JSW Steel BBP r2r v1.2

JSW SAP GST Implementation
Business Blueprint Document

Record to Report
Business Blueprint Document BBP_R2R
Record to Report To-Be Subprocess Design
Document Control Information
Document Information
Document Identification BBP_R2R
Document Name Record to Report
Project Name JSW Steel SAP GST Implementation
Client JSW Steel Ltd
Document Author Roshan Karkera

Document Version 1.2
Document Status Draft
Date Released
Document Edit History

Version Date Additions/Modifications Prepared/Revised by
1.1 27-Mar-2017 Draft Version Roshan Karkera
1.2 27-Apr-2017 Changes after Dolvi session Roshan Karkera
Document Review/Approval History

Date Name Organization/Title Comments
Kamal Purohit DTTILLP / Manager <Comments>
Distribution of Final Document

The following people are designated recipients of the final version of this document:
Name Organization/Title
Document Control Information Page ii JSW Steel Ltd. SAP GST Implementation
Table of Contents
1 Introduction ..................................................................................................................................... 4
1.1 As-Is Process Overview ............................................................................................................. 4
2 As-Is Process Details ...................................................................................................................... 5
2.1 GL Master Data ......................................................................................................................... 5
2.2 Business Place .......................................................................................................................... 5
2.3 Vendor Invoice Processing ........................................................................................................ 5
2.4 Vendor Debit Note Processing ................................................................................................... 6
2.5 Cash Purchases ........................................................................................................................ 6
2.6 Advance Payments on Purchases.............................................................................................. 7
2.7 Customer invoice/Debit notes processing (Non-SD related) ....................................................... 8
2.8 Customer Credit Notes Processing ............................................................................................ 9
2.9 Advance Payment Receipts from customer .............................................................................. 10
2.10 Cash Advances ....................................................................................................................... 11
2.11 Bank Charges (LC discounting/realization, Lodgment Fees, foreign payments) where service tax
is applicable .................................................................................................................................... 11
2.12 Input Service Distribution (ISD) ................................................................................................ 11
2.13 Indirect Tax Utilization Process ................................................................................................ 12
3 Process on SAP (To-Be) ............................................................................................................... 15
3.1 GL Master Data ....................................................................................................................... 15
3.2 Business Place ........................................................................................................................ 15
3.3 Vendor Invoice Processing ...................................................................................................... 16
3.4 Vendor Debit Note Processing ................................................................................................. 17
3.5 Cash Purchases ...................................................................................................................... 18
3.6 Advance Payments on Purchases............................................................................................ 19
3.7 Customer invoice/Debit notes processing (Non-SD related) ..................................................... 20
3.8 Customer Credit Notes Processing .......................................................................................... 21
3.9 Advance Payment Receipts in Sales........................................................................................ 22
3.10 Cash Advances ....................................................................................................................... 23
3.11 Bank Charges (LC discounting/realization, Lodgment Fees, foreign payments) ........................ 24
3.12 Input Service Distribution (ISD) ................................................................................................ 24
3.13 Indirect Tax Utilization Process ................................................................................................ 26
3.14 SAP Transaction Codes........................................................................................................... 27
3.15 Customization Requirements (Application & Software) ............................................................. 27
3.16 SAP Reports............................................................................................................................ 28
4 Change implications – Benefits .................................................................................................... 29
5 Change implications – Risks ........................................................................................................ 30
6 Change implications – Action plan............................................................................................... 31
Table of Contents Page iii JSW Steel Ltd. SAP GST Implementation
1 Introduction
The Purpose of this document is to explain the AS-IS process in the current tax regime and TO-BE process
under the new GST regime of Record to Report (R2R) for JSW Steel Limited. JSW is already using the
functionalities of SAP for managing activities related to Record to Report.
This document describes the proposed solution for Record to Report in the new GST regime and its
mapping with current process applicable for the following entities only
 JSW Steel Limited (1000)
 JSW Steel Coated Products Limited (1010)
 Amba River Coke Limited (1030)
 JSW Steel SALAV Limited (1060)
1.1 As-Is Process Overview

The Record to Report processes on which there is an impact of indirect taxes focuses on the following
activities
 Vendor Invoice Processing
 Vendor Debit Note Processing
 Cash Purchases
 Advance Payments on Purchases
 Customer invoice/Debit notes processing (Non-SD related)
 Customer Credit Notes Processing
 Advance Payment Receipts in Sales
 Cash Advances
 Bank Charges (LC discounting/realization, Lodgment Fees, foreign payments) where service tax is
applicable
 Input Service Distribution (ISD)
 Indirect Tax Utilization Process
Introduction Page 4 of 32 JSW Steel Ltd. SAP GST Implementation

JSW Steel_BBP_R2R_V1.2
2 As-Is Process Details
2.1 GL Master Data

Currently in JSW Steel, indirect tax related GL codes has been created majorly at plant or state level. In
the 4 legal entities there are approximately 326 GLs of Excise, Service Tax, VAT & CST created in the
system.
2.2 Business Place

In JSW Steel, around 108 Business places has been created in SAP which represents a manufacturing
plant, port & depot. These have been assigned to 128 plants.
At the time of transaction posting, the business place field gets populated in all the line items of the
accounting document. For FI transactions, a validation for mandatorily updating business place field in all
transactions has been activated.
2.3 Vendor Invoice Processing
 Majorly all vendor invoice processing is done at GBS-Mumbai office. Initially the invoices
are received at plant, authorized by respective department. These invoices are listed
down in an excel template, documents are scanned & sent to GBS for further processing.
At GBS, the tax components of invoices are verified by Indirect Tax team & only after it
is authorized by them, it is forwarded to the AP team for posting in the system.
 For Non-stock items e.g. Consumables, manual invoice booking is followed except in
Salem where it is routed through Purchase Order.
 There are also service related invoice E.g. Travel, Legal fees, Professional fees, Hotel
expenses (where booking is done by JSW), Freight charges, payment to parcel services,
CSR activities, which are accounted through FI module. Service tax is accounted using
tax codes.
 In case of domestic freight/handling, if any taxes (RCM) are to be charged, the same is
calculated manually in excel & the values are posted to respective tax GL accounts. In
Salem plant, though, tax codes are being used.
As-Is Process Details Page 5 of 32 JSW Steel Ltd. SAP GST Implementation
 Sodexo vouchers are given to employee as part of the CTC. Accounting of the same to
vendor who supplies the voucher is not routed/posted as part of the monthly payroll
process in HCM module. Based on invoice received from vendor & post verification from
report provided by HR for the vouchers issued to employee, it is posted through the
Purchase Order Process. In Salav, though, such invoices are manually accounted in FI
module.
 The nature of services availed at corporate office are Legal fees & Banking and Finance
services
2.4 Vendor Debit Note Processing
Following are the nature of debit notes currently being processed by R2R team at JSW
 If there are any differences e.g. Shortages / damages/rate differences after
accounting of MIRO, based on debit note raised to vendor, finance accounts for the
same including taxes.
 Else the adjustments are made at the time of MIRO itself.
 In Salem, debit notes are also issued for Penalty for Quality as well as Performance.
 Whereas in Dolvi, debit notes are issued for e.g. Quality, rate difference, moisture,
power rate. For this, debit note is prepared in word format & manual JV is passed to
account for the same including taxes wherever applicable.
 Additionally, in Salav, debit notes are issued for e.g. VAT collected by vendor but not
deposited. Manual JV is used to account it in the system.
2.5 Cash Purchases

Following are the nature of cash purchases currently being processed by R2R team at JSW
 In Dolvi/Salav plant, there are some consumable purchase e.g. Spare parts,
computer parts where Excise or VAT is applicable. This is routed through the Cash
Journal & the tax component is posted as a separate line item. Credit for the same is
availed.
 Other plants there are no cash purchases where taxes are applicable. They are
normally routed through the PO process.
2.6 Advance Payments on Purchases
Following are the nature of advance payments on purchase of material or services currently
being processed by R2R team at JSW
 In case of rail freight, relevant department sends request for advance payment based on
rakes which are planned to be dispatched. Advance payment (with or without TDS) is
made as a bank transfer which is then utilized by railways for dispatching the rakes.
 E-freight – Bank transfer is made to a Pool A/c based on instructions from logistics.
Railways debit this account as & when the RR is generated. FRF is generated later based
on actual RR value. In Dolvi & Salav, no FRF is generated. Instead NFA (Note for
approval) is a mandatory document for initiating any down payment request. The
document is generated in word format.
 Advance for railway freight – In this case, bank transfer is made to the CHA account,
who utilizes this amount for railway freight. Here, FRF is generated prior to transfer of
funds. In Dolvi & Salav, no FRF is generated.
 In other cases, vendor approaches respective department for approval, which is sent to
finance for processing the payment with or without TDS based upon fund requirement
(this is decided between HOD/Finance head/Treasury/Internal Audit)
 For all domestic PO based vendors, advance payment is processed through ME2DP i.e.
DPR through PO. Approval process is same as mentioned above.
 In case of foreign vendors, there are no taxes deducted on the payment
 Post approval by Internal Audit as mentioned in the above DPR process, Treasury
processes the payment with reference to DPR subject to availability of funds either
through F-48 or F110
The Export Sales departments also processes the following foreign outwards payments
1. Freight –Outward – The shipping team will do the negotiation. Once the deal is
finalized for a particular, NFA is prepared by them post which it is approved by
Pre/internal Audit & Taxation team. After this approval, payment is processed by
Finance. F-48 is used for accounting of the freight payment. Shipment team will
allocate the freight amount against the relevant invoices. Corporate finance accounts
for the invoice with the same exchange rate on which the advance has been booked.
Hence there is no exchange rate difference in these transaction. Bank charges are
accounted along with ST through tax codes only.
2. Agency Commission – Foreign currency only - For each shipment/invoice,
respective location makes a provisional entry in system. Based on invoice raised by
the agent which is always against a particular shipment, payment is processed &
accounted through transaction F-48. As till now, no TDS is deducted on such
payments. After this the invoice is accounted along with reversing the related
provisional entries.
3. Quality Claim - If there are any claims raised by customer, marketing team along
with an external surveyor will negotiate with customer to arrive an amicable claim
value. Based on this debit note is raised by the customer which goes through the
NFA approval process. Amount is transferred based on this as an advance & after
this the actual accounting of the debit note takes place in the system with the same
exchange rate of payment. This is done in order to avoid accounting of exchange
rate differences.
4. Reimbursements – Inspection charges at destination location, handling charges at
discharge port, surveyor charges, Container is booked by customer & due to delay at
JSW side-Charges incurred by customer due to this is reimbursed. Payment process
is same as mentioned above.
5. Misc. charges – Same payment process as mentioned above.
2.7 Customer invoice/Debit notes processing (Non-SD related)

Following are the nature of non-SD related customer invoices/Debit notes on sale of
material, assets or services currently being processed by R2R team at JSW
 Any job work done for group companies or external customer, invoice along with service
tax is raised from Finance. Tax code is not used for calculation, accounting is done
manually. This scenario is not applicable for Salem, Dolvi or Salav.
 If there are any difference in VAT charged in the original invoice, manual invoice is
raised for accounting of the tax portion.
 Testing by R&D department is done for external customers. Such charges are billed to
customer along with service tax.
 Sale of Car to employee (OYCS-Own your car Scheme) - HR initiates the process &
provides approval for accounting of such sale in Finance (This process is a manual done
outside system). Applicable VAT is charged on such transaction which is directly posted
to the respective GL account. Employee is created as a customer in the system for such
accounting of such sales
 Sale of Mobile to employee – (Only applicable in Salav) Mobiles given to employees & if
he leaves the organization within 3 years of issuance to mobile, HR initiates the process
& provides approval for accounting of such sale in Finance (This process is manual and
done outside system). Applicable VAT is charged on base value as per HR policy & not
on WDV value, which is directly posted to the respective GL account. Debit note is raised
out of the system & accounted manually. Individual employee is created as vendor
which is also treated as a customer (Vendor as a customer)
 In case of Vasind/Tarapur/Kalmeshwar, Rent income is received from external
customers, e.g. Banks, Telecom towers, shopping complex, etc. for usage of plant
property. Invoice is manually prepared in word or excel along with service tax. This
accounted using the standard SAP transaction & tax codes.
 Supplementary invoice with respect to price difference is always issued/generated from
SD module along with tax implication.
 Scrap sales are processed through SD module only along with accounting of relevant
taxes.
 MBC-Mini Bulk Carrier & Barges charges (only in Salav) - Such services are provided to
Dolvi plant, ARCL & JSW cement which are created as customers in the system. Monthly
invoice is raised based on volume per metric ton details for which is maintained in excel.
Charges per metric ton are based on agreement between the respective plants & legal
entities. Manual invoice is raised which is word format along with service tax. This is
accounted in using transaction F-02.
 In corporate office, debit notes are raised on group companies against rent for property.
Debit note is raised along with service tax. Service tax is collected from the respective
service receiver and paid to government.
2.8 Customer Credit Notes Processing
 Following are the nature of credit notes are processed by R2R team at JSW
o Rebates – Marketing creates the rebate agreement in system. Sales Audit
team approves the agreement which is intimated to Finance for settling the
same. Accounting entry is automatically posted at the time of settlement. This
process is handled in SD module.
o Quantity/Volume discounts-Monthly
o Price Support/Rate difference

o Marketing support
o MOU discount -yearly/quarterly
o Quality Compensation - This relates to quality issues for goods supplied.
Customer is compensated based on the confirmation by Quality team. Credit
note is issued without any taxes. For some major automotive companies,
after issuance of the credit note, they request for refund of the VAT portion
also. In that case, another credit note is issued for the same through Finance.
 There are no taxes charged on such transaction & in the system there is link to the
invoices against which such discounts are given.
 Credit notes or supplementary invoices are normally raised from SD module.
Currently when credit notes are issued, no taxes are charged.
2.9 Advance Payment Receipts from customer
Following are the nature of Advance payment receipts from customer currently being
processed by R2R team at JSW
 Earnest Money (Tender/Auction sales) - Advance amount is taken from customers who
participate in the auction. No taxes are charged on it. Post completion of the auction, the
money is refunded to the relevant customers without any interest. Special GL indicator
is used for such kind of transaction.
 In Vijaynagar, dispatches are majorly done only based on advances received from
customer. No taxes are applicable on such advance.
 In other plants, majority of the customers are on credit terms. Only in case of new
customers where credit worthiness is not known/determined, advances are taken prior
to despatch of goods.
 No receipt document is generated from the system or manually created is being issued
to customer by JSW.
In Export Sales department, there are few case of Customer advances (F-29), where when
amount transferred to bank, bank charges are applicable along with service tax. Once
shipment is completed, documents are provided to the banks to adjust the values against
the advance. For this bank debits some charges i.e. lodgement fees on which service tax is
applicable. All such charges are accounted through transaction FB50
2.10 Cash Advances

Following are the nature of Cash Advance receipts from customer currently being processed
by R2R team at JSW
 In Vijaynagar plant, for Scrap sales, advance is sometimes received in form of cash/
cheque which is accounted through the cash journal transaction in SAP. Post
clearance of cheque in the bank, the goods are dispatched to the customer.
 In all other plants, no cash advances are received from customers.
2.11 Bank Charges (LC discounting/realization, Lodgment Fees, foreign

payments) where service tax is applicable
Following are the various scenarios where bank charges with service tax is applicable &
currently being processed by R2R team at JSW
 In case of export sales, majorly customer dispatches are on Letter of Credit (LCs).
 When the export documents are discounted with the bank or on final realization of
the documents, for processing the same bank debts some charges.
 Also in case where advances are received from the customer & once shipment is
completed, all relevant documents are provided to the banks to adjust the values
against the advance. For this bank debits some charges i.e. lodgment fees
 Service tax is applicable on bank charges/ realization charges/lodgment fess. Tax
codes are used for calculation of the tax liability.
 Also, there are foreign payments, as mentioned below, where bank debits some
processing charges on which service tax is applicable.
o Freight-outward
o Agency Commission (Foreign currency only)
o Quality Claims
o Reimbursements of expenses incurred by customers
2.12 Input Service Distribution (ISD)
Following are the process currently being followed by R2R team at JSW for distribution of
service tax credit accumulated at corporate office for services procured on behalf of other
locations.
 Corporate office is having Input Service Distribution registration.
 Reverse charge is applicable on Director sitting fees, Freight payment, any payment
or charges/fees for rendering the service to Non Resident.
 Invoices for all such expense along with service tax are accounted in Corporate
Service Tax Receivable GL A/c. At the month end, the details of the Receivable A/c is
listed down along with details of vendor, name of service, nature of service, ST
Value.
 Based on turnover of the plants, the Service Tax receivable value is allocated to
respective plant by raising a manual invoice/Debit note from finance.
2.13 Indirect Tax Utilization Process
Following is the process currently being followed by R2R team for utilization of various indirect taxes
 Excise Utilization
 Report is executed to know the credit availability on both input & capital goods.
 The details are downloaded in excel & if any discrepancies are found, the details are
sent to finance for making the necessary adjustments.
 After adjustment of Cenvat Credit, the net payable (PLA) details is sent to Treasury
along with accounting entries for processing the payment
PLA A/c Dr.
Cash/Bank Cr.
 Post this, utilization is done in the system using standard transaction
 Service Tax Utilization
o Report is executed to know the availability of service tax credit. This report is
used to ascertain the credit to be availed on payment basis. Also the records for
the same are maintained manually outside SAP for e.g. Railway service credit,
RCM credit, ISD credit, Service tax on branch handling expenses.
o At the time of booking invoice, the Service tax portion is posted to Receivable
a/c. Later when the invoices are received by Tax team & it is noticed that there
are some ineligible credits, the same is listed down & sent to Finance for
reversing the value from Receivable A/c to the relevant expense GL account
o In case of import of services, the ST tax liability is getting generated by passing a
manual JV based on information received from HO and done once in a month.
Dr. Service Tax Receivable
Cr. Service Tax Payable
o In case of Railway inward, ST tax component is booked to a separate GL account
(ST receivable Railways).
Based on request, Railways will issue a Service Tax certificate based on the RRs
for the month.
Excise Team will verify the credits vis-à-vis the balances in the ST Receivable-
Railways GL A/c.
For the eligible credit, a manual JV is passed e.g.
Dr. ST Receivable Final- Vijaynagar
Cr. ST Receivable Railways
In case of ineligible ST credit, below accounting is passed
Dr. Expense A/c
Cr. ST Receivable Railways
o In case of Railway outward, ST tax component is booked to ST Receivable Final
GL account
Based on request, Railways will issue a Service Tax certificate based on the RRs
for the month.
Excise Team will verify the eligible credits based on the customer INCO terms
mentioned in the SO as per list provided by logistics/CSD
In case of ineligible ST credit, below accounting is passed
Dr. Expense A/c
Cr. ST Receivable Final a/c
o Post this, utilization is done in the system using standard transaction
The final ST Payable for RCM are sent to Treasury, along with ST Category
details, for making the payment
Dr. ST Final Payable
Cr. Bank
o Details required for filing of returns are maintained outside system & it’s a
manual process.
 Availment of 50% credit for capital goods
o The tracking for availment of excise credit for capital goods is processed through
standard transaction on a yearly basis
o In case of capital goods removal as such cases, first excise department updates
the line items & takes credit for the balance 50% amount in the same fiscal year.
Post this, the process for removal of goods is done.
 VAT Utilization
o In Vijaynagar, VAT credit for capital goods cannot be availed immediately on the
booking of the purchase bills. Whereas in Dolvi/Salav, it is taken immediately.
o In case where VAT credit can be availed for Capital goods after confirmation of
the commencement, manual JV is passed to transfer the values from VAT
recoverable A/c to VAT Payable A/c.
o There are Input tax restrictions on Stock Transfer/Non-Sale transaction - E.g.,
Job work/own consumption/Free supplies/exempted sales. For such cases,
manual JV is passed to transfer values from Cr. VAT Recoverable to Dr. Expense
A/c
o In Vijaynagar, VAT input tax credit for 2% on Petroleum products for purchases
within Karnataka cannot be availed. Hence, a manual JV is passed
Dr. Petroleum Products Expense A/c
Cr. VAT Recoverable A/c
o Whereas in Dolvi, No input credit available for Petroleum products. E.g. HSD,
LDO, Furnace Oil .In case of purchases of Natural gas, 3% retention is applicable.
E.g. If purchases for natural gases are made from outside the state, Entry tax
13.5% is applicable. After payment of the total entry tax amount, 10.5% is taken
as VAT Input credit.
o There are also discrepancies found in invoice booking (Sales & Purchases), which
is identified during the analysis e.g. VAT liability of another state accounted to
VAT` liability of Karnataka state. For all such discrepancies, manual JV is passed
to rectify the same. This is done prior to discharging the VAT liability
o After arriving at the final eligible Credit amount, a manual JV is passed
Dr. VAT Payable
Cr. VAT Recoverable
o Also, balances available in CST payable A/c is transferred to VAT payable A/c for
processing the payment of total liability.
o Tax department prepares a note mentioning the amount payable for VAT, CST &
Entry Tax along with relevant accounting entries to be posted and forwards the
same to Treasury department for processing the payment.
3 Process on SAP (To-Be)

To Be Process section will cover the changes in process that will need to be captured in SAP ERP system
due to impact of new GST regime. This section will further segregate the scenarios that would be covered
through solutions provided by SAP or via Customized best practice solution. It will cover list of transactions
/ reports available in SAP.
3.1 GL Master Data

As recommended by SAP, for each GST registration input & output GL accounts will need to be created
for CGST, SGST & IGST. This would be required in order to track & have visibility at GL level the
balances for each of the GST registration.
But technically there are no issues if GL accounts are not created at individual GST registration level
since business place field (which will be equivalent to a particular GST registration) will get captured in all
line items of accounting transactions.
In JSW, decision has been taken that GL accounts relevant for each component of GST taxes will be
created in system at GST registration level.
Also, as of cut-off date, the existing tax GLs which will no longer be required/valid in the GST regime, will
be blocked for any further postings.
3.2 Business Place

New Business places will be created in SAP based on the GST registration which will be taken by JSW.
The final list of registrations is pending to be shared by JSW. In the system, each business place will
need to be updated with the relevant GST registration number.
Nomenclature proposed for creating business places in system is as below
2 digit short Running sequential Description
description of state number
MH 01 JSW Steel (Maharashtra)
TN 01 JSW Steel (Tamilnadu)
Also, individual plants created in system will be assigned the relevant business places so that in all
SD/MM transactions the business place gets populated automatically. In case of FI transactions, on the
business place field there is a validation to input values in the field. This will continue going forward.
Also, a new validation will be created to restrict users from using the existing business places when
processing any manual FI transactions.
Process on SAP (To-Be) Page 15 of 32 JSW Steel Ltd. SAP GST Implementation
3.3 Vendor Invoice Processing
The current process & transactions for accounting of vendor invoices will continue. Following are changes
in the system process which will be impacted in the GST regime
1. Capturing of excise invoice (J1IEX) will no longer be applicable.
2. Taxes for which credit is available will be calculated automatically through usage of tax codes &
accounted at the time of MIRO (Invoice booking)
3. At the time of custom MIRO, since taxes related to CVD/SAD will get subsumed in GST, IGST will
be applicable & get accounted through the import pricing procedure.
4. Since it is proposed to create new Business places per GST registrations, a validation will be
created for FI transactions (FV60/FB60) to restrict users from selecting the existing business
places. This will ensure that there are no issues when generating the GST returns which is based
on business place.
5. Also, Business place field (which represents a particular GST registration) will be made
mandatory in these transactions which will enable capturing of GST relevant taxes & will minimise
the efforts in reconciling & filing of the GST returns in the month end.
In Purchase Order /Service Order based invoice verification below are the accounting entries which will
get posted
Description Debit/Credit Indicators Business Place
Vendor A/c Cr MH01
GR/IR Clearing A/c Dr MH01
CGST/SGST or IGST Receivable A/c (as applicable) Dr MH01
TDS (if applicable) Cr MH01
In Non-Purchase Order /Service Order based invoice booking below is the accounting entries which will
get posted
Vendor A/c Cr MH01
Expense A/c Dr MH01
3.4 Vendor Debit Note Processing
The current process & transactions for accounting of Debit notes will continue. Following are changes in
the system process which will be impacted in the GST regime
1. Currently there are no taxes charged on issuance of Debit notes to vendor. In GST regime, taxes
will be applicable on issuance of debit note. Hence, relevant tax codes will be mandatorily used in
all such transactions
2. Tax codes will be created in the system which will enable automatic calculation & accounting of
the relevant GST taxes.
3. Since it is proposed to create new Business places per GST registrations, a validation will be
created for FI transactions (FB65) to restrict users from selecting the existing business places.
This will ensure that there are no issues when generating the GST returns which is based on
business place.
Business place field (which represents a particular GST registration) will be made mandatory in these
transactions which will enable capturing of GST taxes & will minimise the efforts in reconciling & filing of
the GST returns in the month end.
In Debit note booking below is the accounting entries which will get posted
Vendor A/c Dr MH01
Expense A/c Cr MH01
CGST/SGST or IGST Receivable A/c (as applicable) Cr MH01
3.5 Cash Purchases

In JSW, there are very few cases where cash purchases for taxable materials are routed through the SAP
standard transaction FBCJ & this process is followed only by Dolvi/Salav plant. All other plants route such
transaction through the PO process only.
It is recommended to route all such procurement through the PO process only in order to standardize the
process across the group. This will minimise manual intervention in calculation of relevant GST taxes.
Also, for filing of GST returns vendor details are required which is not possible to capture during the FBCJ
transaction at the time of booking the cash purchases.
Hence there are two ways in which these kind of purchases can be handled in SAP
1. Through Purchase/Service Order
a) Raise a purchase/service order in the system
b) Process the Goods receipt / Service entry sheet
c) Process the Invoice Verification (MIRO) using the relevant GST tax codes
Vendor A/c Cr MH01
GR/IR Clearing A/c Dr MH01
CGST/SGST or IGST Receivable (as applicable) Dr MH01
d) Process the cash payment through FBCJ-Cash Journal
Vendor A/c Dr MH01
Cash A/c Cr MH01
e) Clear the invoice document/s with the relevant cash payment document/s.
2. Invoice booking in Finance module

a) Process the invoice booking (FB60) using the relevant GST tax codes
Vendor A/c Cr MH01
Expense A/c Dr MH01
b) Process the cash payment through FBCJ-Cash Journal
Vendor A/c Dr MH01
Cash A/c Cr MH01
c) Clear the invoice document/s with the relevant cash payment document/s
In Dolvi, it has been decided that there won’t be any cash related purchases for taxable material or
services & would only be routed throught he PO process.
3.6 Advance Payments on Purchases
In the GST regime, on advance payments for procurement of goods or services, GST taxes will be
applicable. Vendor will have to issue “Bill of Receipt” document as proof for receipt of advance.
Currently, solution for handling this process is being awaited from SAP.
In the event of SAP not providing any solution, below is the process which needs to be followed in order
to reverse the excess GST tax input credit availed at the time of advance payment.
1. At the time of advance payment processing through transaction ME2DP/F-47/F-58/F-53/F110/,
relevant tax codes will be used to calculate the GST component. Accounting entry would be as
below
Description Debit/Credit Ind Business Place Amount
Vendor A/c Dr MH01 29464.00
Bank A/c Cr MH01 30000.00
CGST/SGST or IGST Receivable A/c (as MH01 3214.28
applicable) Dr.
Input GST Clearing A/c Cr. MH01 3214.28
TDS A/c (if applicable) Dr MH01 536.00
2. At the time of invoice booking below accounting entry would be posted (FB60/MIRO)
Vendor A/c Cr. MH01 39285.00
GR/IR or Expense GL A/c Dr. MH01 35714.28
CGST/SGST or IGST Receivable A/c (as MH01 4283.72

applicable) Dr
TDS A/c (if applicable) Cr. MH01 715.00
3. The advance payment so posted needs to be cleared with the relevant invoices (F-54). This
needs to be done immediately after booking the final invoice.
Vendor A/c Cr. MH01 30000.00
Vendor A/c Dr. MH01 29464.00
TDS A/c (deducted on advance payment) Cr. MH01 536.00
CGST/SGST or IGST Receivable A/c (applied MH01 3214.28
on advance payment Cr
Input GST Clearing A/c Dr. MH01 3214.28
This solution also is subject to change based on JSWs decision on whether at the time of advance
payment accounting in JSW books vendor account will be debited an amount inclusive of GST values.
(As per GST law, Input tax credit on such advances is available only after receipt of goods or services)
3.7 Customer invoice/Debit notes processing (Non-SD related)

For all the below listed nature of invoices/debit notes which are currently being raised from Finance,
relevant GST related tax codes will be created which needs to mandatorily used & GL determination will
happen automatically from the enhancement as mentioned above.
 Job work done for group companies or external customer
 Testing by R&D department done for external customers.
 Sale of Car to employee (OYCS-Own your car Scheme)
 Sale of Mobile to employee
 Rent income received from external customers, e.g. Banks, Telecom towers, shopping complex, etc.
for usage of JSW property.
 MBC-Mini Bulk Carrier & Barges charges (only in Salav) - Such services are provided to Dolvi plant,
ARCL & JSW cement which are created as customers in the system. Monthly invoice is raised based
on volume per metric ton details for which is maintained in excel. Charges per metric ton are based
on agreement between the respective plants & legal entities.
 Debit notes on group companies against rent for property
Decision has been taken that for all such kind of incomes customer invoices/debit notes will be raised
from SD module only through the service invoice process. This will enable standardization of process
across JSW group.
SAP Transaction FB70 will not be used any further for raising invoices/debit notes to customers/group
companies.
In case of Sale of assets, e.g. Cars, Mobile, etc, the current process of retirement of asset from the Asset
module in FI will continue.
In Sales Order based customer invoice/Debit note booking below is the accounting entries which will get
posted
Customer A/c Dr MH01
Income A/c Cr MH01
CGST/SGST or IGST Payable A/c (as applicable) Cr MH01
3.8 Customer Credit Notes Processing
Following are the nature of credit notes are processed by R2R team at JSW
o Rebates
o Quantity/Volume discounts-Monthly
o Price Support/Rate difference
o Marketing support
o MOU discount -yearly/quarterly
o Quality Compensation.
As per current GST law, all credit notes issued to customers should have reference to relevant invoices
against which credit notes are being issued & GST will be applicable.
It is recommended that all such customer credit notes be raised from SD module.
Alternately, SAP Transaction FB75 in FI module can be used for raising such credit notes to customer’s
along with usage of GST relevant output tax codes.
In Non-Sales Order based customer credit note booking below is the accounting entries which will get
posted
Customer A/c Cr MH01
Expense A/c Dr MH01
CGST/SGST or IGST Receivable A/c (as MH01

applicable) Dr
3.9 Advance Payment Receipts in Sales
In the GST regime, on advance payments for domestic sale of goods or services, GST taxes will be
applicable. JSW will have to issue “Receipt Voucher” document to the customer as proof for receipt of
advance.
In the event of SAP not providing any solution, below is the process which needs to be followed in order
to reverse the excess GST tax paid to government.
1. At the time of advance payment processing through transaction F-29, relevant tax codes will be
used to calculate the GST component. Accounting entry would be as below
Bank A/c Dr. MH01 11800.00
Customer A/c Cr MH01 10000.00
CGST/SGST or IGST Payable (as applicable) Cr. MH01 1800.00
2. At the time of customer invoice booking below accounting entry would be posted (VF01/FB70)
Description Debit/Credit Indicators Business Place Amount
Customer A/c Dr. MH01 11800.00
Sales A/c Cr. MH01 9800.00
Freight/Other charges Cr MH01 200.00
CGST/SGST or IGST (as applicable) Cr MH01 1800.00
3. The advance payment so posted needs to be cleared with the relevant invoices (F-39). This
needs to be done immediately after booking the final invoice.
Customer A/c Cr. MH01 11800.00
CGST/SGST or IGST Payable (applied on MH01 1800.00
advance payment Dr
In case, Advance payment is received as a lumpsum amount & multiple invoices are raised subsequently
against the same advance payment, option is also available in SAP to proportionately reverse the
relevant GST applicable for each of the invoices. This can be done using the same F-39 transaction.
Below is the Accounting requirement for customer advances (Dolvi)

1. At the time of advance payment processing through transaction F-29, relevant tax codes will be
used to calculate the GST component. Accounting entry would be as below
Bank A/c Dr. MH01 11800.00
Customer A/c Cr MH01 11800.00
CGST/SGST or IGST Payable (as applicable) Cr. MH01 1800.00
GST Set-off Receivable (clearing) A/c Dr MH01 1800.00
2. At the time of customer invoice booking (VF01/FB70), provision should be there to adjust the
GST component of the advance & below accounting entry is proposed
Debit/Credit Business Place Amount
Description Indicators
Sales A/c Cr. MH01 98000.00
Freight/Other charges Cr MH01 2000.00
GST Set-off Receivable (clearing) A/c Cr MH01 1800.00
CGST/SGST or IGST Payable (as MH01 16200.00
applicable) Cr
In case where advance amount relates to multiple invoices, proportionate amount of GST component
should be captured at the time of each invoice booking.
Solution for Advance payment is awaited from SAP
3.10 Cash Advances

In Vijaynagar plant only, for Scrap sales, advance is sometimes received in form of cash/ cheque which is
accounted through the cash journal transaction in SAP. Post clearance of cheque in the bank, the goods
are dispatched to the customer. Currently no taxes are applicable on such advances.
In the GST regime, since advances from customers will attract GST, at the time of processing the
advances payment in cash/cheque, relevant GST tax codes will be required to be selected in order for
system to calculate the tax.
The limitation in this process is that in transaction FBCJ there is no simulation mode which enables user,
prior to posting the document, to display & review the accounting entries.
Hence in order to standardize the process across the group it is recommended to accept such advances
through the banking process only. This will avoid posting of any erroneous calculation of taxes.
3.11 Bank Charges (LC discounting/realization, Lodgment Fees, foreign

payments)
The current process of manually accounting of bank charges in SAP through standard FI transactions
(FV50/FB50) will continue. Though the tax codes to be used will be GST relevant ones & which will be
created in system only based on the final tax % structure yet to be released by Govt. of India
Accounting entries would be as below
Bank Charges A/c Dr MH01
Bank A/c Cr MH01
Clarity from law is awaited on whether accounting of these charges will be based on bank advice or bank
will raise an invoice for charging GST on bank charges.
3.12 Input Service Distribution (ISD)
In the event of SAP not providing any solution, the current manual process of raising invoices/debit notes
in SAP based on turnover of respective GST registration/entity will continue.
Since the process for allocation is possible only at month end after booking of such invoices & based on
turnover of individual plant/location, currently there is no standard solution in SAP which can enable
automation of this process.
At the time of booking the invoice, if the location for the relevant expenses incurred is identifiable then the
expense should be accounted to the relevant location/business place.
As per current GST law, Input service distributor may distribute credit of –
 CGST as CGST/IGST and IGST as IGST/CGST, if distributor and the recipient of credit are
located in different States.
 SGST as SGST/IGST, if distributor and recipient of credit are located in different States.
 CGST and IGST as CGST, if distributor and recipient of credit being a business vertical are
located in same State.
 SGST and IGST as SGST, if distributor and recipient of credit being a business vertical located in
same State.
Accounting entries would be as below
1. At the time of invoice booking in Corporate office
Vendor A/c Cr CP01
GR/IR clearing or Expense A/c Dr CP01
CGST/SGST or IGST Receivable A/c (as applicable) Dr CP01
TDS (if applicable) Cr CP01
2. At the time of raising invoice/debit note by Corporate office to respective plants/locations

Plant/Location as Customer A/c Dr CP01
CGST/SGST or IGST Receivable A/c (as applicable) Cr CP01
3. At the time of booking invoice/debit note raised by Corporate office in respective plants/locations
Corporate as Vendor A/c Cr KN01
CGST/SGST or IGST Receivable A/c (as applicable) Dr KN01
3.13 Indirect Tax Utilization Process
With the proposed implementation of GST laws in India from 1st July 2017, the availment of input credit
with output liability, payment & filing of return will be processed and available online in the GSTN portal
only.
Solution will be dependent on which ASP provider JSW will register with. Below is a brief about both the
solutions:-
1. If JSW registers with SAP as an Application Service Provider (ASP).
SAP has proposed a solution (the final version of which will be released in April-June phase)
which will facilitate as an Application Service Provider (ASP) to interface with the SAP ECC
system & the GSTN portal through the GST Suvidha provider (GSP). Following is the draft
overview of the solution
a. SAP will have a program/dashboard called E-document which will be used to push
certified data through an interface from the ECC system to the ASP.
b. ASP will process the data from SAP in the legally required format for further processing in
the GSTN portal via the GSP
c. GSP will have the necessary validations & checks and once the data is verified, it will be
passed on to the GSTN portal
d. The reconciliation/output provided by GSTN portal will then be available in the ECC
system in a dashboard for users to verify the relevant data via GSP  ASP
e. The GSP & GSTN portal will have all validations for all the components of GST, to
calculate the net input credit available & the liability for a particular GST registration.
f. Final Payment will be made in the GSTN portal & accounting in SAP will be a manual
process
g. For Utilization of input credit, as of now SAP is not proposing to have any utilization
program (similar to the existing program for cenvat utilization). Hence a manual JV will
need to be passed to transfer value of input credit allowable as per GSTN portal from the
Receivable A/c the Payable A/c for the respective components of GST.

CGST/SGST or IGST Receivable A/c (as applicable) Cr MH01
CGST/SGST or IGST Payable A/c (as applicable) Dr MH01
2. If JSW registers with a non-SAP Application Service Provider (ASP)

Feasibility of integrating with the non-SAP ASP will be ascertained during the implementation
phase which will enable a seamless process for GST returns filing, reconciliation & final payment
in the GSTN portal.
If integration is not possible with the ASP, then a customized report will need to be developed to
fetch data from SAP in an uploadable format (as per structure which will be provided by the
relevant ASP). This will then be uploaded manually in the ASP.
3.14 SAP Transaction Codes
S.N Report Description T Code

1 Create Invoice with PO reference MIRO
2 Create Invoice without PO reference (direct FI) FB60
3 Create Vendor Down payment request F-47
4 Create Vendor Down payment F-48
5 Vendor Down Payment Clearing F-54
6 Vendor Master Creation FK01
7 Park an Vendor Invoice MIR7
8 Post a Vendor Invoice MIR6
9 Post Customer invoice FB70
10 Post Customer Credit memo FB75
11 Customer Down Payment F-29
12 Clear Customer Down Payment F-39
13 Cash Journal Postings FBCJ
14 Retirement of Asset-With Customer F-92
15 Retirement of Asset-Without Customer ABAON
16 Transfer of Asset within company code ABUMN
17 Scrapping of Asset in New GL ABAVN
3.15 Customization Requirements (Application & Software)

In order to support the changes in taxation rules, below configuration will be carried out
1. GST specific new condition types & account keys as mentioned below will be configured in the
Tax procedure ZTAXIN
2. Also, the tax GL account determination will now move from maintenance in OB40 to maintenance
in table J_1IT030K_V for a combination of Chart of Accounts, Account Key, Tax code & Business
place. Though default values will need to be maintained in OB40 also for each of the tax codes.
3. In case JSW decides to create GST related GL accounts per registration, since the plant details
cannot be read in FI transactions, GL determination for taxes will not happen automatically from
J_1IT030K_V table. Hence a logic will be written using user exit
"J_1I7_GET_BUSINESS_PLACE" to fetch the relevant GL accounts based on business place,
account key & tax code combination.
4. New business places will be mapped to respective plants already existing in the system.
This maintenance for GST relevant GL account determination will be applicable for all processes where
tax codes are used.
FRICE object
(F-forms,
R-Reports, Critically
Object Description
I- Interface, (Critical /
ABAP C- Conversions, Essential/
Ref. E-Enhancements) Desirable)
1 Vendor Credit Note (ZFI_INV_VOUCHER) F C
2 Vendor Debit Note (ZFI_DEBIT_LETTER) F C
3 Customer Debit note (ZFI_DEBIT_VOUCHER) F C
4 Customer Credit Notes (ZFI_AR_CMPRINT) F C

5 Customer Advance Receipt Voucher F C
6 GST Tax GL account determination for FI transactions E C
(user exit "J_1I7_GET_BUSINESS_PLACE")
7 GST registers (if not provided by SAP) R C
8
3.16 SAP Reports
S.N Report Description T Code

1 Vendor Ledger FBL1N
2 Customer Ledger FBL5N
3 GL Ledger FBL3N
4
4 Change implications – Benefits

 By making the recommended changes listed above in the relevant impacted processes, JSW will
be GST compliant with minimal manual intervention.
 In GST regime, since the reconciliation process, availment of input credit & final payment will be
an online process through the GSTN portal, there would be complete control & visibility on the
issues arising due to ineligible & non-availment of input credit.
Change implications – Benefits Page 29 of 32 JSW Steel Ltd. SAP GST Implementation
5 Change implications – Risks

 Leniency in usage of tax codes mandatorily for all transactions will enable wrong calculation
of taxes & inconsistent data which will have an impact on the reporting requirements for GST
and will involve manual intervention.
Change implications – Risks Page 30 of 32 JSW Steel Ltd. SAP GST Implementation
6 Change implications – Action plan

 Users will be educated & trained on the criticality on usage of tax codes in all transactions
which has tax implication.
 Users will be educated & trained on the importance of using the new business places created
in system and its impact on GST returns.
Change implications – Action plan Page 31 of 32 JSW Steel Ltd. SAP GST Implementation
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member
firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about (http://www.deloitte.com/about) for a
detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
This material has been prepared by Deloitte Touche Tohmatsu India LLP (“DTTILLP”), a member of Deloitte Touche Tohmatsu Limited, on a
specific request from you and contains confidential information. The information contained in this material is intended solel y for you thereby, any
disclosure, copy or further distribution of this material or the contents thereof is strictly prohibited.
©2015 Deloitte Touche Tohmatsu India LLP. Member of Deloitte Touche Tohmatsu Limited
About Deloitte Page 32 of 32 JSW Steel Ltd. SAP GST Implementation


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JSW SAP GST Implementation

Business Blueprint Document

Document Control Information

Document Identification BBP_R2R

Document Name Record to Report

Project Name JSW Steel SAP GST Implementation

Client JSW Steel Ltd

Document Author Roshan Karkera

Document Status Draft

Document Edit History

Document Review/Approval History

Distribution of Final Document

1.1 As-Is Process Overview

Introduction Page 4 of 32 JSW Steel Ltd. SAP GST Implementation

2 As-Is Process Details

2.1 GL Master Data

2.2 Business Place

2.3 Vendor Invoice Processing

2.4 Vendor Debit Note Processing

2.5 Cash Purchases

2.6 Advance Payments on Purchases

2.7 Customer invoice/Debit notes processing (Non-SD related)

2.8 Customer Credit Notes Processing

o Price Support/Rate difference

2.9 Advance Payment Receipts from customer

2.10 Cash Advances

2.11 Bank Charges (LC discounting/realization, Lodgment Fees, foreign

2.12 Input Service Distribution (ISD)

2.13 Indirect Tax Utilization Process

3 Process on SAP (To-Be)

3.1 GL Master Data

3.2 Business Place

3.3 Vendor Invoice Processing

3.4 Vendor Debit Note Processing

3.5 Cash Purchases

2. Invoice booking in Finance module

3.6 Advance Payments on Purchases

CGST/SGST or IGST Receivable A/c (as MH01 4283.72

3.7 Customer invoice/Debit notes processing (Non-SD related)

3.8 Customer Credit Notes Processing

CGST/SGST or IGST Receivable A/c (as MH01

3.9 Advance Payment Receipts in Sales

Below is the Accounting requirement for customer advances (Dolvi)

3.10 Cash Advances

3.11 Bank Charges (LC discounting/realization, Lodgment Fees, foreign

3.12 Input Service Distribution (ISD)

2. At the time of raising invoice/debit note by Corporate office to respective plants/locations

3.13 Indirect Tax Utilization Process

Description Debit/Credit Indicators Business Place

2. If JSW registers with a non-SAP Application Service Provider (ASP)

3.14 SAP Transaction Codes

S.N Report Description T Code

3.15 Customization Requirements (Application & Software)

4 Customer Credit Notes (ZFI_AR_CMPRINT) F C

3.16 SAP Reports

S.N Report Description T Code

4 Change implications – Benefits

5 Change implications – Risks

6 Change implications – Action plan

About Deloitte Page 32 of 32 JSW Steel Ltd. SAP GST Implementation

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