Introduction to Goods And Services Tax (GST)

GST is an indirect tax which has replaced many Indirect Taxes in India. The Goods and Service Tax act was passed in the Parliament on 29th March 2017. The act came into effect on 1st July 2017; Goods and Services tax law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.

GST is one indirect tax for the entire country. Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST (CGST) and State GST (SGST) are charged. Inter-state sales are chargeable to Integrated GST (IGST).

There are 3 taxes applicable under this system: CGST, SGST and IGST.

• CGST: Collected by the Central Government on an intra-state sale (for example, transaction happening within Maharashtra).
• SGST: Collected by the State Government on an intra-state sale (for example, transaction happening within Maharashtra).
• IGST: Collected by the Central Government for inter-state sale (for example, Maharashtra to Tamil Nadu).

This functionality allows the user to identify which taxes can be applied between CGST and SGST, or IGST. The system will automatically calculate these taxes using new routines.

In line with the GST requirements of India, enhancements are done in the TAXGST module and other modules of Temenos Transact.

The GSTIN is captured in the CUSTOMER application as legal ID docs.

A soft property class is introduced, which is mandatory across product lines of INMB to capture GSTIN at arrangement level, which is used for AA related charges.

Provisions are introduced in select applications, which will be used to capture GSTIN at the transaction level.

New fields are introduced in the TAXREG.PARAMETER application to store the GSTIN of the bank or branch, which is used in GST processing.

New fields are introduced in the TAXREG.GST.DETAILS application to store the GSTIN of the transaction and IRN.

This functionality also allows the user to apply the GST tax for transactions involving currency conversions using the PAYMENT.ORDER application.

For foreign currency conversions, GST is calculated as a two-step process:

1. Calculate the conversion amount in India Rupees (INR), which will have the buy rate of INR against the converted currency, to arrive at the base amount for calculating GST.
2. Apply the Interstate Goods and Services Tax (IGST) or the Central Goods and Services Tax (CGST) + State Goods and Services Tax (SGST).

This functionality also allows banks to calculate the split tax for the FUNDS.TRANSFER and MM.MONEY.MARKET applications.

Click here to understand the terms and abbreviations used in this functionality.