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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
US $16.5 billion - 140 companies - 190k Employees
Corporate Center

Automotive

Farm Equipment

Information Technology

Financial Services Sector

Systech

Partners Division

Real Estate

Hospitality

After Market

Two Wheeler

Defense

11 Business Sectors, 18 Industries


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
GST

S M Kulkarni Richard de Souza


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

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 Levied, collected & Retained by the Origin State , for first two
Tax would be levied on years only .
Interstate Supply of Goods only Adverse Impact on Purchase Costs & Selling Prices for
first two years .
M&M Present Indirect Tax (Excise/VAT) System in India

Imports
Foreign Export Foreign
V Custom Duty +
V1 0% ED/CST Customer
CVD+ SAD

CST

Inter-state M&M Local


Outside Transfer Depot Customer
V VAT Sales Sales
V2 ED+0% CST B B
(ED + 2% CST VAT
State
(Tax on Tax)
A Interstate
MFR Sales Local
(Goods ) 2% CST Dealer Customer
V CST Sales
C Form B B
Taxation VAT
Local
V3 Local Sales
ED + VAT Local
Local Sale Dealer Sales Customer
V VAT (Tax on Tax) VAT A A
VAT
M&M Proposed Indirect Tax (GST) System in India (C-GST & S-GST)
Imports
Outside Export Foreign Non Creditable 1%
V Custom Duty +
India V1 0% GST Customer Additional Tax on
( I GST) interstate Supplies
I GST
Inter-state
Supply of Local
M&M
Outside goods Depot Supply Customer
V GST Inter-state Supply State
V2 IGST B CGST + B
A
IGST (C+S-GST) SGST
MFR.
On Interstate
Supply supply
of Local
Goods & IGST Dealer Supply Customer
V I GST
Services (CST+SGST B CGST + B
) IGST
Local
V3
Local
Local Supply Supply Local
C&S (CGST + SGST) CGST + Dealer Supply Customer
V
GST SGST A CGST + A
SGST
GST Seamless Flow of Credits in a Supply Chain
20% GST = 10% C GST + 10% S GST ( Within the state Supply ) , 20% I GST = 10% CGST +
10% S GST (Interstate Supply + Imports )

Customer
State State Dealer State
State A
( IGST) B ( IGST) C ( I GST) State (GST) D
Vendor
MFR - 1 MFR - 2 D Consuming
1% State
Add 1% Addl. 1% Addl
Tax Tax Tax

1OO + 20 150 + 30 200 + 40 I 220 + 44 220 + 44


IGST IGST GST GST

Transfers of Credits to receiving states by Clearing House Finally , the


1% Non creditable Additional Tax on Interstate Supply of Goods State D gets the S
GST Revenue
GST & Exports

Vendor 1 Imports ( I GST)

Foreign
Exports
Vendor 2 Interstate Supply (I GST) Customer
Exporter Outside
0% GST India

Vendor 3 Local Supply (GST)

Grant of Cash Refund to such Exporter.


Cash flow , Blockage of Funds issues.
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 10.50

--------------------------------- 10% S GST --------------------------------- 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
Business Needs

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


Manufacturers/ Consumers
will download data from
the GSTN Portal.

Mahindras
Suppliers will upload their Sales Data
Tata Motors
Mico
Ashok Leyland
Lucas TVs
MRF Tyres
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 :
Manufacturers/ Consumers GST Value:
Suppliers will upload their Sales Data 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.
Manufacturers/ Consumers Material received not uploaded by
Suppliers will upload their Sales Data will download data from the supplier.
GSTN Portal Upload the exceptions on to the GSTN
Portal. (Unregistered Suppliers)
Features by SAP

Discrepant Invoices Value Mismatch


Missing in GSTN
Missing in ERP
Facility to trigger an Email to the
supplier

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

Manufacturers/ Consumers Compute power of Hana will ease


Suppliers will upload their Sales Data will download data from the transactions at both ends.
GSTN Portal
Lets watch the Demo