gst solution sap business one -...

GST SOLUTION SAP BUSINESS ONE

How to Work With GST

SAP Business One 9.2

Contents

1 Introduction................................................................................................................................... 5

2 Settings ...................................................................................................................................6

2.1 States ............................................................................................................................................... 6

2.2 Locations .........................................................................................................................................................7

2.3 Business Partner Master Data ........................................................................................................ 8

2.4 Item Master Data ............................................................................................................................. 9

2.5 Warehouses ................................................................................................................................................. 10

2.6 Tax Types ..................................................................................................................................................... 10

2.7 Tax Code Determination ............................................................................................................................. 12

2.8 Withholding Tax ........................................................................................................................................... 13

2.9 Document Numbering ................................................................................................................................ 14

3 Marketing Documents ............................................................................................................... 16

3.1 A/R Invoices ................................................................................................................................................. 16

3.2 A/R Credit Memos ....................................................................................................................................... 18

3.3 A/R Down Payment Requests ...................................................................................................... 19

3.4 Inventory Transfers ...................................................................................................................... 20

4 GST Scenarios ............................................................................................................................. 21

4.1 Sales Scenario for Goods/Services (Nil Rated & Regular) ........................................................21

4.2 Sales Scenario for Goods/Services (Comp. Levy, Exempt, Non GST) .....................................21

4.3 Sales Scenario for Goods/Services (Export) ............................................................................ 22

4.4 Sales Scenario for Goods/Services (Advance Payment) ......................................................... 22

4.5 Sales Scenario for Goods/Services (Reverse Charge) ............................................................. 22

4.6 Sales Scenario for Debit Memos ................................................................................................. 23

4.7 Sales Scenario for Credit Memo and Sales Return ................................................................... 23

4.8 Sales Scenario for Revised Invoice ............................................................................................. 23

4.9 Inventory Scenario for Self-Supplies (Incl. Consignment)........................................................ 24

4.10 Inventory Scenario for Job Work................................................................................................. 24

4.11 Purchasing Scenario for Goods/Services (Invoice First - Normal Tax) ................................... 24

4.12 Purchasing Scenario for Goods/Services (Outgoing Payment First – Normal Tax) ............. 25

4.13 Purchasing Scenario for Goods (Invoice First – Reverse Charge) ........................................... 25

4.14 Purchasing Scenario for Service (Invoice First – Reverse Charge ........................................... 25

4.15 Purchasing Scenario for Goods/Services (Outgoing Payment First – Reverse Charge) ...... 26

4.16 Purchasing Scenario for Goods/Services (Credit Note) and Return ....................................... 26

4.17 Purchasing Scenario for Goods/Services (Debit Note) and Supplementary Invoices ........... 26

4.18 Purchasing Scenario for Goods/Services (Revised Invoice, DR and CR Memo) .................... 26

4.19 Purchasing Scenario for the Import of Goods ........................................................................... 26

4.20 Purchasing Scenario for the Import of Services ........................................................................ 27

4.21 Purchasing Scenario for Withholding Tax (WHT) for TDS GST (A/P Invoice and DP) ........... 27


1 Introduction

This how-to guide will help you to work with Good and Service Tax (GST) in the India localization of SAP Business

One.

GST is a new way of handling indirect taxation in India. GST replaces some existing tax regimes providing benefits

such as:

• Reduced tax complexity

• A simplified taxation system with fewer variables

• Greater tax transparency

• A reduced administrative burden

• Unified taxation for the country and individual states

• Economic and employment benefits

GST is a change to existing functionality that affects SAP Business One Customers in India. SAP Business One

provides solutions to customers through patch deployment to meet the requirements of GST, the relevant

versions and or patches will be needed to take advantage of GST functionality. The GST solutions provided in SAP

Business One are described and explained in this g u i d e .

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2 Settings

Settings in SAP Business One enable GST functionality to operate and conform to the legal and reporting

requirements of the tax authorities in India.

2.1 States

As GST requirements are different depending on which states of India are involved, the states need to be clearly

defined in SAP Business One. The state codes are specifically required for the reporting of Place of Supply in

various GST reports.

You must ensure that the required GST State Codes are entered into SAP Business One in order for GST and

related reporting to function properly. GST State Codes are represented by a two digit numeric value.

The States - Setup screen can be accessed by following the path Main Menu → Modules tab → Administration →

Setup → General → States in SAP Business One.

The GST State Codes used for states are different to the eCodes used for states in the eTDS process.

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2.2 Locations

Locations contain key information related to GST which needs to be defined in SAP Business One. Without the

correct location information, GST functionality will not function properly. Locations can be applied, for example, to

Warehouses. The required fields on the Locations - Setup screen GST tab are as follows:

o GST Location – checkbox that enables the fields mentioned below and makes the location GST relevant.

o GSTIN – a unique GST identification number applicable to a particular Location and provided by the GST

Authorities for a company during the registration process. Consists of 15 characters.

o GST Type – a GST categorization as specified by the GST authorities.

o GSTIN TDS – a unique GST identification number applicable to a particular Location in case an entity or

company is registered for TDS (Tax Deducted at Source).

o GSTIN ISD – a unique GST identification number applicable to a particular Location in case an entity or

company is registered for ISD (Internal Supply Distribution).

You must manually enter the required correct Location GST information into SAP Business One for GST to

function properly.

The Locations - Setup screen can be accessed by following the path Main Menu → Modules tab → Administration

→ Setup → Inventory → Locations → Accounting Data tab → GST tab in SAP Business One.

2.3 Business Partner Master Data

Different Business Partners (BPs) are dealt with differently under GST depending on their GST settings. One BP

may have several ship to addresses that will each need different GST information. A BP may not have any GST

information at all, depending on their classification.

The following fields on the Addresses tab of the Business Partner Master Data screen are important when GST is

being considered:

o State – as GST is based on state location, this is key to determining the correct GST treatment.

o GSTIN – a unique GST identification number applicable to a Ship to Address and provided by the GST

authorities. Consists of 15 characters.

o GST Type – a GST categorization as specified by the GST authorities.

o Merchant ID – to generate a BP identifier for E-Commerce selling purposes.

You must manually enter the required GST information into SAP Business One for GST and related reporting to

function properly.

In SAP Business One, the Business Partner Master Data screen can be accessed by following the path Main Menu

→ Modules tab → Business Partners → Business Partner Master Data. Both the Addresses tab and Accounting tab

→ Tax tab are found on the Business Partner Master Data screen.

The following field on the Accounting tab → Tax tab of the Business Partner Master Data screen is important when

GST and withholding tax are being considered:

o Subject to GST Withholding Tax – checkbox

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2.4 Item Master Data

Different Items are dealt with differently under GST depending on their GST settings. An item has to be marked as

GST relevant to consider it for GST treatment. An item can be classified differently under Material Type and Tax

Category leading to different GST treatment. The following fields on the Item Master Data screen General tab are

important when GST is being considered:

o GST – checkbox

o Material Type – options are Raw Material or Capital Goods.

o HSN – Harmonized System of Nomenclature, a unique product coding system. Very similar in nature to

Chapter ID that is used for Excise tax.

o Tax Category – options are Regular, Nil Rated or Exempt depending on how the tax authorities regard the

item, this selection drives GST treatment logic.

o Capital Goods On Hold Percentage

o Capital Goods On Hold Amount Limit

o Assessable Value

o SAC – (Service Accounting Code) only applicable to Service type items.

You must manually enter the required GST information into SAP Business One for GST and related reporting to

function properly.

In SAP Business One, the Item Master Data screen can be accessed by following the path Main Menu → Modules

Tab → Inventory → Item Master Data.

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2.5 Warehouses

If a Warehouse is set to be external, then it can be used in subcontracting scenarios. The following field on the

Warehouses - Setup screen General tab is important when GST is being considered:

o External – checkbox

The Warehouses - Setup screen can be accessed by following the path Main Menu → Modules tab →

Administration → Setup → Inventory → Warehouses → General tab in SAP Business One.

2.6 Tax Types

Specific Tax Types are available to handle GST. The following tax types on the Tax Types - Setup screen

specifically relate to GST:

o CGST

o IGST

o SGST

o CessGST

o SINCessGST

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By selecting the Attribute Values option for a particular Tax Type you can enter a value into the Reverse Charge %

field to determine how reverse charging is handled, especially in relation to A/P marketing document journal

entries.

In SAP Business One, the Tax Types - Setup screen can be accessed by following the path Main Menu → Modules

Tab → Administration → Setup → Financials → Tax → Tax Types.

The background formulas for calculating the different tax types are set as default values. These background

formulas can be changed through the Tax Formula - Setup screen.

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To access the Tax Formula - Setup screen follow the path Main Menu → Modules tab → Administration → Setup →

Financials → Tax → Tax Engine Configuration → Tax Formula).

2.7 Tax Code Determination

To manage GST, four Key Fields are available in the Tax Code Determination - Setup screen. Additional GST

related Key Field options are available for selection:

o UDF – User Defined Field

o State From

o State To

o BP Country

o Item Tax Category

o GST Type

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The Tax Code Determination - Setup screen can be accessed by following the path Main Menu → Modules tab →

Administration → Setup → Financials → Tax → Tax Code Determination.

2.8 Withholding Tax

This section represents withholding tax changes relevant for TDS (Tax deducted at source).

New dedicated withholding tax fields relevant for GST are planned for SAP Business One 9.2 PL08. Patch

deployment and delivery is subject to change.

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2.9 Document Numbering

For the purposes of GST, new subdocument types have been introduced for invoices and credit memos. For these

new subdocument types there is a different numbering series. The Document Numbering - Setup screen can be

used to view and amend these settings.

The document type Bill of Supply is unaffected by GST changes and remains in place for invoicing under

the previous tax regimes and Excise purposes.

The Document Numbering - Setup screen can be accessed by following the path Main Menu → Modules tab →

Administration → System Initialization → Document Numbering.

Sequence also reflects these GST attributes. The Sequence - Setup screen can be accessed by following the path

Main Menu → Modules tab → Administration → Setup → Financials → Tax → Sequence.

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3 Marketing Documents

To handle GST, there are options available in the marketing documents available in SAP Business One. These

options have been introduced as enhancements so as to comply with the requirements of GST.

3.1 A/R Invoices

A/R Invoices (follow path Main Menu → Modules tab → Sales - A/R → A/R Invoice) have various fields and options

to help specify the correct details for GST.

The field Transaction Type in the header section of an A/R Invoice has three different options to determine how

the A/R Invoice you are creating relates to GST:

o Bill of Supply – for invoices that are not affected by GST.

o GST Tax Invoice – for invoices affected by GST.

o GST Debit Memo – for adjusting GST Tax Invoices already created.

The field Place of Supply in the header section of an A/R Invoice has the states of India as options. Place of Supply

Determines which state the A/R Invoice contents are being shipped to and therefore how GST will be dealt with.

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The Tax tab of an A/R Invoice has several options to determine how the A/R Invoice you are creating relates to

GST:

o E-Commerce Operator – to choose a Business Partner when selling through an E-Commerce Portal.

o E-Commerce GSTN – to choose a GSTIN associated with an E-Commerce Operator.

o Revision – checkbox option stating that the A/R Invoice is a revision, reveals the following:

o Original Ref. No. – Reference number of the document that is being revised.

o Original Doc. Date – the date of the document that is being revised.

o Export – checkbox option determining that the A/R Invoice is for exports outside India.

o Bill of Export No. – provided by the authorities as an official document with standalone

numbering/identification.

o Bill of Export Date. – Date of document provided.

If a Transaction Type of GST Debit Memo is chosen for the A/R Invoice then an additional two fields will become

available when the Revision checkbox is selected:

o Original Debit No. – to enable the reporting of reference numbers of credited documents

o Original Debit Date

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The Contents tab of an A/R Invoice has a SAC field option for GST when the Item/Service Type is selected as

Service for a GST Tax Invoice. The SAC field value must be manually entered as unlike in Service Type Documents

the SAC information is not determined by Master Data.

3.2 A/R Credit Memos

A/R Credit Memos (follow path Main Menu → Modules tab → Sales - A/R → A/R Credit Memos) have fields and

options to help specify the correct details for GST, much like in A/R Invoices, but with important differences.

When selected, the checkbox Revision on the Tax tab of an A/R Credit Memo reveals four fields:

o Original Ref. No. – Reference number of the original invoice being credited.

o Original Doc. Date – reference date of the original invoice being credited.

o Original Credit No. – Reference to Credit Memo used for crediting invoice, in case this is a second Credit

Memo.

o Original Credit Date – date reference to Credit Memo used for crediting invoice, in case this is a second

Credit Memo.

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3.3 A/R Down Payment Requests

A/R Down Payment Requests (follow path Main Menu → Modules tab → Sales - A/R → A/R Down Payment

Requests) have the field Transaction ID on the Tax tab to specify the correct details for GST.

o Transaction ID – a unique ID provided by the authorities to identify a payment.

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3.4 Inventory Transfers

Inventory Transfers (follow path Main Menu → Modules tab → Inventory → Inventory Transactions → Inventory

Transfer) have the option Copy To in order to copy details to an A/R Tax Invoice.

This Inventory Transfer functionality enables the specific scenario of Self Supplies including Consignment

Scenarios and Job Work.

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4 GST Scenarios

The introduction of GST will have an effect on common, everyday business processes. Most of the process for

raising marketing documents or performing business transactions will remain the same but there will be

important changes resulting from GST. Different processes and marketing documents that are impacted by GST

are described in this section.

4.1 Sales Scenario for Goods/Services (Nil Rated & Regular)

The standard sales process involving Sales Quotation, Sales Order and Delivery remains the same as it was before

the introduction of GST. However, after the introduction of GST, there are important new mandatory steps at the

A/R Invoice stage of the sales process.

In order to generate an A/R Invoice (follow path Main Menu → Modules tab → Sales - A/R → A/R Invoice) for Nil

Rated and Regular items the standard operating procedure as before applies, but with some important

differences, following the introduction of GST.

• In the Transaction Type field of the A/R Invoice header you must choose GST Tax Invoice.

• In the Item No. or Item Description field you must choose a GST relevant item.

• In the Tax Code field you must choose a GST relevant Tax Code this makes sure the correct GST account is

credited.

4.2 Sales Scenario for Goods/Services (Comp. Levy, Exempt, Non GST)

In order to generate an A/R Invoice (follow path Main Menu → Modules tab → Sales - A/R → A/R Invoice) for

Comp. Levy, Exempt or Non GST items the standard operating procedure as before applies, but with some

important differences.

• In the Transaction Type field of the A/R Invoice header you must choose Bill of Supply

• In the Item No. or Item Description field you must choose a GST relevant item

• In the Tax Code field you must choose GST

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4.3 Sales Scenario for Goods/Services (Export)

In order to generate an A/R Invoice (follow path Main Menu → Modules tab → Sales - A/R → A/R Invoice) for items

for export, the standard operating procedure as before applies, but with some important differences.

• In the Transaction Type field of the A/R Invoice header you must choose GST Tax Invoice.


• In the Tax Code field you must choose a GST relevant so indicating a GST account

• There are two different options, choose which applies in the Duty Status field on the Tax tab:

o With Payment of Duty – GST will be posted.

o Without Payment of Duty – GST will not be posted.

• The Export checkbox on the Tax tab must be selected.

• You must populate the Bill of Export No. and Bill of Export Date fields.

4.4 Sales Scenario for Goods/Services (Advance Payment)

In order to generate an A/R Down Payment Request (follow path Main Menu → Modules tab → Sales - A/R → A/R

Down Payment Request), the standard operating procedure as before applies, but with some important

differences.

• Where relevant, GST will be applied to the document produced first in the process, either the A/R Down

Payment or the A/R Invoice.

• A Transaction ID is required on the A/R Down Payment Request.

There are two different options, define which applies in the Duty Status field on the Tax tab

4.5 Sales Scenario for Goods/Services (Reverse Charge)

In order to generate an A/R Invoice (follow path Main Menu → Modules tab → Sales - A/R → A/R Invoice) for a

reverse charge, the standard operating procedure as before applies.

• An A/R Invoice needs to be raised as a GST Tax Invoice

• The amount of GST payable is based on the reverse charge percentage, if the percentage is 100%, then no

GST would be payable.

• A single document may hold regular and reverse charge items or services.

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4.6 Sales Scenario for Debit Memos

Generate an A/R Invoice (follow path Main Menu → Modules tab → Sales - A/R → A/R Invoice) to create a debit

memo. Debit memos can correct a previously created A/R Invoice with a transaction type of GST Tax Invoice.

• In the Transaction Type field of the A/R Invoice header you must choose GST Debit Memo

• To be used to adjust GST Tax Invoices only

• GST Debit Memos can be created to adjust tax only or quantities value and tax

• The A/R Invoice can be created for:

o Tax only

o Quantity, value and tax

o Not available for without quantity, use DS WH

• You must enter the original GST Tax Invoice reference number and date

4.7 Sales Scenario for Credit Memo and Sales Return

Generate an A/R Credit Memo (follow path Main Menu → Modules tab → Sales - A/R → A/R Credit Memo) to

create a credit memo and sales return. Credit memos can correct a previously created A/R Invoice with a

transaction type of GST Tax Invoice.

• You must enter the original GST Tax Invoice reference number and date

• A Bill of Supply transaction type is to be used for all A/R Credit Memos that are not GST related

• An A/R Credit Memo can be revised, the original must referenced

• The A/R Credit Memo can be created for:

o Tax only

o Quantity, value and tax

o Without quantity

• The sales return is handled by the A/R Credit Memo

4.8 Sales Scenario for Revised Invoice

First cancel the original A/R Invoice (follow path Main Menu → Modules tab → Sales - A/R → A/R Invoice) that was

created with a transaction type of GST Tax Invoice. Then create a new A/R Invoice with the correct revised

attribute and reference to the original invoice.

• You must flag the new A/R Invoice as a revision

• This process should only be used when the GST Tax Invoice being corrected belongs to a previous period and

has been reported. Otherwise you can just cancel the invoice and create a new one.

• Enter the original GST Tax Invoice reference number and date of the invoice being revised

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4.9 Inventory Scenario for Self-Supplies (Incl. Consignment)

For inventory transfers made in the same state (intrastate) there is no GST impact so no change to the existing

process.

For inventory transfers made between two different states (interstate) an Inventory Transfer is needed first

(follow path Main Menu → Modules tab → Inventory → Inventory Transactions → Inventory Transfer) followed by

an A/R Invoice where the warehouse is the issuing party. The A/R Invoice can be created by selecting Copy To on

the relevant Inventory Transfer. Where the warehouse is the receiving party, an A/P Invoice can be created by

selecting Copy To on the relevant Inventory T r a n s f e r .

• Once the A/R Invoice has been copied to, you need to ensure it is a GST Tax Invoice

• A Business Partner for each interstate warehouse will be needed

4.10 Inventory Scenario for Job Work

In an inventory scenario for job work is where inventory is sent to another location for processing before being

returned to its original location.

Where the job work is taking place in the same state then an Inventory Transfer (follow path Main Menu →

Modules tab → Inventory → Inventory Transactions → Inventory Transfer) is made in the same state (intrastate). If

the raw material inventory is not returned within one year or three years for capital goods inventory, then an A/R

Invoice with a transaction type of GST Tax Invoice will be required.

Where the job work is taking place in a different state (interstate) then an Inventory Transfer (follow path Main

Menu → Modules tab → Inventory → Inventory Transactions → Inventory Transfer) is made between different

states. An A/R Invoice with a transaction type of GST Tax Invoice will be then be required. For the inventory

received back an A/P Invoice is then required.

4.11 Purchasing Scenario for Goods/Services (Invoice First - Normal Tax)

The standard purchasing process involving Purchase Request, Purchase Order, Goods Receipt Purchase Order

and Outgoing Payment remains the same as it was before the introduction of GST. However, after the introduction

of GST, there are important new mandatory steps at the A/P Invoice stage of the purchasing process.

In order to generate an A/P Invoice (follow path Main Menu → Modules tab → Purchasing - A/P → A/P Invoice), for

invoice first - normal tax scenarios, the standard operating procedure as before applies, but with some important

differences following the introduction of GST.

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• In the Transaction Type field of the A/P Invoice header you must choose GST Tax Invoice


• In the Tax Code field you must choose a GST relevant Tax Code, this makes sure the correct GST account is

credited

4.12 Purchasing Scenario for Goods/Services (Outgoing Payment First – Normal Tax)

In a purchasing scenario for goods and services where there is an outgoing payment first under normal tax there

will then need to be an A/P Invoice.

• When there is an A/P Down Payment, input tax credit cannot be accepted until the related goods or services

are received as well as the counter party tax invoice

• An A/P Down Payment cannot be used for making advance payments to customers (for goods and services)

as GST inputs will be posted on the A/P Down Payment Invoice or outgoing payment

4.13 Purchasing Scenario for Goods (Invoice First – Reverse Charge)

In a purchasing scenario for goods where there is an invoice first followed by a reverse charge, the reverse charge

can be for all or part of the original A/P Invoice.

• Reverse Charge has to be stated in the tax code of the A/P Invoice

• Time of supply is the earlier of payment or 30 days from the issue of A/P Invoice

4.14 Purchasing Scenario for Service (Invoice First – Reverse Charge

In a purchasing scenario where there is an invoice for services first followed by a reverse charge, there will first be

an A/P Invoice with an exempt tax code. If an outgoing payment is not completed within 60 days then there will be

an A/P Invoice for tax only - reverse charge followed by an Outgoing Payment.

• Tax liability is at the time of payment or 60 days from the issue of A/P Invoice

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4.15 Purchasing Scenario for Goods/Services (Outgoing Payment First – Reverse Charge)

In a purchasing scenario where there is an A/P Down Payment request followed by an A/P Invoice a reverse

charge can be for all or part of the original amount.

4.16 Purchasing Scenario for Goods/Services (Credit Note) and Return

There are two possible options for a purchasing scenario where there is a credit note and return.

1. When the Tax Code selected in the A/P Credit Memo is a Normal Tax Code

2. When the Tax Code selected in the A/P Credit Memo is a Reverse Charge, the GST will be determined

based on the percentage of the reverse charge

4.17 Purchasing Scenario for Goods/Services (Debit Note) and Supplementary Invoices

In a purchasing scenario where there is a debit note for goods or services and a supplementary invoices an A/P

Invoice will be required with the relevant GST amount.

4.18 Purchasing Scenario for Goods/Services (Revised Invoice, DR and CR Memo)

In a purchasing scenario where there is a canceled A/P Invoice or A/P Credit Memo, the revised A/P Invoice or

revised A/P Credit Memo must have the revised field selected and the original document reference number and

date provided.

• This scenario is only to be used when canceling a document for a period that was already r e p o r t e d .

• For a revision in the same reporting period, a simple cancellation and new invoice should be p r o c e s s e d .

• Canceled invoices within the same period are not reported.

4.19 Purchasing Scenario for the Import of Goods

In purchasing scenarios, the import of goods is supported through A/P Invoices with tax only or reverse charges.

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• The A/P Invoice will have a the BP as a Goods Vendor that is tax exempt

• An A/P Invoice for collecting and forwarding agent for only BCD and service will depend on the agent to pay

any BCD and GST

• An A/P Invoice for an item with IGST tax code, tax only can be created for GST input posted with C&F invoice.

The import checkbox on the A/P Invoice should only be selected for a GST input credit posting.

4.20 Purchasing Scenario for the Import of Services

In purchasing scenarios, the import of services is supported through A/P Invoices as tax only, reverse charge.

4.21 Purchasing Scenario for Withholding Tax (WHT) for TDS GST (A/P Invoice and DP)

In purchasing scenarios, direct or indirect Withholding Tax is supported for TDS GST on A/P Invoices and A/P

Down Payment Invoices.

• For A/P Invoices, TDS / TCS GST will only be applicable when a government department or notified company

is making a payment in excess of 100,000 INR, or an Ecommerce Operator is making a payment to a supplier

• A PO will be mandatory for TDS GST number

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