The Union Budget of India, also referred to as the Annual Financial Statement in the Article 112of the Constitution of India, is the annual budget of the Republic of India. The Government presents it on the first day of February so that it could be materialised before the beginning of new financial year in April. Union Budget for 2020-21 was presented by Finance Minister Nirmala sitaraman on feb 1st 2020.
Budgetary changes both in Direct Tax and Indirect tax will have configuration changes in SAP-ERP in the following scenarios:
- Any change in tax or duty rates (Ex Import duty, Change in TCS %)
- Introduction of any new duties or cess ( Ex Health cess for Import of Medical devices)
- Abolition of duties and taxes ( Ex : Dividend Distribution tax )
Changes in Direct Tax (Config change in SAP-FICO & HR)
- Tax payers will have additional option to avail a lower Income tax rate on various slabs by foregoing certain deductions and exemptions ( This new regime is optional only )
- Dividend Distribution Tax abolished.
- TCS – An authorised dealer receiving an amount or an aggregate of amounts of seven lakh rupees or more in a financial year for remittance out of India under the LRS of RBI, shall be liable to collect TCS, if he receives sum in excess of said amount from a buyer being a person remitting such amount out of India, at the rate of five per cent.
In non-PAN/Aadhaar cases the rate shall be ten per cent.
- ESOP deferred Tax payment by 5 years for Start-ups
- 70 out of 100+ exemptions were removed from the old regime. ( Income Tax)
Changes in Indirect Tax (GST/Imports)
- Composition scheme restricted to taxpayers making the inter-state supply of service, supplies not leviable to GST and supplies through e-commerce operator where TCS is deductible
- The date of the debit note will be standalone considered for availing input tax credit, delinked from the date of invoice. ( Change in FI DOC date based on Doc Type )
- 5% health cess to be imposed on the import of medical devices ( New Condition type to be configured through SPRO )
- Excise duty to be raised on cigarettes and tobacco products,
- GST refund Process to be 100% electronic ( There is scope for Online tracking mechanism in SAP which is to be integrated with GSTN Portal )
Lower personal income tax and the option of a new tax regime will spur spending by the middle class, millennial populace and enhance economic growth. The proposals in Union Budget 2020 are a balanced one at its core, focusing on enhanced governance and promoting growth. Also in the Budget speech Govt has announced that there will be a national Logistics policy which aims to promote seamless movement of Goods across country which requires further enhancement in SAP Logistics execution module based on the guidelines and the procedural simplification on the Movement of Goods.
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