New Tax system in India (GST Implementation) and SAP system preparation for India

The Indian taxation system is one of the most complex in the world with several levels of taxes having different components and rates. The Indian government is trying to simplify or reduce the complexity of this existing system and bring the GST into place. GST is a goods and services tax which will be implemented in India with multiple levels such as CGST (Central GST), SGST (State GST), etc., which will replace the existing excise tax, service tax, VAT, and CST, etc.

This change of tax system will also be a big change for commercial organizations and the software systems they use for business transactions. Companies using SAP will also have to update or change their systems according to the new legal requirements in India.

SAP, as the leading ERP provider including a good country version package for India can be expected to come up with the necessary SAP notes for the tax change and the related processes. In addition to these SAP notes, users might also require additional customizing according to their business processes. But even with such SAP notes and customizing the companies involved must apply the latest tax procedure for the company codes based in India. This means the Indian companies using SAP and the old tax procedure TAXINJ should migrate from the old tax procedure to the new procedure TAXINN.

This change of tax system in India does not yet have a precise changeover plan but is expected to be implemented in calendar year 2016 or at the latest by April 2017. Because there is no fixed time schedule prescribed by the government, this is the right time to switch from TAXINJ to TAXINN.

This migration to TAXINN involves changes in FI tax procedure as well as in the sales and purchase pricing. Therefore, we recommend starting the migration as soon as possible to enable the switch in without any delay – on time and with a proper and 100% compliant SAP solution.

Even if GST is not implemented in 2016 it still is a good idea to change the tax procedure for Indian companies using SAP to TAXINN. The reason is that the new procedure and customizing changes will enable easy handling of transactions with tax conditions and makes changing or adding new taxes or tax rates very simple. The migration is therefore recommended in any case, in order to optimize handling in Indian company codes.

Read authenticated and latest matter about GST in India via following links:

GST India
GSTN- Goods and Service Tax Network
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