This document provides an overview and introduction to implementing SAP's Country India Version (CIN) for companies operating in India. It discusses why CIN needs to be implemented to calculate taxes according to Indian law. It then covers the Indian taxation system including direct and indirect taxes. It provides details on central excise duty, additional excise duty, special excise duty, and value-added tax. It also discusses tax procedures, condition types, registers and accounts that need to be maintained, and internal processing keys for automatic tax calculation in SAP according to Indian regulations.

1. Welcome to Sessions on CIN Implementation

2. OVERVIEW
Welcome to SAP FI/CO Sessions
 Introduction to CIN
 Why Companies have to implement Country India
Version?
 CIN Customization from FI, MM and SD points of view
 Question time!

3. Introduction to CIN
CIN – Country India Version
 As all Company Codes created in Country India are legally bound to pay
taxes as per Indian Laws, we need to set up mechanism to calculate all
types of taxes including Excise duty.
 Setting up mechanism to automatically calculate taxes /duties as per Indian
Taxation laws is called implementation of CIN.

4. Introduction to Taxation system in India
Taxation system in India
 There are two types of taxes in India. They are:
 Direct Taxes
 Indirect Taxes
 Direct Tax, like income tax, wealth tax, etc. are those whose burden falls
directly on the taxpayer.
 The burden of indirect taxes, like excise duty, service tax, VAT, etc. can be
passed on to a third party.
 .

5. Introduction to CIN
Central Excise - Introduction
 Central Excise duty is an indirect tax levied on goods manufactured in India.
Central Excise Duty is levied and collected by the Central Excise
Department under the authority of the Central Excise Act, 1944 and Central
Excise Rules, 1944.
 Taxable event for Central Excise Duty is manufacture or production of
goods, though, for administrative convenience duty is actually collected at
the stage of removal or clearance of goods from the factory on monthly or
fortnightly basis.
 Every manufacturer of excisable goods is required to get himself registered
before commencing production.
 Excise invoice has replaced gate pass as the clearance document with
effect from 1.4.1994. The invoices should be bound in a book form and
should not be manually made. They have to be mechanically generated and
serially numbered for each financial year beginning from 1st April.

6. Introduction to CIN
Types of Central Excise
There are three types of Central Excise duties collected in India namely
Basic Excise Duty - BED
This is the duty charged under section 3 of the Central Excises and Salt
Act,1944 on all excisable goods other than salt which are produced or
manufactured in India at the rates set forth in the schedule to the Central
Excise tariff Act,1985.

7. Introduction to CIN
Additional Excise Duty - AED
Section 3 of the Additional duties of Excise (goods of special importance)
Act,1957 authorizes the levy and collection in respect of the goods
described in the Schedule to this Act. This is levied in lieu of sales Tax and
shared between Central and State Governments.
These are levied under different enactment's like medicinal and toilet
preparations, sugar etc. and other industries development etc.

8. Introduction to CIN
Special Excise Duty - SED
As per the Section 37 of the Finance Act,1978 Special excise Duty was
attracted on all excisable goods on which there is a levy of Basic excise
Duty under the Central Excises and Salt Act,1944. Since then each year the
relevant provisions of the Finance Act specifies that the Special Excise Duty
shall be or shall not be levied and collected during the relevant financial
year.

9. Introduction to CIN
Meaning of VAT
Value Added Tax (VAT) is a general consumption tax assessed on the value
added to goods and services.
It is a general tax that applies, in principle, to all commercial activities
involving the production and distribution of goods and the provision of
services. It is a consumption tax because it is borne ultimately by the final
consumer.
It is not a charge on companies. It is charged as a percentage of price,
which means that the actual tax burden is visible at each stage in the
production and distribution chain.

10. Introduction to CIN
Vat – Contd..
 VAT, in simple terms, is a multi-point levy on each of the entities in the supply
chain with the facility of set-off of input tax - that is, the tax paid at the stage of
purchase of goods by a trader and on purchase of raw materials by a
manufacturer. Only the value addition in the hands of each of the entities is
subject to tax.

11. Introduction to CIN
Registers to be maintained as per the Excise Act
 RG 1 – Register for excisable finished goods maintained by manufacturing
plant
 RG 23 A - Register maintained by the manufacturer to capture goods
issues and goods receipts for excisable materials.
 Part I – shows quantity of material produced
 Part II – shows excise duty on the material produced
 RG 23 C – Register maintained by the manufacturer to capture duty paid
towards capital goods
 RG 23D – Register showing goods issues and goods receipts of all excisable
materials by Depot / Dealer
 ER1 – Register showing monthly reports of CENVAT Credit Account and
PLA

12. Introduction to CIN
Accounts to be maintained
 PLA – stands for Personal Ledger Account – It is a Bank Account by which
excise duty is going to be transferred to the excise authorities by using TR6-
GR7 Challan.

13. Introduction to CIN
Internal processing keys
 Internal processing keys are used by the system to determine the accounts
to updated automatically.
 The following internal processing keys are required:
 A1 – Excise purchase basic
 A2 – CST purchase
 A3 – VAT purchase
 A4 – Excise sales
 A5 – CST Sales
 A6 – VAT Sales

14. Condition types
 Condition class – Preliminary structuring of condition types, for example, in
surcharges and discounts, taxes or prices.
 Calculation type – Determines how the system calculates prices, discounts or
surcharges in a condition. For example, the system can calculate a price as a
fixed amount or as a percentage based on quantity, volume or weight.
 Condition category – A classification of conditions according to predefined
categories like taxes, freight, price, cost etc.
 Condition type – The condition type is used for different functions.
 In taxes, it helps us to identify different types of purchases and
sales transactions like CST purchase, VAT sales etc.
 In pricing, for example, condition type lets you differentiate between
different kinds of discount
 In Output determination, between different output types such as
order confirmation, delivery note etc.

15. Tax procedures
Tax procedures
 There are two Tax procedures available for India. They are:
 TAXINN (Condition based)
 TAXINJ (Formula based)
 Step : Number of Condition type
 Counter : Serial number of sub-step
 Condition type : Name of the condition type
 Description : Description of the condition type
 From / To : This range of “Step Numbers.” becomes base for the
condition type to calculate taxes / surcharges
 Manual : System allows user to assign condition type
manually during document processing if this
option is selected

16. Tax procedures – Contd…
 Mandatory : Maintaining condition record becomes mandatory if
this option is selected
 Statistical : We select this option to tell the system that this
condition type value is maintained for information
purpose only
 Print : This indicator tells them system whether value of this
condition type is to be printed in the document or not
 Sub-total : In this column, we need to mention the table name in
which the value is to be stored
 Requirement : We need to enter the requirement name that is to be
fulfilled to calculate or avoid for that condition type

17. Tax procedures – Contd…
 Alt. C Ty : Alternative formula for condition type – We need to
enter alternative formula to the formula in the
standard system that determines a condition
 Alt. C Bv : Alternative formula for condition base value – In this
column, we need to enter alternative condition that
should be used when condition records to the
standard condition type are not available.
 Account key : Account determination object
 Accrual Acct Key : Key which helps the system to determine the GL
Account where accruals/provisions are involved

18. Introduction to CIN
CIN – Country India Version
 As all Company Codes created in Country India are legally bound to pay
taxes as per Indian Laws, we need to set up mechanism to calculate all
types of taxes including Excise duty.
 Setting up mechanism to automatically calculate taxes /duties as per Indian
Taxation laws is called implementation of CIN.

19. Question Time
Thank You