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SAP Implementation

Project: PARINAAM
Business Blue Print Document for
Finance – Tax Process (TDS & WCT)
Implemented
By

(TDS). TDS Certificates issuance . Works Contracts Tax ( WCT) Key Words Supplier Invoices . WCT Certificate issuance. AR.Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited Document History Document Name Business Blueprint Title Finance – With Holding Tax Process Document Purpose To be process in SAP for Tax Deducted at Source. GL & HCM Document Sign-Off Company Project: PARINAAM Name MHRIL-TCS CONFIDENTIAL Date Signature Page 1 of 19 . Payments . TDS Deduction . AP. Reporting Document Status In progress Contact for Enquiries Process Basics Illustrative Response Process Name Finance – Extended Withholding Tax including Works contract tax Process Number MHRIL-FI-02-02-111 Process Description (Brief Bullet Points) … What Does the Process Do Calculation and processing taxes applicable on vendor invoices or payments Process Owner (preferably indicate the position in the organization structure rather than the name) Head Finance Input Process Dependent BBP’s MM.

4. The withholding tax type governs the way in which extended withholding tax is calculated. Recipient Type 3. In one business transaction. MHRIL-TCS CONFIDENTIAL Page 2 of 19 . 2. Systems object that you use to classify payment recipients according to their profession. Project: With Holding Tax Type PARINAAM A two-digit code that represents the specifications used for calculating and displaying tax. All other currencies are considered as foreign currency. The percentage rate used to calculate the tax amount.0 Extended With Holding Tax Created By Suanand K Reviewed By Mohan Krishnamurthi Date Sign Approved By Created By Reviewed By Approved By Glossary S.Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited Document Change Control Release / Version Description Date V1. With Holding Tax rate With Holding Tax Code 5. for the purposes of withholding tax reporting. In Financial Accounting. several kinds of withholding tax may have to be withheld. Description Full Form Currency A currency is the money in general use in a country.No 1. This is the local currency. a currency has to be specified for each company code.

Authors and contributors can be referred to in section Document History. Standardize business processes and practices. as adequate for meeting its stated business needs  TCS team to design and develop the application using the requirements as the basis. application. Both. This is the main concept document of the project. Integrated Solution for real time accounting and enhanced reporting.  The acceptance testing team to develop test data and to test the application  The maintenance and support team to understand all aspects of the process.0 in order to evolve the Business Blue print. Capture and make available information needed for effective and accurate Finance strategies. This document aims to describe the future business solution based on SAP ERP. Any additional explanations that are only relevant when the project is in progress are given in the various project management plan documents. as well as to plan and manage all project resources thereof. The document contains how the process under reference will be handled in the TO-BE SAP scenario along with the business benefits and organisational changes required to implement the SAP enabled business processes. Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 3 of 19 . Thus there was a requirement to study the existing Finance and Reporting practices of MHRIL and map the same to the functionality provided in SAP ECC6. IT subjects and organizational issues that are required to understand the situation. and maintain it.Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited Introduction This document depicts the SAP enabled TO-BE version of the business process of MHRIL. These project results were devised and decided on by the project team and the department experts from customer MAHINDRA HOLIDAYS & RESORTS INDIA LIMITED during the Business Blueprint project phase. Address the current and future business requirements. SAP R/3 FI module provides a very wide and comprehensive range of functionality that meets the requirement of most of the enterprises worldwide. This document states all of the conceptual results of the project PARINAAM. It is supplemented by separate specifications for custom developments. Intended Users This document will help:  MHRIL to understand and approve the requirements and design of the proposed application. The content of this document forms the basis and the guidelines for the subsequent Realization phase. Eliminate the processes which add no value such as redundant data collections and reconciliation. The document also highlights Tax Processes (TDS & WCT) and covers the reporting requirements of MHRIL with respect to the process under reference. are described in it. which the project management team will provide on request. These are evolved based on the detailed study of the business processes and functions of Customer and with the inputs from the series of Business Blueprint Workshops conducted for this purpose. The main project objectives and business drivers behind MHRIL’s decision to implement SAP are to       Streamline the processes related to Tax Processes (TDS & WCT) in Finance.

.3 Extended With Holding Tax Process..3 3.........................11 TDS Deduction Process........................................................ 14 Interfaces.........11 TDS Certificate............................................1 10....................................................................................................14 Master Data Considerations (including all relevant data relationships)........................................................................................14 4.......................................................................................................... 15 Enhancements & Forms......................................7 3........................... Standard Reports....................................................................................................12 4..............................2 3.......................................................................10 Lower deduction of TDS (TDS Exemption)..........................................15 Data Cleansing Requirement............................................................................................... Data Conversion / Historical Data.........................................2 1......................1 5..............................................7 Key Policies/Operational Decisions or Logic within the Process..................................2 5........................... Description of Improvements. Organizational Consideration.......................................................14 6.......................................2 3................. 8 Solution in SAP.......................................1 3.................................................................................1 10..................g........6 Scope in Brief..........3 14..............................14 Functional Deficit.............................................................. Scope....7 Explanation of Functions and Events............................................................................................................ Process Description / Requirements.................................................................................................................................... 12 WCT Remittance Challan Process...........................14 7..............13 5........................8 Business Requirements......................... 10 Assignment of TDS Codes to Vendor Master....... Business Process Diagram.................................................15 Scope...............4 3................... 10......................................6 1...................9 3..............................6 3...........................2 11.............. Integration...... 15..............................................1 12...................................................8 3............................................................................ 15 Enhancements..........................................................................16 Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 4 of 19 ..............1 1........ 9..............................3 1................................................................................................................................................1 11..........................................................3 12..................................................................14 6.....................Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited Table of Contents 1.....................................14 System Configuration Considerations...................................................14 Integration & Interface Considerations...........10 TDS Codes...12 Works Contract Tax (WCT)........................................13 Organization Structure Consideration.......2 13....... 6 Location where the Business is performed............................. Business Process Master List reference....................................... Forms)...............................................................4 13.................2 12.......................................................................9 3..............................................................................................12 Works Contract Tax Codes... 11 Quarterly e-filing of Challan................................................................................................5 3...............4 2.........................................................................14 Approach to Cover Functional Deficit............................ 14 Reporting Requirements......................................................................................1 2......15 12........................................................................................................................................................................................................................................................................................................................................... 14 Developed Reports..........................................................14 11....................1 13...15 13........................................................................................ 15 Data Migration....................................1 5..........................16 Workflow Requirements...............15 Data Validation and Reconciliation........................................... 8....................8 2.........................................2 12.............................. 15 Outputs (e............... Changes observed/Suggested..14 Functional Deficit............................................................................................ Changes to Existing Organization Process..................................11 Remittance Challan Process....15 Authorization Requirements...........................

.................................16 Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 5 of 19 ............................................................. Tata Consultancy Services Limited Traceability Matrix.........Mahindra Holidays & Resorts India Limited 16...

2 Scope in Brief Scope of this document covers the current MHRIL process on  Income tax deducted at source other than salaries under various sections of the income tax act 1961 as applicable.  Number ranges for TDS challan.  Computation of total taxable amount subject to maximum limits not chargeable to tax under various sections of the per Income tax act 1961.  Deduction of TDS on advances and clearing against the Invoice is subject to business decision on adjusting advance payments. Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 6 of 19 .Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited 1. Scope 1. certificates & other bank remittance challans.For example whether tax to be deducted on corporate /others as the tax rate is varied for corporate and others.  Maintaining exemption limits or reduction in rate of tax.1 Business Process Master List reference BPML Reference Process Number MHRIL-FI-02-02-111 Core Process Level-1 FICO Process Area Level -2 Financial Accounting Business Process Level-3 Extended Withholding Tax Remarks 1.  Remittances.  Maintaining tax codes as applicable under various sections of the Income tax act.  Maintaining recipient types.  Treatment of TDS on overseas payments for services.

The main purpose of this document is to calculate and process the taxes applicable on vendor invoices or payments. updating. and issuance of certificates and filing of returns subject to applicable vendors. 1. 1.4 Key Policies/Operational Decisions or Logic within the Process Not Applicable Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 7 of 19 . however there may be Specific formats for payments. Works contract tax (WCT) is similar to TDS.Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited  Generation of certificates.3 Location where the Business is performed Location Scope covers Head office / branches / resorts of MHRIL company code and Line of Business (LOB) as defined in organization Structure.  Filing of annual returns.

6 TDS or WCT are deducted and recorded at the time of booking vendor invoice. Accumulation of maximum amount not chargeable to tax. PARINAAM MHRIL-TCS CONFIDENTIAL Page 8 of 19 . Business Requirements         Project: TDS should be deducted on real time basis either at the time of invoice or payments. Returns are filed quarterly (e-filing).Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited 2. Process Description / Requirements 1. TDS certificate generated/prepared for the deductions made. Taxes are deducted at each branch/resort and returns are filed based on location.5 Explanation of Functions and Events     1. Calculation of tax based on exemption limits Generation of certificates Filing of returns Real time calculation of WCT. TDS on advance payment should be adjusted during invoice against total TDS. Maintenance of tax types and tax codes to be derived automatically from the system.

Similar tax types can be created under different sections.Others ii) Section code: Section code refers to the assessing officer under the Income tax act 1961. This is must for generation of challan and tax certificate.Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited 3.2).  Tax deduction number maintained in the search term. where the tax will be remitted and returns will be filed. i) Recipient types: Recipient types are used to determine the rate of tax to be used at the time of tax deduction and tax certificate generation. Solution in SAP The following will be configured in SAP to address the business requirements (2. which can be referred for creation of specific types. C2 for HUD and C3 for Others. This will be represented by 2 characters: For Invoice: 194 C. For Payment /Advance: 194 C.C1 for Individuals.  Complete address of the Income tax office. Building.P1 for Individuals. etc / Professional or Technical Fess Based on above classification. 2) Withholding tax types: This represents the classification of tax types under various sections as listed below: Section Description 194C Payment to Individual / HUD / Corporate 194J Fees for Professional 195 For overseas payments for service 194A Bank Interest 194B Winnings from Lottery / Crossword Puzzle / Horse Race 194D Payment of Insurance Commission 194H Commission or Brokerage 194I Rent of Plant & Machinery / Land.Corporate  OT . withholding tax types will be created in the system. Similar for other types of payments Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 9 of 19 . IN will be used for MHRIL. This will be maintained and determined either at the time of advance payment or at the time of Invoice whichever is earlier. Following will be recipient types for MHRIL:  CO . Standard Withholding tax types are available in the system. the above section codes can be maintained for both for Invoice and payments. Furniture. P2 for HUD and P3 for Others. Based on the business requirements. Basic Settings: 1) Withholding tax (TDS/WCT) country: Withholding tax will be created for each country specific and relevant to vendor. following masters need to be maintained in section code:  Assessing officer where the returns are being filed. In addition to above. For instance Section code for Chennai can be maintained as 1000.

Presently MHRIL is not calculating surcharges separately. for payment as well as for invoice booking will be assigned to each vendor. iii) Assignment of GL Codes: Presently separate GLs are used for different types of taxes. Separate rate type would be created for surcharge with different calculation procedure. 1. C2 for HUD and C3 for Others. Both categories of tax codes i. 1. Vendor master is to have the relevant Permanent account number of the vendor in order to pick up during certificate printing.e. As per the nature of transaction.C1 for Individuals. 4) Activation of Extended withholding tax and assignment of company codes i) Assignment of withholding tax types to the company code: All the withholding tax types are assigned to company codes with validity period. which are clubbed with the main income tax. user has to delete the tax codes which are not relevant for that transaction. P2 for HUD and P3 for Others. For Payment /Advance: 194 C. 3) Withholding tax codes: Tax codes represents the percentage of tax prescribed under various sections of the Income Tax Act 1961. In cases where the Vendor is not liable for deduction or at lower rate of tax the same will be entered. Some vendors may be rendering services that are subject to TDS in more than one section. Master data: Assignment of tax codes in the Vendor Master Based on the nature of service the applicable tax types and tax codes will be attached to the vendor masters which are to be made liable. same will be followed in SAP. formulae will be developed to calculate the various taxes. Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 10 of 19 . Withholding tax codes will be represented by a maximum of two characters: For Invoice: 194 C.7 TDS Codes TDS Codes will be created as per the applicable tax rates for payments as well as invoice.Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited Rounding off rule for withholding tax type: Rules will be defined for each withholding tax type in respective company code.8 Assignment of TDS Codes to Vendor Master TDS codes will be assigned to vendor master as per applicable rates for individual vendors. Multiple tax types can be assigned to a single vendor. In the Vendor master either with 100% exemption or reduction percentage for a specified Validity period.P1 for Individuals. ii) Formulas for withholding tax: As per tax requirement for business. Tax types are assigned to respective tax codes. which will be deducted either at the time of Invoice or Payment including advance payment.

Down payment adjustment with Invoice When user will adjust the vendor advance with invoice. During Vendor Advance (Down Payment) At the time of vendor advance as per TDS codes assignment (in vendor master) respective TDS will be deducted.Mahindra Holidays & Resorts India Limited 1.10 TDS Deduction Process During Vendor Invoice During vendor invoice as per TDS codes assignment (in vendor master) respective TDS will be deducted. payment date and Challan number) in the system after depositing the money in the bank. Depending upon the stage when adjustment is made. On receipt of final Invoice from Vendor. At the time of making advance payment to Vendors TDS amount is deducted for the advance payment. system will reverse the TDS amount proportionately. if any vendor provides certificate of exemption. Advance payment earlier will be reversed in full including the TDS amount and the Invoice will be entered for the full amount capturing the relevant TDS amount. Challan Update Process Update bank details (Basic Statistical Return (BSR) code. The changes may be in TDS code or amount deducted. 1 Interest from Bank 194 A 10 Contractors (194C) Other than Advt. This means this will effect bank payment of TDS. system can generate accounting entry.11 Remittance Challan Process Remittance Challan will be generated through the system. Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 11 of 19 . This remittance Challan will propose the amount which will be used to prepare the Challan physically (This function does not generate the Challan form). Following information has to be maintained in Vendor master:     Exemption Exemption Exemption Exemption certificate Number Validity Period percentage Volume 1. respective effect will be given in vendor master which will ensure deduction of tax at reduced rate of tax for that vendor. 1. This step will clear open items in the account of TDS Payable and credit the bank. Subsequent Adjustments in TDS deducted In case of error of deduction of TDS.9 Tata Consultancy Services Limited Items % of TDS Professional Fees ( 194J) 10 Contractors ( 194C) Advt. 2 Lower deduction of TDS (TDS Exemption) In case . subsequent adjustments can be done only through specific function of TDS JV available in CIN.

the number given to that certificate stands cancelled and cannot be used again. 1. It is also to be noted that certificate needs to be printed in the first instance rather than preview.15 Works Contract Tax Codes Different tax code and type will be defined under respective sections. However. In such an instance. TDS Certificates already issued can be reprinted with “DUPLICATE” clearly printed on the face of the certificate. Print preview will be considered as original certificate generated. Subsequent Adjustments in WCT deducted Adjustment can be made through WCT JV function. This will be developed by obtaining MHRIL specific requirements.Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited 1. the cancellation will be possible through system.14 Works Contract Tax (WCT) During Vendor Invoice During vendor invoice as per WCT codes assignment (in vendor master) respective WCT will be deducted. remittance Challan update. For example: WCT for Tamil Nadu to be mapped as W1 as tax type and 4 % as tax code. This tax code and type to be mapped vendor master at company code level.16 WCT Remittance Challan Process WCT Deduction will be performed in the system as a part of SAP Standard Functionality. respective entry will be posted. 1. 1. 1. Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 12 of 19 . In case the certificate is printed wrongly and needs to be cancelled.12 TDS Certificate TDS certificates are to be issued quarterly. Considering WCT rates are not common across India a separate tax type to be created with 2 character for differentiating the states and respective tax code to be mapped. In case of specific requests from vendors.13 Quarterly e-filing of Challan Quarterly e-file report can be generated and filed. The certificate has to be issued after downloading from IT website. which will be used to deduct tax at the time of payment. WCT Remittance & Certificate generation are not part of the standard functionality.

17 Extended With Holding Tax Process Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 13 of 19 .Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited 4. Business Process Diagram 1.

Mahindra Holidays & Resorts India Limited Project: PARINAAM MHRIL-TCS CONFIDENTIAL Tata Consultancy Services Limited Page 14 of 19 .

11. 9. Reporting Requirements 7 Standard Reports Sl. Changes to Existing Organization Process 4 Changes observed/Suggested  None.Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited 5. Functional Deficit  Tax computation. System Configuration Considerations  Vendor master  Customer master 6. Description of Improvements  Better tracking of documents through the entire process of TDS.  Quarterly e-file generated by the system. Certificate will not be generated through system. System will give the available data. Integration & Interface Considerations 5 Integration 6 None. Approach to Cover Functional Deficit  Printing of certificate for WCT to be managed out of the system. Organizational Consideration 1 Organization Structure Consideration 2  Company Code = 1025 (MHRIL Designated)  Chart of Accounts Master Data Considerations (including all relevant data relationships) 3  Existing TDS & WCT rate through Supplier Master or customer if required. 8. No Requirements SAP reports 1 MIS on TDS J1INMIS 2 Certificate Printing J1INCERT Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 15 of 19 . The original certificate will be printed once only. deduction and accounting for WCT will be system driven but.  Duplicate certificates can be printed from the system through secured authorization level. 7. 10. Interfaces None.  Handling of special scenario such as reduced rates of deduction is driven by standard SAP system.

Forms) OUTPUT / FORMS WRICEF-ID Description XX-xxO001 XX-xxO002 Tax Certificates Project: Data Object (Sales Order) Output Type (Form. 11 Data Cleansing Requirement  For Completeness and correctness all data cleansing related activity will be performed by MHRIL. Enhancements & Forms 13 Functional Deficit Yes 14 Enhancements Enhancements WRICEF-ID Description Data Object (Vendor Invoices) MHRIL-FI-02-02111 Work Contract Tax Certificates printing Functiona l Gap Alternative SAP Standard System Does not support Customization Reason Owner Finance 15 Outputs (e.) Frequency Volumes Owner Attachment Tax Challans PARINAAM MHRIL-TCS CONFIDENTIAL Page 16 of 19 .  MHRIL to validate and reconcile the data for consistency and correctness. Data Migration 9 Data Conversion / Historical Data  TDS codes to be attached to vendors subject to TDS. 10 Data Validation and Reconciliation  Vendor master data with historical value will be provided to MHRIL in specified format /template.Mahindra Holidays & Resorts India Limited 8 Tata Consultancy Services Limited Developed Reports REPORTING WWRICEF-ID Description Report Type (ABAP. EDI.  WCT Codes to be attached to vendors subject to WCT. 12 Scope No 13.g. Data Elements Relevant KPI Owner BI. etc. BOBJ) Printing of WCT Forms Certificate 12.

Vendor Provision created D Processing System (SAP. Printed Certificate D Provision 5 Co Code. Recipient Type Quarterly e-file generated. Section Code. Recipient Type. Authorization Requirements D – Direct fit. TDS Section.Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited 14. 16. W – Work around. Vendor No. TDS Section. FI Document with TDS D Create TDS JV for subsequent adjustments 2 Document number Accounting document generated D Create Remittance Challan 3 Co Code. TDS. Section Code. Non-SAP) 15. Recipient Type Remittance Challan generated and amount proposed. Amount. document range. D Create Bank Challan 4 Co Code. date range. Traceability Matrix Project: PARINAAM MHRIL-TCS CONFIDENTIAL Page 17 of 19 . PO#. D Certificate Printing Ad hoc Vendor. C – Customization Activity Data Input Data Output Responsibility / Authorization Remark s Create Invoice / Down payment for TDS vendors. TDS Section. 1 Company Code. N – Not in SAP. Workflow Requirements None. Section Code. and House Bank Bank Details updated in Remittance Challan D Quarterly efile 4 Co Code. Bank Challan No.

4 TDS filing 3.5 Issuance of certificate PARINAAM 3.Mahindra Holidays & Resorts India Limited Tata Consultancy Services Limited KPMG Process Process No Project: TCS-MHRIL BBP Process Title Process No Process Title Page No 7.1 TDS rate updation 3.6 & 3.7 Quarterly filing 15 7.1 Tax Codes 13 7.10 MHRIL-TCS CONFIDENTIAL TDS/WCT Certificate 15 & 16 Page 18 of 19 .