Business Blueprint Document

Process : Service Tax on GTA

Project DISHA

At ASF Insignia SEZ Pvt. Ltd.

By KPMG Advisory Services Private Limited

Date 18, September 2014

Document Information
Document Name

Business Blueprint Document

Title

FI14_AISPL_BPD_Service Tax on GTA_V03

Document Purpose

To design the process for Service Tax on GTA in SAP

Key Words

GTA

Document Status

Draft

Contact for Enquiries

Amit Bharti (amitbharti@kpmg.com) Phone: 9437028948

Revision history
Version
V0
V1
V1

Author
Amit Bharti

Date
26.12.2011

Revision

This document has been reviewed by

1
2
3
4
5

Reviewer
Deepak Darooka
Ashish Sadarangani
Kumar Walekar

Date reviewed

This document has been approved by

1
2
3
4
5

Subject matter Advisors KPMG

Name
Signature
Ashish Sadarangani

Date approved

This document has been signed off by

Client EMIL
Name

Signature

1
2
3
4
5

Process

Service Tax on GTA

Applicable Companies

ASF Insignia SEZ Pvt. Ltd. (AISPL)

BUSINESS BLUEPRINT DOCUMENT PROCESS :

SERVICE TAX ON GTA PAGE 2 OF 45

Date

Contents
1

Existing Processes / Requirements / Expectations

1.1
1.2

Service Tax (GTA)

Requirement/Expectations:

5
7

Explanations of Functions and Events

2.1

Triggering Functions and Events:

Organizational Considerations

3.1

Org. Scope

Description of Improvements

10

4.1

Areas of Improvement

10

Solution in SAP

11

5.1
5.1.1
5.1.2
5.1.3

11
11
11

5.1.4
5.1.5
5.1.6
5.1.7
5.1.8
5.2
5.3
5.4
5.5

Service Tax (GTA) Process

Overview
Configuration for Service Tax GTA (FI)
Maintaining WHT Types & Codes for Service Tax GTA in Vendor Master
Record (FI)
Service Order for Transport Services (MM-SD)
Service Receipt for Transport Services (MM-SD)
Invoice Posting with Service Order for Transport Services (FI)
Remittance
Reporting
Activity Task Table
Organization Structure Elements
Master Data Elements
Key Data Structure Elements

11
11
11
12
13
13
13
14
14
15

Process Flow Diagram

16

6.1

Service Tax (GTA) Processing

16

Description of Functional Deficits

17

7.1
7.2

ST-3 report for Service Tax

Form EXP-2

17
17

Approaches to Cover Functional Deficits

18

8.1
8.2

ST-3 report for Service Tax

Form EXP-2

18
18

Integration Considerations

19

9.1

Integration elements

19

10

RICEFW Requirements

20

10.1
10.2

Reports
Interface

20
20

BUSINESS BLUEPRINT DOCUMENT PROCESS :

SERVICE TAX ON GTA PAGE 3 OF 45

10.3
10.4
10.5
10.6

Conversions
Enhancement
Forms
Workflow

20
20
20
21

11

Authorization Requirements

22

11.1

Authorizations related to Service Tax (GTA) Processing

22

12

SAP Solution Comparison with Expectations in As-Is

23

12.1

Service Tax (GTA) Solution-Expectations Comparison

23

13

Changes from As-Is

24

13.1

Changes in Service Tax (GTA) Processing

24

BUSINESS BLUEPRINT DOCUMENT PROCESS :

SERVICE TAX ON GTA PAGE 4 OF 45

Existing Processes / Requirements / Expectations

(Please refer to the Corresponding As-Is Document. Incorporate the existing process (with flow
diagram)/pain areas/expectations here.)

1.1

Service Tax (GTA)

1. Transporters invoices received from Logistics function are verified whether the same is
meant for Domestic use or Exports.
2. In case the same relates to sales in domestic market & cost of transportation per trip
exceeds Rs 1500, service tax liability is created at applicable rates in the system on
25% value of transportation cost. Cost of transportation per trip is calculated with
reference to Contracts which is usually awarded on Per ton basis. Similarly material
handling within mines which is transportation in nature & exceeds the value per trip of
Rs 1500 also attracts service tax.
3. In case the same relate to Exports, no service tax is payable as per Notification No
18/2009 subject to the fulfilment of the conditions laid down therein.
4. Service Tax is calculated manually and accounting Entries are posted.
a) Entry at the time of posting:
Service Tax A/C

Dr

To S.Tax Payable A/C

5. Service tax payable amount is remitted to S.Tax Department as per the following
schedule:
Normal: Payable within 6 days from the end of the month
Year end: Payable within 31st March.
6. Payment is made electronically for EOU & Non-EOU separately.
7. Online Payment receipt is sent to the Banking Dept for updating Bank Books at their
end.
8. Submission of Returns electronically in Form ST-3 data is prepared manually in excel
sheet and excel utility sheet downloaded from ACES site is filled and uploaded to the
ACES site within 25 days of the next month from the period ending 30th September or
31st March.
9. Submission of returns under Not.18/2009S.T - data is prepared manually in excel sheet,
Form EXP-2 filled in excel sheet as per format in the notification, and return submitted
manually at The office of the Dy.Commissioner of S.Tax, Rourkela within 15 days of the
next month from the period ending 30th September or 31st March.
10. Service Tax Audit- Reconciliation of Transportation charges ledger with the returns filed
is done manually in excel sheet

Current Process Flow:

Transporter Invoices are received by the

Accounts Department

Manual decision is taken whether service

tax is payable or not

Calculation of amount of S.Tax by the

system as per the rate as specified by the
Finance Act

Invoices/Advances are posted in the

system and accounting entries are
generated

Data is collected manually in excel and S.Tax

is remitted in the Bank online. Bank challan no.
Recorded in hard copy for e-filing

Manual entry is posted for the bank

remittance executed online.

Data is prepared manually for half-yearly efiling in the specified format in excel utility
sheet downloaded from the ACES site and
uploaded in the ACES site.

1.2

Requirement/Expectations:
For every S.Tax code, system should be able to automatically decide whether
service tax is payable or not.

We should be able to maintain S.Tax rates for various sections. We should be able
to change the rates as per the govt. notifications. Even basic tax, cess and
charges should be segregated separately with a flexibility to change as per the
government regulations
System should identify the S.tax amount that is pending for remittance for a month
and should execute the accounting entries, thereby clearing the S.Tax payable A/C
and crediting the Bank A/C
System should be able to record the Bank Challan number generated after epayment.
System should automatically pull the data accurately for half-yearly e-filing in the
statutory format in excel so that it can be used for upload to ACES.
System should be able to prepare the stock statement for filing of EXP-2 & ST-3
return.
System should be able to reconcile the Transportation charges ledger with the
returns.
In view of GST regime in coming future, the SAP processes should be able to
cater the need arising out of GST implementation.

Explanations of Functions and Events

(Explain what events and processes trigger this process. Refer to the preceding activities which are
necessary for this process to start)

2.1

Triggering Functions and Events:

1 If the transportation is in the domestic market & the cost of transportation per trip
exceeds Rs 1500, service tax liability needs to be created at applicable rates in the
system on 25% value of transportation cost. Cost of transportation per trip is to be
calculated with reference to Contracts which is usually awarded on Per ton basis.
Similarly material handling within mines which is transportation in nature & exceeds
the value per trip of Rs 1500 also attracts service tax. In case the same relates to
Exports, no service tax is to be paid.
2 The service tax liability of the month is to be remitted as per the schedule given by
the department.
3 Vendor Master Record must be maintained for the transport vendor and the Tax
codes for Service Tax (GTA) must be maintained in the Withholding Tax section of
the Master Record since this tax is configured using the Withholding Tax
functionality.
4 The Service Order (Service PO) should have been created for transportation and
Service Receipt for the quantity must be entered for every trip made by the
transporter. Only then the Service Tax GTA can be applied on the vendor invoice
during Invoice Posting.

Organizational Considerations

(Address any issues agreed in the workshop concerning the SAP organizational structure and this
process. Highlight if this process is handled differently in different org. units. Specify the org. scope of
impact of this process e.g. any particular co. codes or segments or purchase organizations)

3.1

Org. Scope

1. The standard SAP processing for Service Tax (GTA) will be configured for EMIL

Mining Division and CFD Division. The functionality can easily be extended to other
EMIL Divisions i.e. Wind Power, Ferro Chem etc. when SAP is rolled out there.
2. The functionality will be used for invoices related to non-export transportation, since

there is no such tax liability in the case of exports.

Description of Improvements

(Describe improvements which will result from implementation of the SAP System. Be sure to include
any impact on business drivers).

4.1

Areas of Improvement

S. No. Area of Improvement

1
KPI 1 - Accurate Service
Tax (GTA) Calculation and
remittance.
2

Impact/Improvement
SAP System automatically calculates and posts the
Service Tax (GTA) in invoices related to transporter
Vendors. In case the invoice pertains to export related
transportation, the tax can easily be exempted. The
Tax liability collected for the month can be remitted in
the system and the bank challan no. be recorded.
SAP system can help in providing Tax details that can
KPI 2 - Generation of
be used for Audit purposes.
required reports for audit
purpose including to the
satisfaction
&
timely
completion of Audit by
Central Excise & Service
Tax.

Solution in SAP

(Describe how this process will be addressed in the product. Detail out the solution so as to
adequately map the process. Highlight the configuration required and the front-end T-codes to be
executed to complete the process)

5.1

Service Tax (GTA) Process

5.1.1 Overview
Unlike other types of services in India, recipients of transport services from goods transport
agencies (GTA) are responsible for withholding and submitting the service tax to the tax
authorities on behalf of the transport service providers. The system automatically calculates
the GTA service tax and makes the relevant postings in FI.

5.1.2 Configuration for Service Tax GTA (FI)

Service Tax (GTA) is configured in SAP through the withholding Tax (WHT) functionality.
Just like TDS, withholding tax types and withholding tax codes for GTA need to be
configured. Two Tax codes will be created: one for GTA and one for GTA exemption. The
rates can be changed as per the govt. notifications. The difference is that that the tax
amount is first debited in the Service Tax on GTA A/C and then Credited to Service Tax
Payable A/C. The vendor a/c is credited with the original invoice amount only. The amount
accumulated in the Service Tax Payable A/C is then remitted to the Tax Department at the
end of the month.

5.1.3 Maintaining WHT Types & Codes for Service Tax GTA in Vendor Master
Record (FI)
WHT Type & Codes for Service Tax (GTA) and GTA exemption are entered in the Master
Record of the Transport Vendors. During posting of invoices in these vendors accounts,
system will prompt with the Service Tax (GTA) amount calculated. The user will have the
option to not only remove the Service Tax (GTA) code if needed but also to change the tax
base amount on which tax is being calculated.

5.1.4 Service Order for Transport Services (MM-SD)

Service Order will be created by MM in case of inter-plant material movement and by SD in
case of Delivery for Sales. The service order will have the per ton rate agreed with that
Transporter and all the Service Receipt and the subsequent Invoice Posting will refer to the
rate mentioned in the SO. One Service Order will be created for one shipment and one
shipment can be made through many deliveries. Each trip will be treated as an individual
delivery.

5.1.5 Service Receipt for Transport Services (MM-SD)

Service Entry Sheet (Service Receipt) (ML81) is entered as a confirmation of the services
received by the MM-SD as the case may be. Every time the truck makes a trip, it will be
treated as one delivery and Service Receipt will be posted for every such delivery made by
the transport vendor with respect to a Service Order. At the time of Service Receipt posting,
the quantity delivered will be entered and the system will automatically create a provisional
liability for an amount equal to Quantity multiplied by the per ton rate agreed with the
vendor.
There will be as many Service Receipts as the trips made.

In this scenario on completion of services, a service entry sheet will have to be made by
receiver. Following accounting entries will take place for each trip automatically:
Account Head

Dr./Cr.

Transportation Expense GL Account

SR / IR account (Provisional Liability A/C)

Dr.
Cr.

Remarks

5.1.6 Invoice Posting with Service Order for Transport Services (FI)
On receipt of invoice from Transport vendor, it needs to be verified with the service sheet
entered for the deliveries made by the transporter. This is done automatically by the system
when the Service Order No. is mentioned during invoice verification. It is proposed to enter
the SD indent no. also at this stage so as to create a link between the Shipping Doc and
Invoice for the transportation used in shipping. After entering both these numbers, the
system will pull all the service receipts (trips) on the screen that are yet to be invoiced.
Since, the Source and Destination for a Transportation service order is fixed, there is going
to be variances between delivery quantities only. Therefore, the per trip cost of each trip in a
bill will mostly be either above Rs. 1500 or below Rs. 1500.
During Invoice Verification (MIRO), system will automatically apply Service Tax (GTA) Tax
Code on the invoice amount. If the per trip cost (amount for Service Receipts) appearing on
the screen is more than Rs. 1500, user will remove the GTA exemption Tax Code and go
ahead with the transaction & the system will post the necessary accounting entries
described below. In cases where some of the trip costs are showing to be less than Rs.
1500, the user will exclude such trips costs from tax application by manually changing the
Tax Base to that effect. Facility to change the Tax Base manually will be provided.
In cases, where the trip costs are less than Rs. 1500 or the invoice pertains to exports
related transportation, the user will remove the GTA Tax Code but retain the GTA exemption
Tax Code so that though no Service Tax (GTA) is posted, it will still be possible to track
invoice on which GTA exemption was applied.
In SAP, invoice verification will be handled through following business process:
Enter Invoice (MIRO)
Park Invoice (MIR7)
Enter Invoice for Invoice Verification in Background (MIRA)
Invoice Verification for the following types of services will be done:
Accounting Entries
Account Head

Dr./Cr.

Remarks

SR / IR account (Provisional Liability A/C

Service Tax on GTA A/c
Edu Cess on Service Tax on GTA A/c
Hr. Edu Cess on Service Tax GTA A/c
Service Tax on GTA Payable A/c
Edu Cess on GTA Payable A/c
Higher Edu Cess on GTA Payable A/c
Vendor account
TDS payable account

Dr.
Dr.
Dr.
Dr.
Cr.
Cr.
Cr.
Cr.
Cr.

If applicable

5.1.7 Remittance
Service tax accumulated in Service Tax Payable A/Cs during the month will be remitted to
the Tax Department on or before the 6th of next month and on or before 31st March during
annual closing. No system alerts are needed since the due dates are fixed and the taxation
department knows their remittance schedule. T Code J_1IGTACHLN will be used to remit
the tax amount. This program picks all the tax items posted during the month and are due
for payment. Its posts the following entry and clears the tax GL.
Accounting Entry:
Account Head

Dr./Cr.

Service Tax Payable A/C

Bank Outgoing Clearing A/C

Dr.
Cr.

Remarks

The challan no. obtained from the bank can be recorded in the system. The T Code for the
same is J_1IGTABANK.

5.1.8 Reporting
The standard SAP report for ST-3 provides data for non-GTA transportation service tax. For
GTA Service Tax, SAP report for TDS will be used to extract data for GTA since it is
configured through TDS functionality. The data from both the reports will be used to prepare
ST-3 report in excel as per the statutory format.
Form Exp-2 will be developed as there is no standard report in SAP for this.

5.2

Activity Task Table

S. No. Task description

Output

Type

Maintain Tax Codes in

Vendor Master Record

SAP

Service Order Creation

SAP

ME21N

Service Entry Sheet

SAP

ML81

Invoice Verification with

SO

SAP

MIRO

Invoice Posting without

SO

The defaults
Service Tax
(GTA) during
Invoice Posting
Service Order is
created for the
Transport
Vendor
Service Receipt
is posted for the
deliveries made
by the
transporter
Invoice is posted
with/without Tax
for the services
received.
Invoice is posted
with/without Tax

SAP
transaction
XK02

SAP

FB60

Job role

S. No. Task description

6

7
8
9

10

11
12

13

5.3

Output

Decision whether to
post Service Tax (GTA)
or not.

User ascertains
whether the trip
costs are above
or below 1500;
or if the
transportation is
export related
Remove Tax Code
Tax code is
removed if tax is
not to be posted
Change Tax Base
Tax is applied on
amount
the reduced
amount
Remit Tax
Tax for the
month is cleared
and the Bank
A/C is credited.
Online/Cheque
Payment is
made
Maintain Bank Challan Bank Challan
no. is recorded
in the system for
the remittance
made
Generate Std. MIS
MIS report for
(GTA)
GTA is obtained
Generate Std ST-3
ST-3 Report for
report
nontransportation
Service tax will
be generate
Prepare a combined ST- Data from both
3
the reports will
be worked upon
in excel

5.4

NonSAP

SAP
transaction
MIRO/FB60

NonSAP

MIRO/FB60

NonSAP

MIRO/FB60

SAP

J_1IGTACHLN

SAP

J_1IGTABANK

SAP

J1INMIS

SAP

J1IC

Excel

Organization Structure Elements

S. No. Organization Elements

1.

Type

Company Code

Master Data Elements

Reference Org Structure

Document

Job role

S. No.
1
2
3
4

5.5

Master Data
Transport Vendor Accounts
Bank GL Accounts
Service Tax on GTA A/c
Service Tax Payable A/C

Key Data Structure Elements

S. No. Key Data Structure

1
2

Master Data Reference

WHT Types and Codes for Service Tax (GTA)

House Banks for remittance

Key Data Structure

Reference

Process Flow Diagram

(Provide all related process maps or diagrams)

6.1

Service Tax (GTA) Processing

Figure 1: GTA Service Tax Process

Description of Functional Deficits

(Where appropriate, identify any gaps. This section is important when assessing risk, as well as
estimating the need for ABAP (or similar) resources. Clearly specify the gaps which cannot be
handled with Standard SAP)

7.1

The standard SAP report for ST-3 provides data for non-GTA transportation service tax
only. Moreover, it does not provide preformatted report in the statutory format.

7.2

ST-3 report for Service Tax

Form EXP-2

Standard SAP does not provide Form EXP-2 report.

Approaches to Cover Functional Deficits

(Documentation of any work-arounds or assumptions that have been made when outlining functional
deficits. Describe the ABAP functional enhancements/developments necessary for the process.
Specify if any ABAP development is not recommended despite the gap.)

8.1

The standard SAP report for ST-3 provides data for non-GTA transportation service tax
only. For GTA Service Tax, SAP report for TDS will be used to extract data for GTA since
it is configured through TDS functionality. The data from both the reports will be used to
prepare ST-3 report in excel as per the statutory format.

8.2

ST-3 report for Service Tax

Form EXP-2

The report needs to be developed.

Integration Considerations

(Specify what integration you need with other modules/sub modules. Highlight the backward, lateral
and forward integration needed to complete the process.)

9.1

Integration elements

Service order should be created for transportation for every Sales Order/STO/Indent No.

Service Entry Sheet should be entered for every trip made by the truck.

Transporters should furnish invoice pertaining to one Service Order only.

10

RICEFW Requirements

(Document Reports, Interfaces, Conversions, Enhancements, Forms & Workflows, as applicable to

the process.)

10.1

Reports

(Mention the standard SAP reports that can full fill the requirement. If not, specify the ABAP reports
that need to be developed)

S.
No.
1
2
3
4

10.2

Report Description
ST-3
Report for GTA
Form EXP-2
GL Report- Option for Special field to
be explored for Quantity

Std SAP/
Development
Std. SAP
Std SAP
Development
Std SAP

T Code / Dev Ref No.

J1IC
J1INMIS
FBL3N

Interface

(Identify any need for interfaces (iDoc, EDI etc.) with external systems e.g: Weighbridge Interface)

S.
No.

Interface Description

Identification

NIL

10.3

Conversions

(Specify the file conversion requirements for the process e.g.: BDC, LSMW)

S.
No.

10.4

Conversion Description

Identification

Enhancement

(Identify any enhancements to be used for the process e.g. User Exit, BAdi)

S.
No.
1.

10.5

Enhancement Description

Identification

Capture Unique No. (SD Indent No.) during SO, MIGO &
MIRO

Forms

(Mention in detail any SAPscript forms, SAPscript print programs, and SmartForms to be developed for the
process e.g. PO, Cheques, Payment Advices, Dunning Notices, Balance Confirmation, WCT
Certificate)

S.
No.
1

Form Description

Identification

S.
No.
2

10.6

Form Description

Identification

Workflow

(Identify any release/approval workflows needed to meet the business/process requirement.

Document workflow requirement in this process including the levels of approval required. Mention
who will initiate the workflow and who all will be the recipients of the work item)

S.
No.

Workflow Description
NIL

Identification

11

Authorization Requirements

Document the level of authorizations that you need for each process in the system. E.g: Identify the
roles that will enter the document and the roles that should be authorized to post it. Identify the need
to restrict the access for certain transactions, views and reports to certain roles. Highlight the
authorization considerations adequately so as to incorporate them while designing the
authorization matrix.

11.1
S.
No.
1
2
3
4

Authorizations related to Service Tax (GTA) Processing

Description
Authorization to maintain Tax Codes in Vendor Master
Authorization to remove tax code during invoicing or
change the tax base amount
Authorization to Park invoice with/without GTA
Authorization to Post invoice with/without GTA

Authorisation
Role
Master Data Cell
AP Clerk
AP Clerk
AP Manager

12
Is

SAP Solution Comparison with Expectations in As-

(Refer to section 1 (As-Is) of this document and specify if the expectation has been met with the SAP
solution or not. If not, provide explanation.)

12.1

Service Tax (GTA) Solution-Expectations Comparison

S.
No.

Expectation

For every Service Tax code, system should be

able to automatically decide whether service tax
is payable or not.

We should be able to maintain S.Tax rates for

various sections. We should be able to change
the rates as per the govt. notifications. Even
basic tax, cess and charges should be
segregated separately with a flexibility to change
as per the government regulations

YES

System should identify the Service tax amount

that is pending for remittance for a month and
should execute the accounting entries, thereby
clearing the Service Tax payable A/C and
crediting the Bank A/C

YES

System should be able to record the Bank

Challan number generated after e-payment.

YES

System should automatically pull the data

accurately for half-yearly e-filing in the statutory
format in excel so that it can be used for upload
to ACES.

NO, data needs to be

extracted from the system
and worked upon in excel.

System should be able to prepare the stock

statement for filing of EXP-2 return.

Expectation met through

SAP ? YES/NO.
If NO, give explantions.
YES

NO, report needs to be

developed.

System should be able to reconcile the

Transportation charges ledger with the returns.

YES

In view of GST regime in coming future, the SAP

processes should be able to cater the need
arising out of GST implementation.

NO, GST rules, rates,

exemptions, returns etc
are not known at this point.
It can be configured later
at an appropriate stage.

13

Changes from As-Is

(Mention the changes from the As-Is Process and identify the roles being impacted.)

13.1

Changes in Service Tax (GTA) Processing

S. No. Change
1
System will calculate tax on invoices from transport
vendors. User can choose to deactivate the tax
calculation on the invoice as the case may be.
2
User will deactivate the tax calculation in case the per
trip cost is less than Rs. 1500 or the invoice pertains
to export related transportation.
3
System will automatically post the tax liability A/C
which will get cleared after remitting the amount.
4
The standard SAP report for ST-3 provides data for
non-GTA transportation service tax only. For GTA
Service Tax, SAP report for TDS will be used to
extract data for GTA since it is configured through
TDS functionality. The data from both the reports will
be used to prepare ST-3 report in excel as per the
statutory format.

Role Impacted
AP Clerk
AP Clerk
AP Clerk
Taxation Clerk,
Taxation Manager

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