2. Topics
Introduction to Indian Taxes
Different Sales processes.
CENVAT Concept
CENVAT Rules and Terminology
CENVAT and Sales Process.
Base for the CENVAT Credit.
Tax Procedures.
Registers.
India Localization Configurations in SD.
Master Data.
SAP Easy Access settings Relevant For India Localization.
Q&A.
Conclusion.
21 June 20162
3. Introduction
Indian tax structure
It is of Two Types.
1.Direct Tax.
2.Indirect Tax.
Direct Tax – It consists of the Capital tax and Personnel income tax.
Indirect Tax – Indirect tax constitutes Excise duties, Sales Taxes and Service taxes.
Excise duties :
It must be a duty on the goods.
The goods must be excisable.
The goods must be manufactured or produced.
The manufacture or production has to be within India.
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4. What is CENVAT…!?
Hi… Let us Discuss, What are Indian Taxes and how they are differentiated
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5. What is CENVAT…!?
Commonly used word, when ever discussing on Indian Tax.
CENVAT : Amount that is paid on the value that is added at that time
of sale to the government.
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6. CENVAT
What is Excise Duty and Types of Excise duties?
What are CENVAT Rules?
What is CENVAT credit?
How and when CENVAT is availed?
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7. Types of Excise duties
Under the excise laws, the following are the various types of duties, which are levied:
Basic Excise duty : Excise duty that is levied at the time of the Goods removal, either it
is for sales or for own consumption.
Additional Excise Duty : Excise duty that is Levied to protect the local industries. This is
varies depending on the products.
Special Excise duties :Excise duty that is levied in order control the competition between
the states, for example, one state may give more subsidies in order to attract the
investments or to encourage the industries of that state.
Additional Duty on specified items under the Act : If the Tariff Commission set up by
law recommends that in order to protect the interests of industry, the Central Government
may levy additional duties at the rate recommended on specified goods.
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8. WHEN AND HOW MUCH CREDIT CAN BE TAKEN
The Cenvat Credit in respect of inputs may be taken immediately on receipt of the inputs.
The Cenvat credit in respect of Capital Goods received in a factory at any point of time in a
given financial year shall be taken only for an amount not exceeding fifty percent of the
duty paid on such capital goods in the same financial year and the balance of Cenvat Credit
may be taken in any subsequent financial year.
The Cenvat credit shall be allowed even if any inputs or capital goods as such or after being
partially processed are sent to a job worker for further processing, testing, repair etc. and
it is established from the records that the goods are received back in the factory within180
days of their being sent to a job worker.
Where any inputs are used in the final products which are cleared for export, the Cenvat
Credit in respect of the inputs so used shall be allowed to be utilized towards payment of
duty on any final product cleared for home consumption and where for any reason such
adjustment is not possible, the manufacture shall be allowed refund of such amount.
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9. …CENVAT
Rule 1. Short title, extent and commencement.-
Rule 2. Definitions.-
“Act” “capital goods” “Customs Tariff Act” “exempted goods” “final products” “first stage
dealer” an importer “input” “manufacturer” or “producer”
Rule 3. CENVAT credit.-
Rule 4. Conditions for allowing CENVAT credit.-
Rule 5. Refund of CENVAT credit.-
Rule 6. Obligation of manufacturer of dutiable and exempted goods.-
Rule 7. Documents and accounts.-
Rule 8. Transfer of CENVAT credit.-
Rule 9. Transitional provision
Rule 10. Special dispensation in respect of inputs manufactured in factories located in specified
areas of North East region and Kutch district of Gujarat.-
Rule 11. Power of Central Government to notify goods for deemed CENVAT credit.-
Rule 12. Recovery of CENVAT credit wrongly taken.-
Rule 13. Confiscation and penalty.-
Rule 14. Supplementary provision
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11. 21 June 201611
Sales From Factory.
Stock transfers.
Sales From Depot.
Scrap Sales.
Auction Sales especially for Scrap.
Job works.
Exports.
Different Sales Process
12. Sales From Factories.
In the Process of Manufacturing the Factory uses two kinds of materials.
Input Material:
Is defined as the one which loses its own identity in the finished product.
Capital Goods:
Is defined as the one which does NOT lose its’ own identity in the finished goods.
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13. 21 June 201613
Supplying Plant Dispatch
Excise Invoice
J1IIN
Add up to Excise Duty Payable A/c
J1IEX
Capture EI
Sales from Factory
14. Stock transfers
In Stock transfers we will transfer the Materials from Plant to plant and Plant to Stock
yards.
Usually in the stock transfers we create the excise invoice while the goods is moving from
plant to Stock yard.
From stockyard to customer usually we are not going to create the Excise invoice, because
stock which is coming in to the Stock is not an input, it is just a transfer from one place to
other.
There is no price escalations here.
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15. Depot process
Depot is also almost same as Stock yards, and here also we are transferring goods from
Plant to Depot, but the difference is in Depots, are Price escalations. In Depots goods is
coming as input.
Transactions can happen through two scenarios:
Scenario1: Depot receives goods from the company’s factory through stock transfer.
Scenario 2: Depot procures goods directly from external sources.
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16. Depot Process:
For Doing Goods Receipt:
Scenario 1: Stock Transfer
Step1: Do GR (Transaction code:MB01)
Step 2: Excise Invoice Capture at Depot (Transaction Code: J1IG)
Scenario 2:
Step 1: Do GR (Transaction Code: MIGO)
Step 2: Excise Invoice Capture at Depot (Transaction Code: J1IG)
At the time of Sale:
Sales Order Delivery J1IJ (always requires a delivery number) PGI Billing
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17. 21 June 201617
Sales From Depot
Depot Dispatch
Excise Invoice
Add up to the Excise Duty Payable A/c
Reduce the Quantity
MIGO
J1IG
J1IJ
Plant
ME21N
J1IIN
18. Export Process
In the process of Exports duty under bond is not payable and the
goods move out from the factory against an ARE1.
However, goods not under bond move out of the factory by paying the
duty and refund is separately claimed on showing proof of export I.e.
shipping bill.
In case of Deemed Exports, the same procedure is followed as in
exports, However, the form used is ARE3.
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19. Tax procedures and Registers.
How we are going for the CENVAT credit in SAP and What is the Base for IT.
Answer is Tax procedures and Excise registers.
What are these.
Now we will going to discuss on Tax Procedures.
SAP provides following std. tax procedure for country India
Formula based tax procedure TAXINJ
Condition based tax procedure TAXINN
Currently From 4.7 we are using TAXINN.
Settings needed in SAP for TAXINN
First we need to Maintain TAXINN procedure as shown in the slide.
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20. Determination of excise duties
Menu path – SPRO – Logistic General – Tax on goods on movement – India – Basic Settings
– Determination of Excise duty – Maintain Excise defaults.
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21. Assign Tax procedure to India
Then we need to assign the Tax procedure TAXINN to county India As shown below.
Menu path – SPRO – Logistic General – Tax on goods on movement – India – Basic Settings
– Determination of Excise duty – Select Tax Calculation Procedure.
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26. Excise Register
What is Excise register and how many are they.
How the Excise registers are using at Different Business Scenarios and How
hese are updating.
Excise register.
Excise Laws require you to maintain a number of registers in a specified format
relating to excise duty. They have to be printed out monthly and shown to the
authorities in the event of an audit. The SAP captures this requirement.
Type of Registers:
RG23A PART I
RG23A PART II
RG23C PART I
RG23C PART II
RG I
RG23D
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27. Excise registers
RG23A: Raw Material
The entries pertaining to quantity will go into RG 23 Part I and that of duty will go into
Part II in the appropriate duty column. i.e. Basic Excise, SED, Additional duty, etc
RG23C: Capital Goods
RG23CI-Part I entry: Excise stock entry at the time of GR (only quantity)
RG23CII-Part II entry: Credit entry of Capital goods (only value)
RG-I : Finished Goods (only Quantity)
The finished goods (manufactured, sub-contracted or gained) and sales or stock transfer
are entered in the RG I Register
Register RG I is updated after creation of an excise invoice while dispatching the goods
from the factory premises with reference a commercial invoice or a pro-forma invoice
RG23D: Depot (this indicates both the Quantity and the amount)
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28. Factory process-Register
RG23 A – Part I & Part II
Material is received in the factory as “for Quality
inspection” or “for Direct Input”.
Material after “Quality Inspection” or when used as
“Direct Input” will go into the RG 23 A Registers.
The entries pertaining to quantity will go into RG 23
Part I and that of duty will go into Part II in the
appropriate duty column. i.e. Basic Excise, SED,
Additional duty, etc.
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29. Depot Process:
The RG 23 D register is used to update the excise entries in case of
Excisable Depots.
The Excise duty is payable when the goods are sent from the factory.
However, it is not levied again when the goods are sent from the
DEPOT.
However, while taking sale from the DEPOT and if price escalations
happen, then the extra excise is paid using a A certificate. These
details are entered in the RG23 D register and excise recovered from
the customer.
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30. Depot Process
Transactions can happen through two scenarios:
Scenario1: Depot receives goods from the company’s factory through stock transfer.
Scenario 2: Depot procures goods directly from external sources.
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31. Transaction Codes relevant For Registers.
Activity SAP Transactions
Register Updates J1I5
RG23 A (Part I & II and RG I)
Register Extraction J2I5
Register Printing J2I6
Utilization J2IU
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32. Tax/Excise Duty set up for MM & SD
Basic Settings
Master Data
Account Determination
Business Transactions
Tools
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33. Basic Settings
Excise Registration ID’s
Company Code Settings
Plant Settings
Excise Groups
Series Groups
Excise Duty Indicators
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34. Excise Registration ID’s
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A number assigned to each premises or
location that has registered as a manufacturer
with the excise authorities.
Mention whether AED, SED, CESS
applicable. If blank will not be available for
inputs
Max no. of line
items in outgoing EI
Permits deductible /
non deductible ED
at GR
35. Company Code Settings
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User can edit
Dr account
during JV
Utilizes from
PLA in JV
First month for
excise year
Excise invoice
selection
36. Plant Settings
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Plant defined as Depot
or not
Multiple plants to one
Excise Registration ID
GRs per EI can be set as
below
Multi GR – Multi Credit
Multi GR – Single credit
Single GR
37. Excise Groups
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Excise Reg ID linked
to Excise group &
Plant
Depot definition at
Excise Grp & Plant
40. Account Determination
Describe which excise accounts (for excise duty and
CENVAT) are to be posted to for the various transaction
types including sub transaction type if any
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41. During transactions system determines which G/L
accounts to post to by looking at the:
Excise group, Company code & Chart of accounts
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42. SD settings Relevant to India Localization.
Assigning Billing types to Delivery Types.
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43. Maintain Excise Defaults.
Maintain the Excise Defaults in order determine Excise group and Series Group
Automatically at the time of Excise invoice creation.
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47. Excise Rate Determination
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Is the
Customer
SSI?
Get SSI
duty
Rates.
Yes
No
Excp rates
Maintained?
Yes
No
Get
Excep
duty
rates
Get Ch ID
Of the
material
Get Customer
Excise
indicator
Get plant
Excise
indicator
Get final
Excise
indicator
Get rate
Based on
Ex Ind & CH ID
48. SAP Easy Access
Sap Easy Access relevant to India Localization.
Creation Excise Invoice.
Updating the Registers.
Extracting Registers.
Print registers.
Utilization determination.
Pass JV by using J1IH.
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49. Creation Of Excise invoice
We will create the Excise invoice with reference to Commercial invoice it may be Proforma
or Normal invoice.
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53. Once u complete the RG1 updating with RMA and ROP we
need to do for IDH for ISSUES
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54. Then continue the next step as shown in Slide 54. it
gives the following result.
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55. Extract the Excise registers.
We need select the RG1 in the initial screen and execute.
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56. System give the following screen.Click on continue
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57. Print the Excise register.
To do this First we need to maintain the Values in table J_2IRG1BAL as follows.
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58. Too print Excise registers use T.C. J2I6, System gives
the all details of RG1 Register.
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59. CENVAT Utilization
Payment to be made to Excise Department for the Self –Removals for the last month.
Utilization to be done against the last month’s incoming excise duties and CVD.
CENVAT utilization to be done before the 5th of next month.
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60. On- Line Transactions
CENVAT Availment and Utilization
Fortnightly Transactions
Excise Duty Utilization
Transaction
DespatchSales Excise
Invoice Process
Excise Duty
Payable Account
Goods
Receipt
Vendor Excise
Invoice Process
CENVAT on hold
for Capital goods
CENVAT Account
Select
Register
PLA Account
Deposit funds in PLA
Account
Credit CENVAT
on-hold A/c
Credit CENVAT A/c
Debit ED Payable A/C
Debit CENVAT A/c
Debit PLA A/c
Credit PLA A/c
Credit ED Payable A/C
63. Pass JV by using J1iH,
Use of JV is to adjust amount in RG23A and RG23C
In JV we use other adjustments to Debit the amount from the Registers.
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67. Important Things to Know
Determination of Excise Rate in Sales and Distribution
Information on Tax Procedure and Conditions
FI Entries related to Excise taking place in SD
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68. Determination of ED Rate in Sales and Distribution
Settings for the same done through Transaction Code J1ID
Material: Material Chapter ID
Customer Excise Details: Excise Indicator for Customer
Plant Excise Details: Excise Indicator for Plant
Excise Indicator Customer + Excise Indicator Plant = Excise Indicator Final
Material Chapter ID + Excise Indicator Final = Excise Tax Rate
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69. FI Entries related to Excise in SD
During the passing of Billing document to Accounting: (VF02, Release to Accounting)
Dr Customer Rs. 125/-
Cr Sale Rs. 100/-
Cr Excise Duty Recoverable Rs. 16/-
Cr Taxes Rs.9/-
During creation of Excise Invoice: (J1IIN)
Dr Excise Duty Recoverable Rs.16/-
Cr Excise Duty PayableRs.16/-
During Monthly Utilization: (J2IU)
Dr Excise Duty Payable Rs. 16/-
Cr CENVAT Clearing Rs.16/-
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70. Information on Tax Procedure and Conditions
Menu Path:
SPRO Financial Accounting Financial Accounting Global Settings Tax on Sale and Purchase
Define Procedure
Procedure: TAXINJ
The various Condition types applicable in SD are:
• Excise Conditions: JMOD, JSED, JAED , JCES, etc.
• Tax Conditions:JIN1, JIN2,etc.
Note:
• Excise Conditions are statistical. Since, these are determined from SD pricing procedure
• Tax conditions are non-statistical. Since, these are determined from TAXINJ
• While defining tax codes (using Transaction Code: FTXP), to maintain Excise Duty (JMOD) as a
changeable field, remove statistical check and maintain 100% for JMOD. After the changes are made,
one has to again put the statistical checks in procedure TAXINJ
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