3653105 - Key Updates: GST Rate Changes on Goods and Services (3rd September 2025)-S/4HANA Cloud

The 56th meeting of the GST Council, held on 3rd September 2025, brought forward several important recommendations aimed at simplifying the GST structure and easing compliance. These measures are designed to provide relief to individuals, benefit the common man, and support the aspirations of the middle class, while also facilitating trade under GST. One of the key outcomes of the meeting is the revision of GST rates on goods (excluding pan masala and tobacco products) and services, which will come into effect from 22nd September 2025. Businesses are advised to review these changes carefully and prepare their systems and processes to ensure a smooth transition.

SAP systems must be updated to reflect the revised GST rates to ensure compliance in Logistics processes (Purchasing, Sales & Distribution, Inventory Management).

"Image/data in this KBA is from SAP internal systems, sample data, or demo systems. Any resemblance to real data is purely coincidental." 

SAP S/4HANA Cloud Public Edition 

Note:

The dates  mentioned below are in DD/MM/YYYY format.
The new tax codes creation is applicable wherever there is change in tax rate

GST Rate Changes on Goods & Services

SAP Modules: SD, MM, FI

Steps:

1.Modify existing Tax Codes with Updated Tax Rates

• • SSCUI 101016: Define Tax Codes for Sales and Purchases (Role: SAP_BR_BPC_EXPERT) – Modify existing tax codes are being updated,
    • Enter the tax code and set Valid From = 22/09/2025
    • Change the tax rate at the respective condition type and confirm the system pop-up for the validity date.
    • Save the updated tax rate

2.Material Master – Tax classification changes

• • App: Manage Product Master data (Role: SAP_BR_PRODMASTER_SPECIALIST) – Go to the Distribution chains view → Sales Tax → Update the Tax Classification field for Materials as per revised GST requirements

3.Create/Update Tax Condition Records 

Role : SAP_BR_TAX_SPECIALIST

1. • App : Set Material Prices - Sales : To maintain pricing conditions for Sales
   • App : Set Tax Rates - Purchasing – To maintain Tax Condition Records for Purchasing
   • App: Create Price conditions - Purchasing – To maintain Purchase conditions
   • Close the existing condition record entry by updating Valid To = 21/09/2025
   • Create new entries with Valid From = 22/09/2025 and assign the updated tax codes.

Example:
For a tax rate change from 18% to 5%, update as follows:

• CGST: from 9% → 2.5%
• SGST: from 9% → 2.5%

Sample screenshot

4.Tax account determination

For newly created tax codes, assign the appropriate Tax G/L accounts to ensure correct FI postings.

SSCUI: 101871 Define and Assign G/L Accounts (Role: SAP_BR_BPC_EXPERT)

 Configuring the system by following above steps will allow you to post documents with new tax rates.

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