Trading Process Setup in NAV 2016

Trading is a process where business buy a specialized range of products, maintain a stock and deliver products to customer. Importers or wholesalers maintain a stock and deliver products to shops or large end customers. They work in a large geographical area, while their customers, the shops, work in smaller areas and often in just a small neighbourhood.

First Stage Dealer (FSD) means “a dealer who purchases the goods directly from manufacturer or importer under the cover of an invoice”.

Second Stage Dealer (SSD) means “a dealer who purchases the goods from a First Stage Dealer”.

Steps to follow for updation of entries in "RG 23 D" register (Trading Process):

"Trading Co." field in Company Information window should be checked or it should be updated on the "Trading" field on location card. The option is available on the "Tax Information" tab of both tables. If only one location is engaged in trading activities, then it is suggested to check mark on "Trading" field in location card. "E.C.C. No." of the location should also be updated on the location card or Company information card. 

When user enters the "Purchase" transaction, he should check the followings :
a) Structure should contain "Excise"
b) Trading location should be selected in "Purchase Order" 
c) When user select the correct location code which is marked as "Trading", the system automatically update the field "Trading" available at the "Tax Information" tab of purchase Order.

d) User should check the statistic before posting the Purchase Invoice. He should check whether "Excise amount" is properly reflecting on the statistic.

After checking above options, he should post the purchase Invoice. When user post the Trading Purchase Invoice, he should navigate the "Posted Purchase Invoice" and would find that entry is updated in "RG 23 D" table.

The table "RG 23 D" contains the following information related to Purchase transactions:

1. Posting Date : The field shows the information when transaction was posted

2.  Document No. : Posted document no. of Purchase Invoice.


The document no. setup for trading location is updated in "Purchase & Payable Setup". The fields available related to trading location in "Purchase & Payable Setup" are as follows :

         a) Posted Invoice No. (Trading)

         b) Posted Ret Shpt Nos. (Trading)

         c) Posted Purch. Rcpt. (Trading)

         d) Posted Purch. Cr. Memo (Trading)

3. Item No. : Item code of the transaction 

4. Transaction  Type: Whether transaction is Purchase or Sale

5. Location Code : Trading Location code

6. Source Type : Vendor or Customer

7. Quantity : Total Quantity in the Trading Purchase Invoice for that item

8. Amount : Total Excise amount

9.  Source Code : Vendor or Customer code

10. Excise Amount per Unit : It is the Excise amount per unit (Amount/Quantity)

11. Bed Amount Per Unit : It is the Bed amount per unit (BEd Amount/Quantity) 

12. Ecess Amount Per Unit : It is the Ecess Amount per unit(Ecess Amount/Quantity)

13. She Cess Amount Per Unit : It is the She Cess Amount Per Unit (She Cess Amount/Quantity)

14. Excise Base Amount Per unit : It is the total Excise base amount per unit on which excise amount is calculated (Excise Base Amount/Quantity)

15. Remaining Quantity : It shows the information about the quantity available on which user can take credit.

16. Order No. : Purchase Order number.

17. Vendor Invoice No : It shows the information regarding Vendor Invoice number.

18. Line Amount Per Unit : It shows the per unit cost of the line (Line Amount / Quantity)

When user enters the "Sales" transaction, he should check the followings :

a) Structure should contain "Excise"

b) Trading location should be selected in "Sales Order" 

c) When user select the correct location code which is marked as "Trading" , the system automatically update the field "Trading" available at the "Tax Information" tab of sales Order.

d) User should check the statistic before posting the Sales Invoice. He should check whether "Excise amount" is properly reflecting on the statistic.

e) User should remember that the excise amount would be copied from the purchase transaction. Also remember that the Excise Amount per unit cost of Purchase transaction would be multiply with quantity of sales order. 

After checking above options, he should post the Sales Invoice. When user post the Trading Sales Invoice, he should navigate the "Posted Sales Invoice" and would find that entry is updated in "RG 23 D" table.

Excise Duty pass on flow for trading business :

As for the trading business, the distributor have to pass the excise duty amount to the customer , if the same material we are purchasing from the manufacturer at different cost and every time we are paying different excise duty amount for the same material then how to map this amount material relationship when we are selling the material, please check the below example

Purchase Material "A": Basic amount 100, Excise Amount: 8

Sale Material  "A": Basic amount 1200, Excise Amount Pass : 8

Second Scenario:

Purchase Material "B': Basic amount 150, Excise Amount : 12

Sale Material "B" : Basic amount 18000, Excise Amount Pass : 12

(We need to remember that we cannot pass more excise in Sale even if sale amount is on the higher side. We can pass only that amount which we have received in Purchase. Excise per unit cost plays a important role as it calculates the excise amount during sales transaction) 

Third Scenario :

"B" is a dealer and purchase materials from its principal A by paying Base amount (say Rs 100 ) & Excise duty (say BED 12%, Ecess 2% & SEcess 1%), comes to Rs 115 and applicable VAT (say 5% ) on it . Thus landed value comes to Rs 120.75. Again "B" sells this material to a manufacturer C for a base amount (say Rs 125) and pass on the excise value he paid to A (Rs 15,ie Rs 125 + 15 =140) and applicable VAT (say 5%) on it. Thus landed value comes to (Rs 140 + Rs 7 =147).

"B" can pass on the credit provided B is registered as First Stage Dealer with Central Excise Department. "B" can sell the good at ₹ 110/- but he can pass on as credit only ₹ 2, being the duty paid by the manufacturer. B cannot pass of duty @2% of 110 as received the excise amount of Rs. 2 during purchase transaction.

The table "RG 23 D" contains the following information related to Sales transactions:

1. Posting Date : The field shows the information when the Sales transaction was posted

2. Document No. : Posted document no. of Sales Invoice.


The document no. setup for trading location is updated in "Sales & Receivable Setup". The fields available related to trading location in "Sales & Receivable Setup" are as follows :

a) Posted Invoice No. (Trading)
b) Posted Ret Rcpt Nos. (Trading)
c) Posted Sales Shpt. (Trading)
d) Posted Sales Cr. Memo (Trading)


3. Item No. : Item code of the transaction

4. Transaction Type: Sale

5. Location Code : Trading Location code

6. Source Type : Customer

7. Quantity : Total Quantity in the Trading Sales Invoice for that item

8. Amount : Total Excise amount

9. Source Code : Customer code

10. Excise Amount per Unit : It is the Excise amount per unit (Amount/Quantity)

11. Bed Amount Per Unit : It is the Bed amount per unit (BEd Amount/Quantity)

12. Ecess Amount Per Unit : It is the Ecess Amount per unit(Ecess Amount/Quantity)

13. She Cess Amount Per Unit : It is the She Cess Amount Per Unit (She Cess Amount/Quantity)

14. Excise Base Amount Per unit : It is the total Excise base amount per unit on which excise amount is calculated (Excise Base Amount/Quantity) during purchase transaction

15. Remaining Quantity : It shows the information about the quantity available on which user can take credit. User need to check the related Purchase Line.

16. Order No. : Sales Order number.

17. Vendor Invoice No : It shows the information regarding Vendor Invoice number through which sales transaction is linked.

18. Line Amount Per Unit : It shows the per unit cost of the line (Line Amount / Quantity). User need to check the related Purchase Linked through which Sales transaction is linked

Note: User need to understand that during posting of Sales Invoice, it checks the remaining quantity in "RG 23 D", if quantity is not available, it will show the error "Item X is short by "Y" quantity in RG 23 D. Please adjust the quantity to proceed.". As mentioned that trading invoice can be made for those quantity quantity which user has purchased for trading and updated in "RG 23 D" table.

Steps Related to Transfer process for Trading 

In order to receive material from other location to Trading location or send material from Trading location, user has to do the process in the same manner as he receives material for other normal transfer order. 

In order to send the material at Trading location, following steps need to follow (as mentioned above that it is default transfer process ):

1) Open the Transfer Order (Department --Purchase--Plannings --Transfer Order) and update the following information :

 a) Transfer-from Code :  Enter the Location code from where the material is being transferred

 b) Transfer-to Code : Enter the Trading Location code where the material is to be received

 c) In-Transit Code: Enter "In-Transit Code"

 d) Structure : User must select the correct "Excise" structure so that Excise be updated in the table "RG 23 D" table

 e) User should check whether "Excise Amount" is updated on the line section

 f) Enter the "Vendor Invoice No." 

 g) Item Code: Update Item Code

 h) Quantity : Update quantity

 i) Transfer Price: Update the price.

After updating above information, click on "Post--Ship" option and post the transaction. The entry will update in "In Transit Location". Users has to  click on "Post--Receive" option to receive the material in "Trading" location. 

When user RECEIVE the item related to Trading through "Transfer Order", the followings information updated in the "RG 23 D" table :

1. Posting Date : The field shows the information when the "Transfer Order"  was posted

2. Document No. : Posted document no. of Transfer Order.

3. Item No. : Item code of the transaction

4. Transaction Type: The system will update the "Purchase" for transfer related entries.

5. Location Code : Trading Location code

6. Source Type : It would be blank for transfer related entries.

7. Quantity : Total Quantity in the Transfer Order received for that item

8. Amount : Total Excise amount

9. Source Code : It would be blank for transfer related entries.

10. Excise Amount per Unit : It is the Excise amount per unit (Amount/Quantity)

11. Bed Amount Per Unit : It is the Bed amount per unit (BEd Amount/Quantity)

12. Ecess Amount Per Unit : It is the Ecess Amount per unit(Ecess Amount/Quantity)

13. She Cess Amount Per Unit : It is the She Cess Amount Per Unit (She Cess Amount/Quantity)

14. Excise Base Amount Per unit : It is the total Excise base amount per unit on which excise amount is calculated (Excise Base Amount/Quantity) 

15. Remaining Quantity : It shows the information about the quantity available on which user can take credit.

16. Order No. : Transfer Order number.

17. Vendor Invoice No : It shows the information regarding  Invoice number

18. Line Amount Per Unit : It shows the per unit cost of the line (Line Amount / Quantity). 

In order to send the material from Trading location, following steps need to follow :

1) Open the Transfer Order (Department --Purchase--Plannings --Transfer Order) and update the following information :

 a) Transfer-from Code :  Enter the Trading Location code from where the material is being transferred

 b) Transfer-to Code : Enter the Location code where the material is to be transferred

 c) In-Transit Code: Enter "In-Transit Code"

 d) Structure : User must select the correct "Excise" structure so that Excise be updated in the table "RG 23 D" table
 e) Applies to Entry (Ship) : It needs to be selected to transfer the material from the Transfer Location.
f) Applies to Entry (RG 23 D): After updating the information "Applies to Entry(Ship)", user should update this field.

 e) User should check whether "Excise Amount" is updated on the line section by clicking on the "Calculate Structure Value" available at the top of the screen.

 f) Enter the "Vendor Invoice No." 

 g) Item Code: Update Item Code

 h) Quantity : Update quantity

 i) Transfer Price: Update the price.

After updating above information, click on "Post--Ship" option and post the transaction. The entry will update in "In Transit Location". Users has to  click on "Post--Receive" option to receive the material.

When user RECEIVE the item related to Trading through "Transfer Order", the followings information updated in the "RG 23 D" table :

1. Posting Date : The field shows the information when the "Transfer Order"  was posted

2. Document No. : Posted document no. of Transfer Order.

3. Item No. : Item code of the transaction

4. Transaction Type: The system will update the "Sale" for transfer related entries.

5. Location Code : Trading Location code

6. Source Type : It would be "Item" for transfer related entries.

7. Quantity : Total Quantity in the Transfer Order received for that item

8. Amount : Total Excise amount

9. Source Code : It would be "Item No." for transfer related entries when we transfer the items from trading locatiom.

10. Excise Amount per Unit : It is the Excise amount per unit (Amount/Quantity)

11. Bed Amount Per Unit : It is the Bed amount per unit (BEd Amount/Quantity)

12. Ecess Amount Per Unit : It is the Ecess Amount per unit(Ecess Amount/Quantity)

13. She Cess Amount Per Unit : It is the She Cess Amount Per Unit (She Cess Amount/Quantity)

14. Excise Base Amount Per unit : It is the total Excise base amount per unit on which excise amount is calculated (Excise Base Amount/Quantity) 

15. Remaining Quantity : It shows the information about the quantity available on which user can take credit.

16. Order No. : Transfer Order number.

17. Vendor Invoice No : It shows the information regarding  Invoice number

18. Line Amount Per Unit : It shows the per unit cost of the line (Line Amount / Quantity).

Setup related to Trading Process :

User needs to update the "General Posting Setup". The following fields need to be updated for Trading process :

a) Sales Account (Trading)

b) Sales Cr. Memo Acc (Trading)

c) Purchase Account (Trading)

d) Purchase Cr. Memo Acc (Trading)

For opening of "RG 23 D", we need to post the purchase transaction on dates before go live. Nullify the impact of the G/L but don't do anything with the ILE and RG23 D.  

Other information related to Trading Process :

• Central Excise Dealers, who purchases excisable goods from manufacturers or first stage dealers and further transfers CENVAT Credit (earlier known as MODVAT), are required to maintain RG23D register as per Central Excise rules.
• Dealers are required to disclose all the purchases and sales transactions in the register even though no CENVAT Credit is passed on to end buyers.

Circular No. 96/7/1995-CX of Central Excise dated 13/2/1995 has clarified this problem long ago:

There are 3 situations as per this Circular:

When whole credit is to be passed on to buyer:

(a) Whenever a registered person receives a consignment under Rule 52A invoice or 57G invoice and in respect of the same he propose to issue either one or more modvatable invoices, he shall keep complete account of each such consignment and all transactions relating there to in RG 23 D register.

For example, if dealer X buys excisable goods from Y with CENVAT of Rs. 100/- and the whole lot of goods is further sold to Z then X shall include these both transactions (i.e. purchase from Y on receipt side, sale to Z on issue side) in the RG23D register.

When partly credit is to be passed on to buyer:

(b) In respect of any consignment part of which is sold under a modvatable invoice and the other part under the cover of non-modvatable invoice, then the details of sales under non- Modvatable invoices have also to be entered in the prescribed register RG 23D. The non- modvatable invoices are not required to be issued in the prescribed proforma.

For example, if dealer X buys excisable goods from Y with CENVAT of Rs. 100/- but only 40% of such goods is further sold to Z with 40% (i.e. 40/-) of excise credit transfer and rest 60% is sold to A through commercial invoice without transfer of balance 60% (i.e. 60/-) credit even though X shall include these all 3 transactions (i.e. purchase from Y on receipt side, sale to Z & A on issue side) in the RG23D register.

When no credit is to be passed on to buyer:

(c) A registered person need not enter into RG 23D register details of those consignment received under Rule 52A invoice or 57G invoice for which he does not propose to issue modvatable invoices.

For example, if dealer X buys excisable goods from Y with CENVAT of Rs. 100/- and sales all goods to A through commercial invoice without transfer of any credit then X shall not include any of these transactions (i.e. purchase from Y and sale to A) in the RG23D register.

Simply speaking, if the credit is not required to be passed on to the buyer then first/second stage dealer is not required to enter details of such excisable invoices in RG23. However, if even some part of credit needs to be issued to buyer then whole excisable invoice details shall be entered and on the issue side both first stage dealer invoice (issued for transfer of partly credit) and commercial invoice (for sale of goods without transfer of excise credit) needs to be entered.

If user does not want to take trade excise credit, he can de-select the option "Trading" from the "Tax Information" from header.

Basic Accounting Concepts

The transactions of any business are divided into three parts. They are:

• Transactions related to Things
• Transactions related to Persons
• Transaction related to Income & Expenditures

 In accountancy, we have three types of accounts i.e.  Real, Personal & Nominal

Real Accounts (Transactions related to Things) : It includes "real things" in the business e.g. assets. Category of transactions related to Real accounts ex: Items, buildings, machinery, cash etc.

In real accounts any increment in assets held by the entity is reflected by debiting (increasing) the relevant asset account and depletion by crediting (decreasing) the asset account.

If any asset account is debited then it is on account of increment in the value of the asset. The acquisition of that asset is matched by a liability (e.g. promise of payment) or owner's equity (e.g. cash) which decreases the resources held by the entity.

RULE: Debit what comes in and credit what goes out.

Personal Accounts(Transactions related to Person): Personal accounts refers to all the transactions related to natural persons, artificial  persons  and  representative  persons  ex:- rama, ravi, andhra bank, outstanding rent. 

RULE : Debit the receiver and credit the giver.

Nominal Account (Transaction related to Income & Expenditures) : Nominal accounts includes all the transactions related to expenditures, incomes, losses and profits . ex:- rent paid, rent received, bad debts, profit on sale of an asset.

RULE: Debit all expenses and losses and credit all incomes and profits.

Sales comes in Credit Side

When untrained people attempt their own bookkeeping, it's usually the Debits and Credits that mess them up. It's called double-entry bookkeeping for a reason. When a transaction occurs, at least two accounts must be involved.

The general idea is to consider each transaction (or entry) as amounts that will either increase or decrease specific accounts, i.e your bank, revenue and expense,. First things first, create a list of accounts you will need, known in accounting as the Chart of Accounts. Depending on the type of account, an increase can be a debit or a credit. This is where it gets tricky.

HINT: an entry can have two increases, two decreases or an increase and a decrease, as long as the debits and credits equal in value, the transaction will balance.

And finally, don't try and compare the debits and credits with what is showing on your bank statement, which will definitely confuse the issue, because when you put money in the bank, the bank statement will show this as a credit, whereas in your books, this increase to the bank is actually a debit. Just try and remember the bank is always the opposite.

Typical Types Of Business Transactions and the Debits and Credits and Accounts Used To Record Them 

In a typical business transaction we get something and we give up something.

Sale  -Sell goods and/or services

Cash Sale -customer pays at the time of sale The business gets cash or a cheque from their customer and gives up a product or service to their customer. Accounts Used: Debit: Cash    Credit: Sales On Account Sale-business allows the customer time to pay The business gets a promise to pay from their customer and gives up a product or service to their customer.  Accounts Used: Debit: Accounts Receivable    Credit: Sales Purchase goods and/or services Cash Purchase -business pays the supplier at the time of purchase The business gets a product or service from their supplier and gives up cash or a cheque to their supplier. Accounts Used: Debit: Expense or Inventory Account    Credit: Cash On Account Purchase-supplier allows the business time to pay The business gets a product or service from a supplier and gives up a promise to pay to their supplier.            Accounts Used:           Debit: Expense or Inventory Account              Credit: Accounts Payable Pay Supplier Charge Purchases -pay suppliers for products and/or services that we promised to pay for later (charge).          Accounts Used:         Debit: Accounts Payable            Credit: Cash Receive Customer Charge Payments -Receive payments from a customer that promised to pay us later (charge sale). The business gets cash or a cheque from their customer and gives up (reduces the amount of) their customer's promise to pay.           Accounts Used:          Debit: Cash             Credit: Accounts Receivable Borrow Money (Loans) The business gets cash or equipment and gives up a promise to pay.           Accounts Used:          Debit: Cash or Equipment             Credit: Note Payable Repay a Loan : The business gets the amount of their promise to pay reduced and gives up cash or a check.          Accounts Used:         Debit: Note Payable            Credit: Cash Draw : The business gets the owner's claim to the business assets reduced and gives up cash or a check.           Accounts Used:          Debit: Owner's Draw             Credit: Cash Payroll : The business gets services from their employees and gives up a check.           Accounts Used:           Debit: Salary & Wages Expense             Credit: Cash

General ledgers

General Ledger is the term for the comprehensive collection of T-accounts (so called because there was a pre-printed vertical line in the middle of each ledger page and a horizontal line at the top of each ledger page, like a large letter T). Before the advent of computerised accounting, manual accounting procedure used a book (known as a ledger) for each T-account. The collection of all these books was called the general ledger.

"Day Books" or journals are used to list every single transaction that took place during the day, and the list is totalled at the end of the day. These daybooks are not part of the double entry book keeping system. The information recorded in these daybooks are then transferred to the general ledgers. Modern computer software now allows for the instant update of each ledger account – for example, when recording a cash receipt in a cash receipts journal a debit is posted to a cash ledger account with a corresponding credit in the ledger account for which the cash was received. Not every single transaction need be entered into a T-account. Usually only the sum of the daybook transactions (a batch total) for the day is entered in the general ledger.


The Five Accounting Elements

There are five fundamental elements within accounting. These elements are as follows: Assets, Liabilities, Equity, Income and Expense. Income is also called Revenue. The five accounting elements are all affected in either a positive or negative way. It is important to note that a credit transaction does not always dictate a positive value or increase in a transactions and similarly, a debit does not always indicate a negative value or decrease in a transaction. An Asset account is often referred to as a "debit account" due to the account's standard increasing attribute on the debit side. When an asset (e.g. an espresso machine) has been acquired in a business, the transaction will affect the debit side of that asset account illustrated below:

Asset
Debits (Dr)	Credits (Cr)
X               |

The "X" in the debit column denotes the increasing effect of a transaction on the asset account balance (total debits less total credits), because a debit to an asset account is an increase. The asset account above has been added to by a debit value X, i.e. the balance has increased by Rs. X or Rs. X. Likewise, in the liability account below, the X in the credit column denotes the increasing effect on the liability account balance (total credits less total debits), because a credit to a liability account is an increase.


All "mini-ledgers" in this section show standard increasing attributes for the five elements of accounting.

Liability
Debits (Dr)	Credits (Cr)
	| X

Expenses
Debits (Dr)	Credits (Cr)
X              |

Equity
Debits (Dr)	Credits (Cr)
|	X

Summary table of standard increasing and decreasing attributes for the five accounting elements:

ACCOUNT TYPE	DEBIT	CREDIT
Asset	+	−
Liability	−	+
Income	−	+
Expense	+	−
Equity	−	+

GST - NAV 2016

What is GST ?

Goods and Services Tax(GST) is an Indirect Tax imposed on supply of goods and services or both. We need to remember that it is a destination or consumption based tax which is payable in the state in which the goods or services are consumed.

Link to download the GST patch for Dynamics NAV  2016 : Download Dynamics NAV 2016 GST Patch 

(The GST Patch for NAV 2016 comes under "Cumulative Update 17 for Microsoft Dynamics NAV 2016")

Features of  GST:

• Goods and Service Tax (GST) is an indirect tax levied on supply of goods or services or both.
• It is a destination/consumption based tax levy which is payable in the state in which the goods and services are consumed.
• It is levied and collected on value addition at each stage of production or distribution process (all points in supply chain). 
• The supplier can avail credit on input tax credit paid on procurement of goods or services.

Components of GST :

1. Central GST (CGST) : It is imposed by Centre on Intra-State supply of goods and services. It means that those transactions which happen within state are liable for Central GST(CGST)

2. State GST (SGST) : It is imposed by State on Intra-State supply of goods and services. It means that those transactions which happen within state are liable for State GST(SGST)

3. Integrated GST(IGST) : It is imposed by Centre on Inter-State supply of goods and services. It means those transactions which happen out of state are liable for Integrated GST(IGST)

GST Registration Number : We have to remember that Registration number under GST is called Goods and Service Tax Payer Identification Number(GSTIN). It is alpha numeric number and state wise PAN based 15 digit number. The first two digits represent State Code.

Followings are the GST codes of States :

The user needs to update the GST State code in the table "State". The field name is "State Code (GST Reg. No.)"

Structural detail of GST Code is given below :

The GST Registration Number is required to be defined in the following tables:

1. Company Information
2. Vendor
3. Customer
4. Location

1.  Company Information : In the Company Information card, user will find a new field "GST Registration No." under the section "Tax Information". User needs to fill the "GST Registration No." of the Company given by the  Government.

2.  Vendor Card : The following information needs to be updated on the Vendor card. User will find following three new fields on the vendor card under the section "Tax Information" :

a) GST Registration No. : User needs to update the GST Registration No. of the Vendor which is given by the Government. System will check the registration number as per the format of GSTIN

b) GST Vendor Type : User needs to select correct vendor type from the available list. The option available are "Registered","Unregistered", "Composite","Import", "Exempt"

c) Associated Enterprises : It is used related to Import purpose. If we are doing any import transaction from any sister concern which is located outside the country.

3.  Customer Card :The following information needs to be updated on the Customer card. User will find following three new fields on the Customer card under the section "Tax Information"

a) GST Customer Type ; The option available are "Registered", "Unregistered", "Export", "Deemed Export", "Exempted". User needs to select correct option

b) GST Registration Type :  The option available are "GSTIN", "UID" & "GID".  Please be noted that most of the customer for any manufacturing organisation would fall under "GSTIN" category. "UID" is related to Union bodies who are seeking to claim refund is required to obtain Unique Identification Number(UID). "GID" is allocated to Government Authorities/PSU.

c) GST Registration No. : User needs to update the GST Registration No. of the Customer which is given by the Government. System will check the registration number as per the format of GSTIN, UID or GID

d) e- commerce Operator : User needs to select this field, if sales are done through an e-commerce operator 

4. Location Card: In the Location  card, user will find a new field "GST Registration No." under the section "Tax Information". User needs to fill the "GST Registration No." of the location given by the  Government.

Validation is provided in Navision so that user should update valid registration number. As mentioned above that first two digit of registration number contains state code and system checks the state code with the code defined in the table "State". For example if Vendor exists in Delhi then the first two digits of Vendor's GST registration number should be of that state code i.e Delhi. As mentionled earlier that GST Registration Number is of 15 digit number.

Place of Supply : Place of supply plays a crucial role in GST. It is the place where services are supposed to be provided or goods are deemed to be sold as per GST law. Place of supply is crucial in determining whether the transaction is intrastate (within State) or interstate (Out of State).

Importance of Place of Supply : As mentioned above that place of supply plays a crucial role in determining the transaction as interstate or intrastate.

1. When location of supplier and place of supply are in the same State then "CGST" & "SGST" tax are applicable

2. When location of supplier and place of supply are in the different State then "IGST" tax is applicable.

Item Master : Information on item card related to GST plays a crucial role in calculation of  GST amount during creation of  Purchase Order or Sales Order. GST related information on item card is given below :

a) GST Group Code : Update the GST Group Code. It is a drop down field and information flows from GST Group setup. User can define "GST Group" as "Goods" & "Services". User can select type "Goods" for items. User can also define various GST percentage as per the requirement like '5GST', '10GST' etc.

b) GST Credit : Two options are available i.e. "Availment" and "Non-Availment". The default option is Availment. It gives the option to user to avail credit. If credit cannot be availed for that item then "Non-Availment" option can be selected on the item card or can be changed  manually during process of any transaction.

c) HSN/SAC Code : All HSN Codes for GST Group code selected above shall be displayed as a drop down for this field. User has to select appropriate HSN code.

User must remember that above information should be updated on Item card in order to have GST amount updated properly during process of any transaction 

What is  HSN/SAC Codes?

Harmonized System Nomenclature (HSN) is applicable for goods whereas Service Accounting Codes (SAC) are applicable for services. These codes are meant to reduce the chances of misinterpretation and helps in assigning correct tax rates to products and services. These HSN codes will be similar to codes, which are being presently used in Central Excise Tariff schedules.

Goods and Services are to be reported along with HSN and SAC codes in compliance Returns (GSTRs). 

HSN codes comprises of eight digits. The number of digits to be mentioned in the GST Returns is dependent on the turnover. If turnover exceeds five crores, it is mandatory to mention four-digits. In case turnover is between 1.5 to 5 crores, it is mandatory to mention two-digits. For exports and imports, it is mandatory to mention eight-digits. However, a taxpayer irrespective of turnover may opt to use either six-digits or eight-digits.

Relevance of HSN/SAC Codes on the product design:

A master has been provided where HSN/SAC codes for each GST Group code can be defined.

HSN/SAC codes must also be selected in Items master and G/L Account card for each item and service respectively.

These codes also flow in purchase lines and sales lines, based on the item or service selected. However, the user can edit the codes in the respective documents.

Impact of Place of Supply on Product design:

From system perspective, Place of Supply can be Bill to Address, Ship to Address or Location Address. GST Dependency Type field has been created in Sales & Receivable Setup with above three as a drop down. The option selected shall be construed as Place of Supply for sale of all goods and services. 

How GST Percentage and Amount is calculated on Purchase Line during Purchase Order creation :

The table "GST Setup" plays an important role in calculating GST percentage & GST amount on purchase line. The "GST Setup" table contains the fields "GST State Code", "GST Group Code", "GST Components", "GST Component %", "Effective Date", "GST Jurisdiction Type"

Following rules apply for automatically selecting the GST percentage and updating the same on purchase line :

1. System checks whether the supply is intrastate or interstate. It is checked as per the location of supplier and  receiver.

2. After checking the above information, system  updates the "GST Jurisdiction Type" as "Interstate" or "Intrastate"

3. "HSN/SAC" code updated on the purchase line extracted  from the information available on the item card field "HSN/SAC"

4. Information available of "GST Group Code" on the item card helps the system to pick correct "GST Group Code" from "GST Setup" table

5. Effective Date : It checks  "GST %"  and select the correct percentage as per the effective date.

6. For Intrastate transaction, "Centre GST (CGST)" & "State GST (SGST)" both are applicable. System will shows the total amount of both "CGST" & "SGST" on the field "Total GST Amount".  In the same manner, the total percentage of  both "CGST" & "SGST" can be checked on the field "GST%". If user wants to know the separate percentage and amount for both   "CGST" and "SGST" at the purchase line, it can be checked through by clicking on the option "Line-Detailed GST" as shown in the below picture.

When user clicks on "Line- Detailed GST", system will show the detail information of SGST and CGST in separate line. The system will show "GST Percentage", "GST Amount", "GST Component Code" i.e (CGST or SGST).

7. Remember, when user post the invoice, the amount of "CGST" and "SGST" will be booked separately as per the percentage defined on the "GST Setup" table. It is explained in the below section


Accounts which are updated when user post the Purchase Invoice of intrastate purchase from Registered Vendor :

Example :
a. Purchase Amount : 100
b. State GST (SGST) Amount : 10
c. Centre GST (CGST) Amount : 10
d: Vendor Amount : 120


             Purchase                                             Dr.          100
             State GST Rece.                                 Dr.            10
             Centre GST Rece.                               Dr.            10
To         Vendor A/c                                         Cr                                  120

It has been found  that the tax amount is updated in "GST Rece. (Interim)" account, it is because that the four conditions have been stipulated for availment of credit, these conditions should be fulfilled in order to update the amount from "Receivable Interim Account" to "Receivable Account", they are :

• Receipts of Goods
• Receipt of Invoice, debit note, supplementary invoice or any other tax-paying documents
• Payment of tax to the government by the supplier
• Furnishing GST Return (GSTR-3)

We know that at the time of posting of Invoice in the system, only two condition would be satisfied i.e receipt of goods and receipt of Invoice. Hence amount is posted in the "GST Receivable (Interim)" at the time of posting of Purchase Invoice. Also be noted that we can ignore the third condition i.e. "Payment of tax to the government by the supplier" as it would be very difficult to obtain the date of payment from different supplier on a periodic basis. To the extent of purchase transactions reconciled, GST credit is posted from "Receivable Interim Account" to "Receivable Account"  

How GST Percentage and Amount is calculated on Sales Line during Sales Order creation:

As mentioned earlier that the table "GST Setup" plays an important role in calculating GST percentage & GST amount on sales line. The "GST Setup" table contains the fields "GST State Code", "GST Group Code", "GST Components", "GST Component %", "Effective Date", "GST Jurisdiction Type"

Following rules apply for automatically selecting the GST percentage and updating the same on sales line :

1. System checks whether the supply is intrastate or interstate. It is checked as per the location of supplier and  receiver.

2. After checking the above information, system  updates the "GST Jurisdiction Type" as "Interstate" or "Intrastate"

3. "HSN/SAC" code updated on the Sales Line extracted  from the information available on the item card field "HSN/SAC"

4. Information available of "GST Group Code" on the item card helps the system to pick correct "GST Group Code" from "GST Setup" table

5. Effective Date : It checks  "GST %"  and select the correct percentage as per the effective date.

6. For Intrastate transaction, "Centre GST (CGST)" & "State GST (SGST)" both are applicable. System will shows the total amount of both "CGST" & "SGST" on the field "Total GST Amount".  In the same manner, the total percentage of  both "CGST" & "SGST" can be checked on the field "GST%". If user wants to know the separate percentage and amount of   "CGST" and "SGST" at the Sales line, it can be checked through by clicking on the option "Line-Detailed GST" as shown in the below picture.

When user clicks on "Line- Detailed GST", system will show the detail information of SGST and CGST in separate line. The system will show "GST Percentage", "GST Amount", "GST Component Code" i.e (CGST or SGST).

7. Remember, when user post the invoice, the amount of "CGST" and "SGST" will be booked separately as per the percentage defined on the "GST Setup" table. It is explained in the below section

Voucher entries which are created when user post the Sale Invoice of intrastate sale from Registered Customer are as followings :

Example :

a. Sale Amount : 4000

b. State GST (SGST) Amount : 1200

c. Centre GST (CGST) Amount : 400

d: Customer Amount : 5600

             Customer A/c                                           Dr.           5600           

To         SGST Payable A/c                                  Cr.                                1200

             CGST Payable A/c                                  Cr.                                  400

             Sale  A/c                                                  Cr                                 4000

Following tables are updated in NAV when above transaction are done :

• G/L Entry
• Cust. Ledger Entry
• Detailed Cust. Ledger Entry
• Value Entry
• GST Ledger Entry
• Detailed GST Ledger Entry

It has been found that two new tables related to GST have been created to update GST information i.e. "GST Ledger Entry" & "Detailed GST Ledger Entry".

GST Ledger Entry : The table contains summary information of taxes updated. The major information updated in the table are as follows :

• Posting Date : Displays the date when transaction was posted
• Document No. : Displays the document number
• Document Type : Displays whether the document type is "Invoice","Payment","Credit Memo","Transfer" or "Refund". This information can help us while creating any report related to document type.  
• Transaction Type : Displays transaction type as Purchase or Sale. It would help in calculating total GST amount in Purchase or Sale in a particular period. It will be helpful during report creation.
• GST Base Amount : It is the amount on which  GST percentage is calculated. Helpful in extracting information related to total GST base amount in a period.
• Source Type : If transaction type is Sale then source type is "Customer". If transaction type is Purchase then source type is "Vendor"
• Source No. : Display the Vendor Code, if source type is Vendor. Displays the Customer Code, if source type is customer.
• GST Amount : Display the GST amount as per the GST component i.e.  SGST or CGST
• GST Ledger Entry shall merged/club the GST component or Gen. Prod. Posting Group in a single transaction, if same group is used multiple times.
• GST Component Code: Displays the GST component as SGST or CGST

Detailed GST Ledger Entry : The table contains detail information of taxes updated. The major information updated in the table are as follows :

• Transaction type : It shows whether the transaction is "Sale" or "Purchase". Helpful in filtering sales or purchase transaction in a particular period.
• Document Type : Displays whether the document type is "Invoice","Payment","Credit Memo","Transfer" or "Refund". This information can help us while creating any report related to document type
• Posting Date : Displays the date when transaction was posted
• Type : Displays whether the type is "Item", "G/L Account", "Resource", "Fixed Assets", or "Charge (Item)"
• Product Type : The product type is displayed only when type is Items. It shows the information whether the item is a normal item or Capital item.
• Source Type : If transaction type is Sale then source type is "Customer". If transaction type is Purchase then source type is "Vendor"
• Source No. : Display the Vendor Code, if source type is Vendor. Displays the Customer Code, if source type is customer.
• GST Jurisdiction Type: Displays the information as Intrastate or Interstate
• GST Component Code : Display the information  whether the transaction is "SGST" or "CGST"
• GST Base Amount : Amount on which GST percentage is calculated.
• GST Amount : Display the GST amount as per the GST component i.e.  SGST or CGST
• Quantity : Displays the quantity on which GST percentage is calculated. As mentioned earlier that "Detailed GST Ledger Entry" table contains detailed information i.e. line wise information of the transaction. The field "Quantity" would not be found in "GST Ledger Entry" table.  
• G/L Account No. : Displays the account no. of  GST amount
• GST Percentage : Displays the GST percentage applied on the GST Base amount
• GST Credit : Display the information as "Availment" or "Non-Availment". The field remains blank on sales transaction
• GST Group Type: Group type can be Goods or Services
• Location State Code : Displays the location state code
• Buyer/Seller State Code: Displays the  state code of the customer for Sales transactions and state of the vendor for purchase transactions.

Utilization of Input Credit under GST :

• The tax credit CGST shall be first utilized towards the payment of output CGST and then towards the payment of output IGST

• The tax credit SGST shall be first utilized towards the payment of output SGST and then towards the payment of output IGST.

• The tax credit IGST is allowed to be utilized towards payment of IGST, CGST and SGST in that order.

GST Roadmap for other Versions :

• Dynamics NAV 2013 R2 : It would be released on 02nd week of May 2017

• Dynamics NAV 2013 : It would be released on 03rd week of May 2017

• Earlier Versions : Earlier versions are not Applicable for GST Patch. Company need to upgrade with latest version to have GST compatible.

Link  of HSN Code detail in GST : HSN CODE

Link of SAC Code detail in GST :  SAC Code