Goods and Service Tax (XML) Extension for Indian Localization in Microsoft Dynamics 365 Finance and Operations- Part-9

Hello everyone, hope you all are doing good and staying safe at home!!!

It has been a long that I have written last blog on GST (Indian Localization). So, just to recap , we have completed all the basic setups and transactions related to GST (Please go through my https://exploredynamics365.home.blog/home/ in Tax category).

Now, in this blog we will try one important and critical topic which is very untouched by most of the Dynamics 365 consultants but trust me Microsoft has made its very easy to modify or extend your GST engine configuration as per your customer’s need. So, let’s start:

We will do this exercise to solve two very generic problems:

1. Multiple Tax rate for same HSN/SAC: Most of the times when we start the implementation customer come up with different scenarios to define the HSN/SAC GST tax rates which require us to add more conditions to the existing rate master. One of the examples for that is: Customer has two different items which falls under same HSN or SAC code but will attract different tax rates.

Solution: Solution to above approach is to define the tax rates for each and every HSN/SAC with tax slab and map the Tax slab on item master. E.g. Item-1 with HSN 101010 – 5 % slab and Item-2 with HSN 101010- 12 %. To achieve this, we need toa dd “Tax Rate Type” column as condition to our “Rate” section of each GST component which will be done by modifying the GST XML.

2. Changing Reverse charge posting: By default, when you will download standard GST xml and post any RCM transaction the accounting entry will be:

Interim Recoverable Debit to GST Payable, but most of the customers want this to change from GST Payable to Interim Payable. So, expected RCM entry is: Interim Recoverable Debit to Interim Payable.

Solution: Solution to this problem is to modify the posting of RCM by extending the GST XML.

Note: All these changes can be made only in Microsoft Dynamics 365 not in any other version like AX 2012.

Step-1: Open Tax Configuration

Electronic Reporting > Select Configuration Provider > Tax Configuration

Step-2: Create New Configuration

Select Tax (India GST) > Click on new Configuration > Select Configuration Derived from Tax India GST > Enter Description > Click Create Configuration

Step-3: Select the new Configuration > Click on Designer > Now you will see the complete structure of you GST Tax engine

Step-4: Select Any GST component, so here you can understand that how each component elements are managed (As shown in picture) , you can manage properties, Columns, Posting or formula’s

Step-5: Solution for First problem, Add new column to the rate section “Tax Rate Type”

Select the CGST Component > Expand > Select Rate Section > Click on Look up > Click on Column

Step-6: On the left-hand side you will see all possible columns which you can add to your configuration,

we will select “Tax Rate Type” and move to the right selection > Click Ok

Now you can see the new column to the “rate” definition

Note: Repeat step-4 to 6 for all other component e.g. SGST, IGST etc…

Note: You can add other columns as well for your requirement.

Step-7: Change Posting for RCM

Select > CGST Component > Click on Posting > Select the transaction Type > Select and change the posting from Tax payable to Interim Payable > Click Save and Close

Note: Repeat this step-7 for all transaction type (Domestic purchase Service etc…) and for all other GST component (SGST, IGST et…)

Now, we are done with our changes, now we need to complete and activate new configuration.

Step-8: Change status to complete

Step-9: Activate the configuration

Tax > Setup > Tax Configuration > Click on Configuration

Step-10:  Add new configuration, synchronize and activate

Step-11: Now you will be able to see new Column in rate definition, now we can define multiple rates for same HSN/SAC code

Note: Define rate for each component, Rates can also be imported exported using excel feature

Step-12: Define SAC for RCM to validate posting change results

Step-13: Add Tax rate type to the item master, Now you will be able to see the new field (Dropdown) got activated on item master where we can define our Tax slabs and as per requirement along with HSN we can define the Tax rate type, this will help us to define the multiple Tax rates for same HSN for different items

Step-14: Test the changes, create one PO, with item having tax rate type and one for SAC to check RCM posting results

Step-15: Final Results, now we can see in the screen shot both the configuration worked, RCM is now getting posted with “Interim Recoverable to Interim Payable “and other GST has got posted with defined Tax rate type on the item master.

That’s it for this blog, I know this was bit long but hopefully this will help you understand the GST XML extension and its elements, now you can make other type of changes in your XML as per customer’s requirement.

Thank You!!! Keep reading and do not forget to share with your network!!!

I will be back soon with new component Creation “UTGST”.