................................... 21
5 Master Data .................................................................................................... 22
5.1.1 HSN and SAC Codes ............................................................................. 22
5.1.2 GST Accounts ........................................................................................ 23
Page 1 of 33 Draft GST document
 5.1.3 Material Master....................................................................................... 23
5.1.4 Service Master ....................................................................................... 24
5.1.5 Vendor Master ........................................................................................ 25
5.1.6 Tax and Pricing Procedure ..................................................................... 26
5.1.7 Access Sequence ................................................................................... 27
5.1.8 Account Keys ......................................................................................... 28
5.1.9 Tax Procedure (TAXINN) ....................................................................... 28
5.1.10 Tax Accounts.......................................................................................... 28
5.1.11 GST Tax Postings .................................................................................. 29
5.1.12 Summary of GST Impact ........................................................................ 29
6 Business Processes ...................................................................................... 30
6.1.1 Domestic Purchase-Invoicing ................................................................. 30
6.1.2 Invoice Verification ................................................................................. 31
6.1.3 MIRO Transaction .................................................................................. 32
6.1.4 Changes in Financial Transactions ........................................................ 32

Page 2 of 33 Draft GST document

1 What is GST?

Goods & Services Tax is a comprehensive, multi-stage, destination-based tax that will
be levied on every value addition.
To understand this, we need to understand the concepts under this definition. Let us start
with the term ‘Multi-stage’. Now, there are multiple steps an item goes through from
manufacture or production to the final sale. Buying of raw materials is the first stage. The
second stage is production or manufacture. Then, there is the warehousing of materials.
Next, comes the sale of the product to the retailer. And in the final stage, the retailer sells
you – the end consumer – the product, completing its life cycle.
So, if we had to look at a pictorial description of the various stages, it would look like

Goods and Services Tax will be levied on each of these stages, which make it a multi-stage
tax. How? We will see that shortly, but before that, let us talk about ‘Value Addition’.
Let us assume that a manufacturer wants to make a shirt. For this he must buy yarn. This
gets turned into a shirt after manufacture. So, the value of the yarn is increased when it gets
woven into a shirt. Then, the manufacturer sells it to the warehousing agent who attaches
labels and tags to each shirt. That is another addition of value after which the warehouse
sells it to the retailer who packages each shirt separately and invests in marketing of the
shirt thus increasing its value.

Page 3 of 33 Draft GST document

GST will be levied on these value additions – the monetary worth added at each stage to
achieve the final sale to the end customer.
There is one more term we need to talk about in the definition – Destination-Based. Goods
and Services Tax will be levied on all transactions happening during the entire
manufacturing chain. Earlier, when a product was manufactured, the centre would levy an
Excise Duty on the manufacture, and then the state will add a VAT tax when the item is sold
to the next stage in the cycle. Then there would be a VAT at the next point of sale.
So, earlier the pattern of tax levy was like this:

Page 4 of 33 Draft GST document

Now, Goods and Services Tax will be levied at every point of sale. Assume that the entire
manufacture process is happening in Rajasthan and the final point of sale is in Karnataka.
Since Goods & Services Tax is levied at the point of consumption, so the state of Rajasthan
will get revenue in the manufacturing and warehousing stages, but lose out on the revenue
when the product moves out Rajasthan and reaches the end consumer in Karnataka. This
means that Karnataka will earn that revenue on the final sale, because it is a destination-
based tax and this revenue will be collected at the final point of sale/destination which is
Karnataka.

1.1.1 Why is Goods and Services Tax so Important?

Currently, the Indian tax structure is divided into two – Direct and Indirect Taxes. Direct
Taxes are levies where the liability cannot be passed on to someone else. An example of
this is Income Tax where you earn the income and you alone are liable to pay the tax on it.

In the case of Indirect Taxes, the liability of the tax can be passed on to someone else. This
means that when the shopkeeper must pay VAT on his sale, he can pass on the liability to
the customer. So, in effect, the customer pays the price of the item as well as the VAT on it
so the shopkeeper can deposit the VAT to the government. This means that the customer
must pay not just the price of the product, but he also pays the tax liability, and therefore, he
has a higher outlay when he buys an item.

This happens because the shopkeeper has paid a tax when he bought the item from the
wholesaler. To recover that amount, as well as to make up for the VAT he must pay to the
government, he passes the liability to the customer who has to pay the additional amount.
There is currently no other way for the shopkeeper to recover whatever he pays from his
own pocket during transactions and therefore, he has no choice but to pass on the liability to
the customer.

Goods and Services Tax will address this issue after it is implemented. It has a system of
Input Tax Credit which will allow sellers to claim the tax already paid, so that the final liability
on the end consumer is decreased.

In Goods and Services Tax there are 3 kinds of 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
In most cases, the tax structure under the new regime will be as follows:

Page 5 of 33 Draft GST document

Transaction New Old Regime Comments
Regime

Sale within the CGST + VAT + Central Revenue will now be shared
state SGST Excise/Service tax between the Centre and the State

Sale to another IGST Central Sales Tax + There will only be one type of tax
State Excise/Service Tax (central) now in case of inter-state
sales.

1.1.2 Example

A dealer in Maharashtra sold goods to a consumer in Maharashtra worth Rs.10, 000. The
Goods and Services Tax rate is 18% comprising CGST rate of 9% and SGST rate of 9%. In
such cases the dealer collects Rs.1800 and of this amount, Rs.900 will go to the central
government and Rs.900 will go to the Maharashtra government.

Now, let us assume the dealer in Maharashtra had sold goods to a dealer in Gujarat worth
Rs.10, 000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%. In
such case the dealer has to charge Rs.1800 as IGST. This IGST will go to the Centre. There
will no longer be any need to pay CGST and SGST.

To understand this, let us first understand what Input Tax Credit is. It is the credit an
individual receives for the tax paid on the inputs used in manufacturing the product. So, if
there is a 10% tax that the individual must submit to the government, he can subtract the
amount he has paid in taxes at the time of purchase and submit the balance amount to the
government.

Let us understand this with a hypothetical numerical example.

Say a shirt manufacturer pays Rs.100 to buy raw materials. If the rate of taxes is set at 10%,
and there is no profit or loss involved, then he has to pay Rs.10 as tax. So, the final cost of
the shirt now becomes Rs (100+10=) 110.

At the next stage, the wholesaler buys the shirt from the manufacturer at Rs.110, and adds
labels to it. When he is adding labels, he is adding value. Therefore, his cost increases by

Page 6 of 33 Draft GST document

say Rs.40. On top of this, he has to pay a 10% tax, and the final cost therefore becomes Rs.
(110+40=) 150 + 10% tax = Rs.165.

Now, the retailer pays Rs.165 to buy the shirt from the wholesaler because the tax liability
had passed on to him. He has to package the shirt, and when he does that, he is adding
value again. This time, let’s say his value add is Rs. 30. Now when he sells the shirt, he
adds this value (plus the VAT he has to pay the government) to the final cost. So, the cost of
the shirt becomes Rs. 214.5 Let us see a breakup for this:

Cost = Rs.165 + Value add = Rs.30 + 10% tax = Rs.195 + Rs.19.5 = Rs.214.5
So, the customer pays Rs.214.5 for a shirt the cost price of which was basically only Rs.170
(Rs.110 + Rs.40 + Rs.30). Along the way the tax liability was passed on at every stage of
transaction and the final liability comes to rest with the customer. This is called
the Cascading Effect of Taxes where a tax is paid on tax and the value of the item keeps
increasing every time this happens.

Action Cost 10% Tax Total

Buys Raw Material @ 100 100 10 110

Manufactures @ 40 150 15 165

Adds value @ 30 195 19.5 214.5

Total 170 44.5 214.5

In the case of Goods and Services Tax, there is a way to claim credit for tax paid in acquiring
input. What happens in this case is, the individual who has paid a tax already can claim
credit for this tax when he submits his taxes.

In our example, when the wholesaler buys from the manufacturer, he pays a 10% tax on his
cost price because the liability has been passed on to him. Then he adds value of Rs.40 on
his cost price of Rs.100 and this brings up his cost to Rs.140. Now he has to pay 10% of this

Page 7 of 33 Draft GST document

price to the government as tax. But he has already paid one tax to the manufacturer. So, this
time what he does is, instead of paying Rs (10% of 140=) 14 to the government as tax, he
subtracts the amount he has paid already. So, he deducts the Rs.10 he paid on his purchase
from his new liability of Rs.14, and pays only Rs.4 to the government. So, the Rs.10
becomes his input credit.

When he pays Rs.4 to the government, he can pass on its liability to the retailer. So, the
retailer pays Rs. (140+14=) 154 to him to buy the shirt. At the next stage, the retailer adds
value of Rs.30 to his cost price and has to pay a 10% tax on it to the government. When he
adds value, his price becomes Rs.170. Now, if he had to pay 10% tax on it, he would pass
on the liability to the customer. But he already has input credit because he has paid Rs.14 to
the wholesaler as the latter’s tax. So, now he reduces Rs.14 from his tax liability of Rs. (10%
of 170=) 17 and has to pay only Rs.3 to the government. And therefore, he can now sell the
shirt for Rs. (140+30+17) 187 to the customer.

Action Cost 10% Tax Actual Liability Total

Buys Raw Material 100 10 10 110

Manufactures @ 40 140 14 4 154

Adds Value @ 30 170 17 3 187

Total 170 17 187

In the end, every time an individual was able to claim input tax credit, the sale price for him

reduced and the cost price for the person buying his product reduced because of a lower tax
liability. The final value of the shirt also therefore reduced from Rs.214.5 to Rs.187, thus
reducing the tax burden on the final customer.

So essentially, Goods & Services Tax is going to have a two-pronged benefit. One, it will
reduce the cascading effect of taxes, and second, by allowing input tax credit, it will reduce
the burden of taxes and, hopefully, prices.

Page 8 of 33 Draft GST document

1.1.3 Present Indirect Tax Structure of India

1.1.4 Proposed Indirect Tax Structure

Page 9 of 33 Draft GST document

1.1.5 Subsuming of Existing Taxes

1.1.6 Taxes that may or may not be subsumed

There are few other indirect taxes that may or may not be subsumed under the GST regime
as there is no consensus among States and Centre & States

 Purchase tax
 Stamp Duty
 Vehicle Tax
 Electricity Duty
 Other Entry taxes and Octroi

Page 10 of 33 Draft GST document

2 Features of Proposed GST
 Destination based Taxation

 Apply to all stages of the value chain

 Apply to all taxable supplies of goods or services (as against manufacture, sale or
provision of service) made for a consideration except –

o Exempted goods or services – common list for CGST & SGST

o Goods or services outside the purview of GST

o Transactions below threshold limits

 Dual GST having two concurrent components –

o Central GST levied and collected by the Centre

o State GST levied and collected by the States

 CGST and SGST on intra-State supplies of goods or services in India.

 IGST (Integrated GST) on inter-State supplies of goods or services in India – levied

and collected by the Centre.

 IGST applicable to

o Import of goods and services

o Inter-state stock transfers of goods and services

 Export of goods and services – Zero rated.

 Additional Tax of 1% on Inter State Taxable supply of Goods by State of Origin and
non CENVATABLE

 All goods or services likely to be covered under GST except :

o Alcohol for human consumption - State Excise plus VAT

o Electricity - Electricity Duty

o Real Estate - Stamp Duty plus Property Taxes

o Petroleum Products (to be brought under GST from date to be notified

on recommendation of GST Council)

 Tobacco Products under GST with Central Excise duty.

Page 11 of 33 Draft GST document

2.1.1 Critical Components -Model GST Law

2.1.2 GST applicable on ‘supply’

In GST regime, all ‘supply’ such as sale, transfer, barter, lease, import of services etc of
goods and/ or Services made for a consideration will attract CGST (to be levied by Centre)
and SGST (to be levied by State). As GST will be applicable on ‘supply’ the erstwhile taxable
events such as ‘manufacture’, ‘sale’, ‘provision of services’ etc. will lose their relevance.

Further, certain supplies, even if made without consideration, such as permanent transfer
of business assets, self-supply of goods or services, assets retained after deregistration etc
will attract GST.

2.1.3 GST payable as per time of supply

The liability to pay CGST / SGST will arise at the time of supply as determined for goods and
services. In this regard, separate provisions prescribe what will time of supply for goods and
services. The Provisions contemplate payment of GST at the earliest for

1. ‘Goods’- Removal of goods or receipt of payment or issuance of invoice or date on

which buyer shows receipt of goods

Page 12 of 33 Draft GST document

 2. ‘Service’s– Issuance of invoice or receipt of payment or date on which recipient
shows receipt of services It can be observed that there are many parameters in
determining ‘time’ of supply. Thus, determining the ‘time’ of supply and further
maintaining reconciliation between revenue as per financials and as per GST rules
could be a major challenge to meet.

2.1.4 Determining Place of Supply could be the key

At present inter-State supply of goods attract Central Sales Tax. Now, it provides that an
inter-State supply of goods and/ or services will attract IGST ((i.e. CGST plus SGST). Thus,
it would be crucial to determine whether a transaction is an ‘intra-State’ or ‘Inter-State’ as
taxes will be applicable accordingly. In this regard, the draft GST law provides separate
provisions which will help in determining the place of supply for goods and services.

Typically for ‘goods’ the place of supply would be location where the good are delivered.
Whereas for ‘services’ the place of supply would be location of recipient. However, there
are multiple scenarios such as supply of services in relation to immovable property etc
wherein this generic principle will not be applicable and specific rule will determine the pace
of supply. Thus, the business will have to scroll through all the place of supply provisions
before determining the place of supply.

2.1.5 Valuation in GST

GST would be payable on the ‘transaction value’. Transaction value is the price actually
paid or payable for the said supply of goods and/or services between un-related parties.
The transaction value is also said to include all expenses in relation to sale such as packing,
commission etc. Even subsidies linked to supply will be includable. As regards discounts/
incentives, it will form part of ‘transaction value’ if it is allowed after supply is affected.
However, discounts/ incentives given before or at the time of supply will be permissible as
deduction from transaction value.

The law also provides for Valuation Rules to help determine value in certain cases. The
Valuation Rules appear to be drafted by taking few provisions from current Valuation
provisions in vague in Excise (for e.g. concept of ‘transaction value’), Service Tax (for e.g.
concept of ‘pure agent’) and Customs (for e.g. concept of ‘goods of like kind and quality’).

Page 13 of 33 Draft GST document

2.1.6 Input tax credit in GST

Current CENVAT Credit regime disallows CENVAT Credit on various services such as motor
vehicle related services, catering services, employee insurance, construction of civil
structure etc. Similarly, State VAT laws restrict input tax credit in respect of construction,
motor vehicle etc. Current, this denial of credits leads to un-necessary cost burden on
assesse.

2.1.7 Inter-State supply of goods for consideration to attract additional tax

Draft GST law provides that an additional tax up to 1% will be levied by Centre on inter-State
supply of goods (and not on services) made for consideration. Thus, effectively inter-State
branch transfers will not attract this 1% additional Tax. This additional tax will be assigned to
States from where the supply of goods originates. This additional tax will be applicable for a
period of two years and could be extended further by GST Council.

2.1.8 Rate of GST

2.1.9 GST Rates on Services

All services have been fitted into four different rates, which are 5%, 12%, the standard 18%
and the luxury rate of 28%

2.1.10 Time of supply

Time of supply of goods is the earliest of:

i date of removal/ making available goods by the supplier;

ii date of issue of invoice;
iii date of receipt of payment by the supplier; or

Page 14 of 33 Draft GST document

 iv date on which the recipient shows the receipt of goods in his books of accounts.

Time of supply of services is the earliest of:

i date of issue of invoice or date of receipt of payment, if invoice is issued within

prescribed period,
ii date of completion of service or date of receipt of payment, if invoice not issued
within the prescribed period,
iii date on which recipient shows the receipt of services in his books of accounts,
where (i) or (ii) above does not apply.

Time of supply under reverse charge is the earliest of:

i date of receipt of supply;

ii date of payment;
iii date of receipt of invoice; or
iv date of debit in the books of accounts.

In addition to the above, there are provisions to determine the date of supply in case of
continuous supply of goods/ services.

Page 15 of 33 Draft GST document

3 Procedural aspects

3.1.1 Registration

Any person having aggregate turnover of Rs. 20 lacks (Rs.10 lacks for person carrying out
business in the north-east) across all locations in India will need to obtain registration in the
States from where they make a supply. In addition, the following persons would be required
to obtain GST registration irrespective of turnover:

 Person making inter-state supply

 Casual taxable persons and non-resident taxable persons

 Person required to pay tax under reverse charge

 Persons making supply on behalf of other registered taxable persons, whether as

agent or otherwise

 input service distributors

 Persons making supply (except of branded services) through an e-commerce

operator

 e-commerce operator

 Aggregator supplying services under his brand name

 It is envisaged that in each State, one registration would be obtained, unless the
taxpayer chooses to obtain separate registrations for its different business verticals in
the State.

3.1.2 Returns

For each month, a person who has not opted for composition is required to file the returns,
Separately for outward supplies made, inward supplies received, and monthly return. In
addition to these returns, separate returns are required to be filed by input service
distributors and by a person deducting tax at source. An annual return is also required to be
filed.

The taxpayers having turnover exceeding the prescribed limit will also be required to get
their accounts audited by a Chartered Accountant or a Cost Accountant, and submit a copy

Page 16 of 33 Draft GST document

 of the audited annual accounts with the annual return. In addition, they would also be
required to submit a reconciliation statement, reconciling the value of supplies declared in
the return furnished for the year with the audited annual financial statement, and any other
documents as may be prescribed.

Return Form What to file? By Whom? By When?

Details of outward supplies of taxable Registered Taxable 10th of the next

GSTR-1
goods and/or services effected Supplier month

Details of inward supplies of taxable

Registered Taxable 15th of the next
GSTR-2 goods and/or services effected claiming
Recipient month
input tax credit.
Monthly return on the basis of
finalization of details of outward supplies Registered Taxable 20th of the next
GSTR-3
and inward supplies along with the Person month
payment of amount of tax.
18th of the month
Quarterly return for compounding
GSTR-4 Composition Supplier succeeding
taxable person.
quarter
Return for Non-Resident foreign taxable Non-Resident Taxable 20th of the next
GSTR-5
person Person month
13th of the next
GSTR-6 Return for Input Service Distributor Input Service Distributor
month
Return for authorities deducting tax at 10th of the next
GSTR-7 Tax Deductor
source. month
Details of supplies effected through e-
E-commerce Operator/Tax 10th of the next
GSTR-8 commerce operator and the amount of
Collector month
tax collected
31st December of
Registered Taxable
GSTR-9 Annual Return next financial
Person
year
Within three
months of the
date of
Taxable person whose
cancellation or
GSTR-10 Final Return registration has been
date of
surrendered or cancelled.
cancellation
order, whichever
is later.
28th of the month
Details of inward supplies to be Person having UIN and following the
GSTR-11
furnished by a person having UIN claiming refund month for which
statement is filed

Page 17 of 33 Draft GST document

4 Impact of GST- An Approach in SAP

4.1.1 Mandatory System Pre-requisites

 Tax Procedure should be TAXINN
 Recommended to move to latest support pack

4.1.2 Implementation Approach

4.1.3 Areas of Impact

Page 18 of 33 Draft GST document

4.1.4 GST Registration

Page 19 of 33 Draft GST document

4.1.5 Assigning Business Place to Plant

4.1.6 Tax Registration- Proposed Solution

Page 20 of 33 Draft GST document

4.1.7 Vendor GST Registration

Page 21 of 33 Draft GST document

5 Master Data

 HSN and SAC Codes

 GST Accounts
 Material Master
 Service Master
 Vendor Master
 Customer Master

5.1.1 HSN and SAC Codes

The Harmonized Commodity Description and Coding System generally referred to as

“Harmonized System of Nomenclature” or simply “HSN” is a multipurpose international
product nomenclature developed by the World Customs Organization

Broad rule is as under:

– Taxpayers whose turnover is above Rs. 1.5 crores but below Rs. 5 crores shall use 2 digit
code;
– Taxpayers whose turnover is Rs. 5 crores and above shall use 4 digit code; and
– Taxpayers whose turnover is below Rs. 1.5 crores are not required to mention HSN Code
in their invoices.

Every business is required to declare list of goods they are dealing into. This declaration is
required along with the HSN code of such commodity. System will automatically pick tax rate
under GST regime based on these HSN codes. Thus it is of utmost importance to mention
correct HSN codes at the time of enrolment or registration under GST

SAC stands for Service Accounting Codes which are adopted by the Central Board of Excise
and Customs (CBEC) for identification of the services. HSN stands for Harmonized System
of Nomenclature which is internationally accepted product coding system used to maintain
uniformity in classification of goods.

Page 22 of 33 Draft GST document

5.1.2 GST Accounts

5.1.3 Material Master

Page 23 of 33 Draft GST document

5.1.4 Service Master

Page 24 of 33 Draft GST document

5.1.5 Vendor Master

Page 25 of 33 Draft GST document

5.1.6 Tax and Pricing Procedure

As per the model law issued by Government of India, tax applicability will be as follows in
GST regime
 Intra-state transactions will attract CGST and SGST
 Inter-state/Import transactions will attract IGST
 Export transactions will be zero rated

Following Condition Types required

Intra-state transactions
 CGST and SGST applicable

Inter-state/Import transactions
 IGST applicable

In order to achieve proposed tax structure, required changes need to be made in tax
procedure

This will lead to introduction of new condition types, access sequence and account
determination

Page 26 of 33 Draft GST document

5.1.7 Access Sequence

Page 27 of 33 Draft GST document

5.1.8 Account Keys

5.1.9 Tax Procedure (TAXINN)

5.1.10 Tax Accounts

Business Place based G/L account determination – Both for MM and SD

Page 28 of 33 Draft GST document

5.1.11 GST Tax Postings

Separate accumulation of credit and payables for

 CGST
 SGST
 IGST

Separate accumulation at Registration level

Automatic Tax posting to respective accounts from business processes

5.1.12 Summary of GST Impact

Page 29 of 33 Draft GST document

6 Business Processes
6.1.1 Domestic Purchase-Invoicing
In normal business procurement scenario based on GS Partner and delivery address region
that you select in the purchase order, the system identifies the transaction as intrastate, and
calculates the taxes accordingly.

GS Partner selected flows in the Goods Receipt document, which will then be passed on to
invoice verification to identify their GST Partner region and delivery address region, and then
taxes are calculated accordingly.

Purchase Scenario
 In the GST regime, for domestic procurement of goods within the same state, the
applicable indirect taxes will be CGST and SGST. The vendor will issue an invoice
charging the CGST and SGST components as tax.
 In case of inter-state domestic procurement of goods, the IGST model for taxation
will be applicable. As per the IGST model, the Centre/Central Government will levy
IGST on all inter-state transactions of taxable goods and services. IGST will be
computed as CGST plus the SGST components of the destination state.

Various Purchasing scenarios mapping.

Page 30 of 33 Draft GST document
Example-1
 Purchase of goods within Maharashtra is intra-state purchase where the purchasing
plant is also located in Maharashtra. If the main vendor is located in Karnataka, and
from Karnataka is going to dispatch the products to Maharashtra; in this case, IGST
will be applicable

Example-2

 Purchase of goods within Maharashtra is an intra-state purchase where the

purchasing plant is also located in Maharashtra. If the main vendor is located in
Karnataka and from Karnataka is going to dispatch products to Maharashtra, inter-
state GST will be applicable. In the event the vendor in Karnataka asks another party
to deliver the goods to the plant in Maharashtra, then inter-state GST will be
applicable.
 For the above case in SAP, user should select goods supplier as a partner function
while creating a purchase order for the taxes to be calculated accordingly.

6.1.2 Invoice Verification

 While creating a purchase order, vendor informed the plant (in Maharashtra) that the
partner (in Maharashtra) is going to deliver the product
 Based on this information, purchasing department creates a purchase order and the SAP
system calculates intra-state GST (CGST, SGST). The system also considers the vendor
(In Maharashtra) as a GST partner and posts the goods receipt.

Page 31 of 33 Draft GST document

 However, when the Finance department tries to post the invoice, they notice that the
actual product arrives from a partner in Gujarat.
 For the above case, SAP provides an option to capture GST Partner on the MIRO
screen. To do so, the user has to change the Maharashtra GST partner to Gujarat GST
partner in the new fields delivered by SAP.

At the time of invoice creation, if the captured GST partner differs from the purchase order
goods supplier, the user can change the GST Partner in the relevant invoice verification
(MIRO) transaction

To do so, SAP has proposed to introduce a new editable field (called GST Partner) in the
header data under Basic data tab. This new field will default the goods supplier partner
vendor that you select in the purchase order. If the user wants to change this, there is a
provision to search for the correct vendor code in the field help search.

6.1.3 MIRO Transaction

6.1.4 Changes in Financial Transactions

GST impact in standalone financial transactions is explained below
SAP recommends the following
 Avoid posting standalone FI entries and
 Route the same through MM/SD route wherever possible

Page 32 of 33 Draft GST document

Since business requirements demand direct FI postings in some of the cases, there are few
changes required for these postings to cater to GST requirements.

Affected Transactions
FB70-Customer Invoice
FB75-Customer Credit Memo
FB60-Vendor Invoice
FB65-Vendor Credit Memo
FV60-Park Incoming Invoices
FV65- Park Incoming Credit Memos
FV70-Enter Outgoing Invoice
FV75-Park Outgoing Credit Notes
Fields to be added in the above transactions
 GST Partner
 Place of Supply
 HSN/SAC Codes

Page 33 of 33 Draft GST document