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