Topic: Vendor Credit Reconciliation

The business need and the solution proposal

Richard de Souza

Vice President & Head Business

Solutions Corporate IT - Mahindra & Mahindra

Ltd.

S. M. Kulkarni

Vice President - Corporate Sales Tax

Mahindra & Mahindra Limited

Automotive

Corporate Center

Farm Equipment

Information Technology

Financial Services Sector

Systech

Partners Division

Real Estate

After Market

Hospitality

Two Wheeler

Defense

11 Business Sectors, 18 Industries

US $16.5 billion - 140 companies - 190k Employees

Topic: Vendor Credit Reconciliation

The business need and the solution proposal

Richard de Souza

Vice President & Head Business

Solutions Corporate IT - Mahindra & Mahindra

Ltd.

S. M. Kulkarni

Vice President - Corporate Sales Tax

Mahindra & Mahindra Limited

S M Kulkarni Richard de Souza

GST

Dual GST Levy :

Integrated GST ( I-GST) on Imports & Interstate Supply of Goods & Services :

To be levied by the Central Govt. .

IGST = C GST + S GST

Paid in the state of Origin and passed on to Destination State

through Clearing House Mechanism .

1% Non Creditable Additional

Tax would be levied on

Interstate Supply of Goods only

Levied, collected & Retained by the Origin State , for first two

years only .

Adverse Impact on Purchase Costs & Selling Prices for

first two years .

Within the state Supply of Goods & Services : GST = CGST + S GST

Structure of GST

V Foreign

V1

Imports

Custom Duty +

CVD+ SAD

M&M

State

A

MFR

(Goods )

Taxation

Export

0% ED/CST

Foreign

Customer

CST

V VAT Outside

V2

Inter-state

Sales

(ED + 2% CST

(Tax on Tax)

Transfer

ED+0% CST

Depot

B

Local

Sales

VAT

Customer

B

Interstate

Sales

2% CST C Form

V CST

Local

V3

Dealer

B

Local

Sales

VAT

Customer

B

Local Sales

ED + VAT

(Tax on Tax) Local Sale

VAT

Dealer

A

Local

Sales

VAT

Customer

A V VAT

M&M Present Indirect Tax (Excise/VAT) System in India

V Outside

India V1

Imports

Custom Duty +

( I GST)

M&M

State

A

MFR.

On

Supply

of

Goods &

Services

Export

0% GST

Foreign

Customer

I GST Inter-state

Supply of

goods

IGST V GST

Outside

V2 Inter-state Supply

IGST (C+S-GST)

Depot

B

Local

Supply

CGST +

SGST

Customer

B

Interstate

supply

IGST

(CST+SGST

)

V I GST

Local

V3

Dealer

B

Local

Supply

CGST +

IGST

Customer

B

Local Supply

(CGST + SGST)

Local

Supply

CGST +

SGST V

C&S

GST

Dealer

A

Local

Supply

CGST +

SGST

Customer

A

Non Creditable 1% Additional Tax on interstate Supplies

M&M Proposed Indirect Tax (GST) System in India (C-GST & S-GST)

State A

Vendor ( IGST)

State

B

MFR - 1

( IGST)

State

C

MFR - 2

( I GST)

Dealer

State D

(GST)

Customer

State

D

Consuming

State

1OO + 20 IGST

150 + 30 IGST

200 + 40 I GST

220 + 44 GST

220 + 44

20% GST = 10% C GST + 10% S GST ( Within the state Supply ) , 20% I GST = 10% CGST + 10% S GST (Interstate Supply + Imports )

Finally , the State D gets the S GST Revenue

Transfers of Credits to receiving states by Clearing House 1% Non creditable Additional Tax on Interstate Supply of Goods

1% Add Tax

1% Addl. Tax

1% Addl Tax

GST Seamless Flow of Credits in a Supply Chain

Vendor 1 Imports ( I GST)

Exporter

Foreign

Customer

Outside

India

Vendor 2 Interstate Supply (I GST) Exports

0% GST

Vendor 3 Local Supply (GST)

Grant of Cash Refund to such Exporter.

Cash flow , Blockage of Funds issues.

GST & Exports

GST Tax Invoice Invoice No. (Serially Numbered)

Date 01 04 2016

Name (Local Buyer) : Mahindra & Mahindra Ltd.

Address : Kandivli (East), Mumbai

GST TIN (Tax Payer Identification Number of both Seller & Buyer)

Sale of Goods ( Auto Parts ) Rs.

Net Supply Price. 100.00

Freight . 05.00

20% GST Net Taxable T.O. .. 105.00

10% C GST

--------------------------------- 10% S GST ---------------------------------

10.50

10.50

Total -------------

126.00

Specific Requirements as per the State C S GST Acts.

Like Certificate, Time of sale, Name & Address of Printer etc.

Authorized Signatory

GSTN system auto drafts purchase statement for tax payer based on sales invoice details uploaded by the seller Tax payer accepts/reject/modifies auto drafted purchase invoice details Adds valid purchase invoice details not reported by sellers

Business Needs

Suppliers will upload their Sales Data Mico Lucas TVs MRF Tyres

Manufacturers/ Consumers will download data from the GSTN Portal. Mahindras Tata Motors Ashok Leyland

Suppliers will upload their Sales Data Manufacturers/ Consumers will download data from the

GSTN Portal

Suppliers will upload their Sales Data which will contain the following

information

Sellers GSTIN - Buyers GSTIN

Sellers Invoice No: Invoice Date: Business Place: Product Category: HSN/SAC Code Gross Value : GST Value:

Suppliers will upload their Sales Data Manufacturers/ Consumers will download data from the

GSTN Portal

Buyers will download the data from the GSTN Portal

Match the same with the receipt data in their systems.

Identify exceptions Invoice in GSTN not in ERP

Goods in Transit Value Mismatch Material not Received

Identify exceptions Invoice in ERP not in

GSTN. Material received not uploaded by

supplier. Upload the exceptions on to the GSTN

Portal. (Unregistered Suppliers)

Suppliers will upload their Sales Data Manufacturers/ Consumers will download data from the

PSTN Portal

Features by SAP

Discrepant Invoices Value Mismatch

Missing in GSTN

Missing in ERP

Facility to trigger an Email to the supplier

Suppliers will upload their Sales Data Manufacturers/ Consumers will download data from the

GSTN Portal

Assumptions

GSTN Authorities will provide

Standard API will be provided for

upload download of data, between

ERP & GSTN Portal

System will be capable to manage the

humongous volumes

Compute power of Hana will ease

transactions at both ends.

Lets watch the Demo