This document provides an overview of India's legal requirements for localization, including excise (CENVAT), VAT/LST/CST, service tax, and CENVAT credit. It discusses key aspects of each tax type such as applicable rates, payment due dates, eligibility criteria, and credit mechanisms. The document also compares CENVAT and VAT systems and outlines considerations for various tax compliance areas like duty calculation, export/import of services, and CENVAT credit on input services.

1. Country India Version (CIN)
Overview
Presented By
K V Ramesh Babu
1

2. Contents
India Localization
1. India Legal Requirements Overview
2. Logistics Process Overview ( Procurement & Sales )
3. Utilization
4. Extended Withholding Tax
2

3. India Localization Requirements -
Overview
 CENVAT (Excise)
 VAT / LST / CST
 Service Tax
 Cenvat Credit
3

4. India Localization Requirements -
Overview
 Central Value Added Tax (Excise)
 VAT (LST) / Central Sales Tax
 Service Tax
 Cenvat Credit
4

5. Central Value Added Tax (Excise)
What is Cenvat?
 Tax on manufacturing or production of goods in India
 Goods having 4M Characteristics are covered under this
- Movable (No duty on Immovable Goods)
- Marketable (Bought and Sold)
- Manufactured (Come up out of a process)
- Mentioned (Central Excise Tariff)
 Every legal entity that manufactures or produces excisable goods
shall pay the duty leviable on such goods
 Materials are classified under various tariff headings (Chapter Ids).
This will be subject to change in every financial budget.
 Goods consumed in-house also liable for payment of duty 5

6. Central Value Added Tax (Excise)
What is the basis of charge?
 Tax Rates Provided by GOI and are subject to change after each
year based on the budget
 Exemption to pay duty on intermediate products in the
following cases
- used for manufacturing capital goods
- used for manufacturing final goods which are eligible for
Cenvat credit
 Duty shall be paid when the goods are removed from the
place of production or place of storage
 Excise duty not payable on goods manufactured for
exports or deemed exports
 Goods manufactured in factory for use within the factory
for repairs of machinery installed within the factory are exempt from
excise. 6

7. Central Value Added Tax
(Excise)
Types of Excise Duty
 Basic Excise Duty (BED)
 Additional Excise Duty (AED)
 Special Excise Duty (SED)
 Education Cess on Excise
 Secondary and Higher education Cess
7

8. Central Value Added Tax
(Excise)
Duty Calculation
 Specific duty – It is calculated on the basis of certain unit,
length, weight etc. Eg. cigarette
Ad valorem duty – It is based on the value of the goods
Duty based on tariff value – The Govt. may fix tariff value from
time to time. The duty will be calculated as percentage of tariff
value fixed by the Govt. and not on assessable value
8

9. Central Value Added Tax (Excise)
Duty Calculation Considerations
 Transaction value is the price actually paid or payable for the
goods and includes any other amount that the buyer is liable
to pay in connection with such sale
 Any additional consideration flowing directly or indirectly to
the seller from the buyer should be added to the transaction
value.
 Cost of production is not relevant for the purpose of
determining assessable value.
 Assessable value may be lower than the cost price of the
goods.
 Goods should be assessed in the form in which they are
removed.
9

10. Excise Payment Overview
Vendor Plant Customer
 Pays Excise Duty  Pays Excise Duty for all  Pays Excise component to
outbound goods movement the Vendor
 Claims Cenvat
10

11. Central Value Added Tax
(Excise)
CENVAT PAYMENT
 Duty to be paid by 5 th
of the following month
Duty deposited in bank using TR 6 challan and credited to PLA
Duty is paid by debiting PLA
11

12. Central Value Added Tax
(Excise)
Excise Registers
Statutory Excise Reporting
 Excise Registers
(RG23A & C Part I & Part II,RG1, PLA, RG23D)
 Excise Monthly Returns
 Bond Registers
 License Registers
 Running Bond Registers
12

13. India Localization
Requirements - Overview
 CENVAT (Excise)
 VAT / LST / CST
 Service Tax
 Cenvat Credit
13

14. VAT / Central Sales Tax
How is Sales tax treated in India ?
 This is a tax on sale
 VAT / LST is charged on sales within the state
 Central Sales Tax (CST) is charged on inter-state sales
 Any sale would be charged to either VAT or CST but only to one
of them
 Every person carrying on any business is required to charge
VAT / CST, on all sales made by him, and pay it to the
Government
 VAT / CST shall be charged at the rate in force as on the date
of sale
14

15. VAT / Central Sales Tax
Tax Impact under VAT System
Rs.
STAGES
I– Manufacturer II – Wholesaler III – Retailer
Selling price 100.00 Cost price 100.00 Cost price 120.00
(excl. tax)
VAT @ 12.5% 12.50 Overheads & profit 20.00 Overheads & 24.00
@ 20% profit @ 20%
Sale price 112.50 Sale price 120.00 Sale price 144.00
(excl. tax) (excl. tax)
Tax paid 12.50 VAT @ 12.5% 15.00 VAT @ 12.5% 18.00
Sale price 135.00 Sale price 162.00
(incl. Tax) (incl. Tax)
Tax paid 2.50 Tax paid 3.00
(15-12.50) (18-15)
15

16. CENVAT vs. VAT
Cenvat VAT
Central – Value Added Tax State – Value Added Tax
Revenue to Central Government Revenue to State Government
Tax on Manufactured Goods Tax on Sale of goods
Single point tax - paid at the first point of goods movement Multi Point Tax – payable at each stage of value chain
Credit can be availed Credit can be availed except in case of LST
General CENVAT rate @ 16% with exceptions General VAT rate @ 4% or 12.5% with exceptions
Centrally administered –Cenvat Chain cannot be broken on State administered – Chain broken on interstate transactions
interstate boundaries
Cenvat credit can be availed on Services Cenvat credit cannot be availed on Services
16

17. India Localization Requirements -
Overview
 CENVAT (Excise)
 VAT (LST) / Central Sales Tax
 Service Tax
 Cenvat Credit
17

18. Service Tax
 Tax on services rendered
 Applicable only on those services which have been notified
by the Government
 Tax is payable @ 12 % plus education cess & Higher and
Secondary education cess
 Exemptions to persons rendering taxable service below
400,000 INR
 Tax to be paid by 5 th
of the next month
 Service tax is payable on advances
18

19. Service Tax
Service Tax Considerations
 Service tax is payable on value of services
 Value of service is the gross amount charged by the service
provider for the taxable service provided
 Any discount/rebate given to customer before accepting the
payment would be deducted from the gross amount
 In most of the cases person providing the taxable service is
liable to pay tax
 Reimbursement of expenses incurred on behalf of customer
is not taxable
 No tax on services which are exported or used for providing
services which are being exported 19

20. Service Tax
Export of Service
 Should be at least partly performed outside India
 It is delivered outside India and used outside India
 Payment for such services is received in foreign exchange
 No tax on services which are exported
20

21. Service Tax
Import of Service
 Should be provided from outside India to a person in India
 Service provider does not have a place of business in India
 Person receiving such service has a place of business in India
 Person receiving such services is liable to pay service tax
 Cenvat credit can be utilized for tax payment
 Tax paid can be used for availing credit
21

22. Service Tax
CENVAT Credit on Input Services
 Service provider is entitled to take credit of service tax paid on input
services
 Credit can be taken only when full payment has been made for the
service
 Credit may be taken for service tax and also for education Cess ,
Secondary and Higher Education Cess paid
 In case the service provider is engaged in exporting services, he shall
be granted refund of CENVAT on input services
 In many cases, various input services will be consumed in the
headquarters/administrative offices of manufacturers and OSPs. In
such cases, the invoices indicating the payment of service tax will be in
the name of such headquarters/ administrative offices. Provision can be
made for availing credit of such service tax, in the premises where
manufacturing activity is undertaken or the premises where the output 22
services are rendered.

23. Service Tax
Reporting
 Half yearly return in form ST-3 to be filed within 25 days from
the end of the half year
Return needs to be accompanied by TR -6 challan evidencing
duty payment
23

24. India Localization Requirements -
Overview
 CENVAT (Excise)
 VAT / LST / CST
 Service Tax
 Cenvat Credit
24

25. CENVAT Credit
A manufacturer or producer of the final product or provider
of taxable services is entitled to take credit of –
 Cenvat (Excise)
 Education Cess
Secondary and Higher Education Cess
 Secondary and Higher Education Cess
 Service tax paid on input services
 Countervailing Duty
25

26. CENVAT Credit
What items can be considered for taking Credit?
 A manufacturer or producer of the final product or provider of
taxable services is entitled to take credit of CENVAT paid on the
INPUTS used in the manufacturing process
INPUTS include inputs in capital goods manufacture which would
be used further in manufacturing process
Inputs need not be contained in the final product. It should have
been used in the process
26

27. CENVAT Credit
What items can be considered for taking Credit?
CENVAT paid on the CAPITAL GOODS used in the
manufacturing process
Capital goods should be used in manufacturing process and
not in any office
Service tax and education cess paid on any input service used
in relation to manufacturing process
When capital or inputs are removed as such (i.e. without
using), only the credit availed originally needs to be paid
Inputs are eligible for Cenvat credit even if the intermediate
products are exempt
27

28. CENVAT Credit
When the Credit may be taken?
 Cenvat credit in respect of inputs may be taken immediately on
receipt of the inputs
 Input includes all goods, except diesel and petrol / gasoline,
used in relation to the manufacturing whether directly or
indirectly and whether contained in the final product or not
 Credit in respect of inputs shall be available whether such
inputs are lying in stock or used in the manufacturing process
28

29. CENVAT Credit
When the Credit may be taken?
 Cenvat credit in respect of capital goods may be taken for an
amount not exceeding 50 % of the duty paid on such capital
goods in the year in which such goods are received and balance
in any subsequent financial year
 Cenvat credit in respect of the capital
goods shall be allowed
even if such goods have been acquired on lease, hire purchase
or loan agreement
 No Cenvat credit shall be allowed on any input or capital good
which is used in the manufacture of exempted goods or in
providing exempted services
29

30. CENVAT Credit
When the Credit may be taken?
 No time limit for availing CENVAT credit
 Unutilized Cenvat credit at the year end should be shown
under “Loans & Advances” in Balance Sheet
 Cenvat credit balance should be reviewed at the year end
and any non-utilizable portion should be added to purchase
cost
 SSI units ( turnover below 10 million INR) cannot avail
Cenvat credit on inputs but can avail Cenvat credit on Capital
goods. But this credit can be utilized only when SSI unit
becomes liable to pay excise.
30

31. CENVAT Credit
How the CENVAT credit may be Utilized?
Cenvat credit may be utilized towards payment of –
 Excise duty on any final product
 An amount equal to Cenvat credit taken on inputs if such
inputs are removed as such
 An amount equal to Cenvat credit taken on capital goods if
such capital goods are removed as such
 Service tax on any output service
31

32. CENVAT Credit
How the CENVAT credit may be Utilized?
 Towards payment of Education cess on excisable goods or on
taxable services
 Where any input or input service is used in final product which
is cleared for export, the Cenvat credit in respect of input or input
service so used shall be utilized towards payment of excise duty
on domestic consumption or towards payment of service tax on
output service
 Where the adjustment mentioned above is not possible, the
manufacturer shall be allowed a refund of such an amount
32

33. CENVAT Availment &
Utilization Overview
SALES EXCISE
ON-LINE TRANSACTIONS INVOICE PROCESS
GOODS
RECEIPT
CENVAT on hold
Debit CENVAT for Cap Goods
on-hold A/c DESPATCH
Credit ED Payable A/c
VENDOR EXCISE
INVOICE PROCESS
Debit CENVAT A/c Excise Duty
CENVAT Account
Payable A/C
Credit CENVAT A/c
Debit ED Payable A/c
MONTHLY TRANSACTIONS (Consolidated Entry)
DEPOSIT SELECT
FUNDS REGISTER Excise duty
IN PLA Utilization
ACCOUNT PLA A/C Transaction
Debit Credit PLA A/c
PLA Account
33

34. Contents
India Localization
1. India Legal Requirements Overview
2. Logistics Process Overview ( Procurement & Sales )
3. Utilization
4. Extended Withholding Tax
34

35. Logistics Process Overview
Domestic Vendor Import Vendor Domestic Vendor
Subcontractor
Plant X Plant Y
Overseas Depot A Depot B
Customer
Domestic Customer
35

36. Excise Procurement
Scenarios
 Domestic Procurement Process
 Subcontracting Process
 Stock Transport Process
 Imports Purchase
 Service Procurement Process
36

37. Typical Procurement Cycle
Payment Processing Requirement Determination
Invoice Verification Vendor Selection
Goods Receipt Order Processing
Purchase Order Monitoring
37

38. Excise Procurement Scenarios
 Domestic Procurement Process
 Subcontracting Process
 Stock Transport Process
 Imports Purchase
 Service Procurement Process
38

39. Domestic Procurement of
Raw Materials
Vendor Delivery Goods Receipt Excise Invoice Vendor Invoice
 Vendor liable to pay  GR at Factory Gate  Excise Invoice Post  Liability to Vendor
excise to Govt.
 Excise Invoice  CENVAT – Part II - Price
 Vendor Excise Invoice Capture Register entry - Excise
accompanies Goods - Other Taxes
 Excise Invoice Post - Other Costs
(Optional)
 Excise Stock – Part I
Register entry
39

40. Domestic Procurement of
Raw Materials
Accounting Entries
 GR Posting
Inventory Account Dr.
GR/IR Clearing Account Cr.
 Excise Invoice Posting
Excise Duty A/C Dr.
CENVAT Clearing Account Cr.
CENVAT Onhold A/C ( For Capital Goods) Dr.
 Vendor Invoice Posting
CENVAT Clearing A/C Dr.
GR/IR Clearing A/C Dr.
Accounts Payable Cr.
40

41. Procurement: Cancellation of
CENVAT Credit
 It is possible to cancel the CENVAT credit after it has been
availed.
 In the first step, the material document has to be cancelled.
 This is followed by canceling the CENVAT credit.
41

42. Procurement: Vendor Returns
 Vendor returns possible by creating an excise invoice for Other
movements
 Avail the credit for the materials/goods that are received.
 Create an excise invoice for the materials/goods returned to the
vendor and pay excise duty by posting this invoice.
42

43. Procurement: Additional Adjustments
 A supplementary excise invoice for extra excise duty sent by a
vendor can be captured and credit availed
 CENVAT credit for Materials destroyed, lost, etc. can be written
off
 Surrender of credit for the excisable materials which are used
for non-productive purposes
 All these are taken care by Excise JV Transaction
43

44. Procurement: Adjustments & Reversals
Highlights
C E N V A T A d ju s tm e n t
S c rap
N o n -p r o d u c tio n u s e
A d d i t io n a l E x c is e P a id b y V e n d o r
D e p o s it in to P L A th r o u g h T R 6
C a n c e l E x c is e In v o ic e
Flexibility for 100% Compliance
W ith R e fe r e n c e to E x te r n a l D o c u m e n t
Management of CENVAT Credit for Capital Goods
CENVAT Reversals and Adjustments
One-Step Reversal of Excise Invoice 44

45. Excise Procurement
Scenarios
 Domestic Procurement Process
 Subcontracting Process
 Stock Transport Process
 Imports Purchase
 Service Procurement Process
45

46. Subcontracting Process
Input
Challan
Sub contractor
FACTORY
Output
46

47. Subcontracting Process
A. With out Payment of Duty: Removal of Materials from Factory
Subcon Transfer Subcon Challan
Order Posting Challan Printing
Note: Print Immediate
Option to be used
47

48. Subcontracting Process
A. With out Payment of Duty : Receipt of materials from subcontractor
Subcon challan Complete
Goods Receipt
Reconciliation Challan
Note: Challans on which quantities are
not completely returned have the status
assigned
48

49. Subcontracting Process
A. With out Payment of Duty : Reversals
Reverse Credit
Run Listing Get Material Qty not
availed on Input
Transaction returned on Challan
Material
Note: Listing Transaction gives list of
Challans due for Reversal
49

50. Subcontracting Process
A. With out Payment of Duty : Recredit
Get Material Qty
Run Listing Recredit Reversed
subsequently returned on
Transaction Credit
Challan
Note: Listing Transaction gives list of
Challans due for Recredit
50

51. Subcontracting Process
B. Under Full Payment of Duty : Transfer Posting of Input Material to Subcon
Subcon Transfer Excise Invoice Excise Invoice
Order Posting Creation Posting
Note: Excise Invoice
created and Posted
under other Movements
51

52. Subcontracting Process
B. Under Full Payment of Duty : Receipt of Material from Subcon
Excise Invoice Excise Invoice Invoice
Goods Receipt
Capture Post Verification
52

53. Excise Procurement
Scenarios
 Domestic Procurement Process
 Subcontracting Process
 Stock Transport Process
 Imports Purchase
 Service Procurement Process
53

54. Stock Transport Process
Supplying Plant Goods Receipt –
Excise Invoice
Delivery Receiving Plant
 Plant liable to pay  GR at Plant Gate  Excise Invoice Post
excise to Govt.
 Excise Invoice  CENVAT – Part II
 Excise Invoice Capture Register entry
accompanies Goods
 Excise Invoice Post
(Optional)
 Excise Stock – Part I
Register entry
54

55. Stock Transport Process
FEATURES
 Applicable for Plants in different registration Ids
 Assessable value in excise master used for duty computation
 EI capture in receiving plant w.r.t
- STO
- GR
 Excise Values copied from supplying plant invoice during EI capture
Delivery through MM Excise Invoice –
No Inter Plant Billing
Stock Transfer Other Movements
55

56. Excise Procurement
Scenarios
 Domestic Procurement Process
 Subcontracting Process
 Stock Transport Process
 Imports Purchase
 Service Procurement Process
56

57. Imports Purchase
Goods Receipt &
Imports PO Commercial Invoice Invoice Verification
Excise Invoicing
 Vendor Outside India  Liability to Customs in  GR at Factory Gate  Vendor Invoicing
India
 Duties to be paid to  Excise Invoice - Price
Customs  CD & CVD Capture - Other Costs
 Credit can be claimed  Excise Invoice Post
on CVD
 Excise Stock – Part I
Register entry
 CENVAT – Part 2
Register
57

58. Imports Purchase
Accounting Entries
 Commercial Invoice Posting
Customs Clearing Dr.
Customs Payable (Commissioner) Cr.
 GR Posting
Inventory Account Dr.
GR/IR Clearing Account Cr.
 Excise Invoice Posting
Excise Duty A/C Dr.
Customs Clearing Account Cr.
 Vendor Invoice Posting
GR/IR Clearing A/C Dr.
Accounts Payable (Vendor) Cr.
58

59. Excise Procurement
Scenarios
 Domestic Procurement Process
 Subcontracting Process
 Stock Transport Process
 Imports Purchase
 Service Procurement Process
59

60. Service Procurement
Service Entry &
Service PO Invoice Verification
Acceptance
 PO for Services  Additional Detailing of  Vendor Invoicing
Individual Services
 Service Tax, Ecess Performed
 Inclusive of Service
and SECESS Tax
 Additional Control of
 Service Provider liable acceptance
to Pay ST to Govt.
60

61. Service Procurement
Vendor Payment FI - JV Utilization
 Payment Inclusive of  Transfer to Service  Utilization Service Tax
Service Tax Tax availed accounts availed against
Service Tax Payable
 Credit Taken on
availed accounts
61

62. Service Procurement
Accounting Entries
 Accounting Entry after Vendor Invoice Verification
Accounts Payable (Vendor) Cr.
GR/IR Clearing Account Dr.
Service Tax Receivable Account Dr.
Education Cess on Service Tax Receivable Account Dr.
Sec.Education Cess on Service Tax Receivable Account Dr.
 FI-JV after Vendor Payment to avail Service Tax Credit
Service Tax Availed Account Dr.
Education Cess on Service Tax Availed Account Dr.
Sec.Education Cess on Service Tax Availed Account Dr.
Service Tax Receivable Account Cr.
Education Cess on Service Tax Receivable Account Cr.
Sec.Education Cess on Service Tax Receivable Account Cr
62

63. Excise Sales Overview
Removal of Goods
From Factory From Depot
Sale Transfer to Factory Sale Transfer to Factory
Return to Vendor Transfer to Depot Return to Vendor Transfer to Depot
Return to Customer Transfer to Subcontractor Return to Customer Transfer to Subcontractor
Full Compliance across the
Distribution Process
63

64. Excise Sales Scenarios
 Sale from Factory
 Transfers to Depot
 Sale from Depot
 Export Sale
64

65. Excise Sales Scenarios
 Sale from Factory
 Transfers to Depot
 Sale from Depot
 Export Sale
65

66. Sale from Factory
Supplying Plant
Excise Invoice
Price: 1000
Qty : 10 PC Dispatch
Duty 16%
+ 160
Debit:
Rs. 160
Excise
Duty
Payable
A/C
Fortnightly utilization
CENVAT/Part II Register 66
PLA Register

67. Sale from Factory
 No CIN related updates
Delivery
 Update Registers and batch utilization
Goods Issue
 ED Payable
 Utilization
Excise Invoice
67

68. Sale from Factory
Separate Commercial and Excise Invoice
Printing
Proforma Excise Commercial
Sales Order Delivery Excise
Invoice Invoice Invoice
Invoice
 Posting to Excise duty payable account
 Posting to CENVAT accounts for Utilization
68

69. Sale from Factory
Single Commercial and Excise Invoice
Printing
Commercial Excise
Sales Order Delivery Excise
Invoice Invoice
Invoice
 Posting to Excise duty payable account
 Posting to CENVAT accounts for Utilization
69

70. Sale from Factory
Excise Document Flow
Excise
Delivery Billing Invoice
Sales Order Bill to: 2300
Sold to : 2300 Ship to: 2300 Sold to : 2300
Material: 400 Material: 400 Material: 400
Material: 400 Quantity: 5
Quantity: 5 Quantity: 5 Quantity: 5
70

71. Sale from Factory
Excise Invoice Features
 Excise invoice created automatically in background during
creation of billing document
 Feature made optional and triggered based on customization
settings
 Excise group and Series group automatically determined
based on customization
 Provision to print excise invoice immediately after automatic
creation of excise invoice
71

72. Sale from Factory
Utilization Due List
 Listing of all billing documents due for utilization provided
 Also includes ability to view,
- Account balances
- Total duty amount needed to utilize the displayed billing
documents
- Deficit, if any
72

73. Sale from Factory
Batch Utilization
 Excise Invoices can be created in Batches
 Provision of additional fields in selection screen like,
- Billing Date
- SD Document Category
- Billing Document Category
73

74. Excise Sales Scenarios
 Sale from Factory
 Transfers to Depot
 Sale from Depot
 Export Sale
74

75. Transfers to Depot
Stock Printing
Replishment Proforma Excise
Transfer Excise
Delivery Invoice Invoice
Order Invoice
75

76. Transfers to Depot
Depot Excise Requirements
Distribution of Excisable goods at depot involves maintenance
of RG23D registers.
Incoming Excise Invoice reference is required to be mentioned
on depot Sales Invoice
At the Factory gate, Excise is paid on the declared value of the
goods to be sold at depot.
Depot should charge from the customer the same Excise duty
from that was paid at factory/source.
In case of price escalations at depot the difference needs to be
paid at the factory.
76

77. Transfers to Depot
Depot Receipts for Stock Transfer
 GR made against the delivery note / stock transfer
 Excise invoice details directly copied from factory invoice
 Loss in transit taken care of
 Ship-from can be captured at Excise Invoice for depot.
 Multiple P.O.s can be combined in one receipt
 Folio number generation can be switched on through
customization
 Item details are proposed for stock returns
77

78. Transfers to Depot
Depot Receipts for Direct Purchases
GR made against the PO
Individual excise invoice details copied from PO item or can
be entered at item level
For imports CVD can be marked
Ship-from can be captured at Excise Invoice for depot.
Multiple P.O.s can be combined in one receipt
Folio number generated based on customization
78

79. Excise Sales Scenarios
 Sale from Factory
 Transfers to Depot
 Sale from Depot
 Export Sale
79

80. Sale from Depot
Delivery & Excise Invoice Commercial
Sales Order
PGI Capture Invoice
 Selling Price 1000 , Quantity 10, ED @ 16% = 160
 RG23D – Reduce quantity by 10, Debit 160
80

81. Sale from Depot
Depot Sales
Separate steps for Excise Invoice create and verification
Option for Single step creation and verification through
customization
Option to cancel excise invoice before verification
Provision to create depot invoice before post goods issue based on
delivery document
Option to restrict incoming excise invoice selection from the same
source of supply
User-exits for unit conversion and Excise / Series group
determination
81

82. Sale from Depot
Depot Sales: A-Certificate Selection
 Pick up the A-certificates relevant for the current removal
 A-certificate can be selected along with the corresponding excise
invoice
 Multiple A-certificates can be picked up
 Splitting of the A-certificate amount across removals not allowed
 Separate RG23D entries in the same folio for better tracking
 Value gets added up and cumulative excise proposed during
Billing
82

83. RG23D Register
 Text
Receipt update the quantity and the value in RG23D
Material   Text
The reference / mother invoice details in terms of batches etc captured
Receipt in – Text
Depot
 Reference to the mother invoice is made
Movement /
 Update goods issue quantity
sale from
depot
 Excise amount cannot differ from that paid at the first point of goods
movement
83

84. Depot Operations
Comprehensive solution for Depot functionality
RG23D Maintenance and Printing functionality is available
Provision to receive Internal as well as External Excise
Invoice at Depot.
Close integration with MM and SD processes
84

85. Excise Sales Scenarios
 Sale from Factory
 Transfers to Depot
 Sale from Depot
 Export Sale
85

86. Export Sale
 Price 1000, Quantity 10, Duty@ 16% = 160
Supplying
Plant Excise
Invoice
 Update Registers
If Exported
under bond
 Debit ED payable a/c 160
 Update Cenvat Part II register and PLA register
If not exported
 Fortnightly utilization
under bond
86

87. Export Sale
Excise Bonding Document Flow
Excise Bond Capture
Delivery Billing Invoice Register Licence
Sales Order Bill to: 2300
Ship to: 2300 Sold to : 2300 Sold to : 2300 Sold to : 2300
Sold to : 2300 Material: 400
Material: 400 Material: 400 Material: 400 Material: 400
Material: 400 Quantity: 5
Quantity: 5 Quantity: 5 Quantity: 5 Quantity: 5
Quantity: 5
 Bonds / LOUT / Licence as applicable in the Business process
87

88. Export Sale
Deemed Export Sales
 Sale is marked as Deemed
 Excise status of customer gives complete concession
 No amount utilization
 Use of local excise invoice range based on series group
88

89. Contents
India Localization
1. India Legal Requirements Overview
2. Logistics Process Overview ( Procurement & Sales )
3. Utilization
4. Extended Withholding Tax
89

90. Utilization
Monthly Utilization
Facilitates payment of duty accumulated for each month
Features include
 Display of pending invoices
 Option for Posting date
 Posting to a Business area
 Selection based on a range of dates
 Optionally, Selection based on a range of invoices
 Utilization strategy based on customization settings
Posting of TR6 Challan entry to PLA account
90

91. Utilization
Utilization Due List
Feature to view list of all billing documents due for utilization
Other features include ability to view
- Account balances
- Total duty amount needed to utilize the displayed billing
documents
- Deficit, if any
91

92. TR6 Challan Posting with PLA Register
Updation
House Bank Own
Prepare Cheque & TR 6 Chllan
Post Accounting document in FI
to post the payment
Excise PLA hold A/c Dr
House Bank A/c Cr
Banker Transfer the
funds toExcise
Authorities and
Acknowledge the Create Excise JV - PLA updation
TR 6 Chllan TR6 Challan (J1IH )
Enter the Accounting Doct. or
TR6 Challan No., FY,
Plant, Excise Group, etc.,
Allocate the TR6 Challan Amount
as per TR6C i.e. BED / AED / SED
Update the PLA Register &
Accounting Document Posted
EXCISE PLA A/c Dr
Excise PLA hold A/c Cr
PLA Register for Value
92

93. Utilization of CENVAT
Input Output
Debit Balance Credit Balance
Perform the Excise
Excise duty payable on
Utilization
Customer Invoice
Input Credit from Vendor
Material Purchase
Input Credit from Vendor
Capital Purchase (50%) Total Available Total Excise duty
RG23C Balances RG23A payable
PLA Balance
Is the Balance
Sufficient
TR6 Challan Payment
NO Yes
Apportion the payable amount
between the
Registers
RG23A, RG23C & PLA
Post the Utilization
RG23A & C Part II Accounting document generated
PLA Register & Registers updated
based on Amount apportionment
93

94. CENVAT Availment & Utilization
Overview
SALES EXCISE
ON-LINE TRANSACTIONS INVOICE PROCESS
GOODS
RECEIPT
CENVAT on hold
Debit CENVAT for Cap Goods
on-hold A/c DESPATCH
Credit ED Payable A/c
VENDOR EXCISE
INVOICE PROCESS
Debit CENVAT A/c Excise Duty
CENVAT Account
Payable A/C
Credit CENVAT A/c
Debit ED Payable A/c
MONTHLY TRANSACTIONS (Consolidated Entry)
DEPOSIT SELECT
FUNDS REGISTER Excise duty
IN PLA Utilization
ACCOUNT PLA A/C Transaction
Debit Credit PLA A/c
PLA Account
94

95. Contents
India Localization
1. India Legal Requirements Overview
2. Logistics Process Overview ( Procurement & Sales )
3. Utilization
4. Extended Withholding Tax
95

96. EWT: TDS Overview
Vendor Vendor
Income tax office
Deduct Tax Issue
from Vendor Certificates
Pay Tax to
Government
Bank
96

97. EWT: TDS (Tax Deducted at Source)
 Tax is deducted at source from all payments/provisions
which are hit by the TDS provisions of the Act
 Some of the above payments/provisions pertain to services
that come within the scope of Tax Deducted at Source
(‘TDS’) under the Indian Income-tax Act, 1961 (‘Act’).
 Tax is not deducted from payment for goods
 TDS is required to be deducted at the time of payment or
invoice posting whichever is earlier.
 The taxes which are so deducted, will then have to be
deposited to the credit of the Indian Government on or before
7th of next every month.
 The company will have to issue TDS certificates to the
vendors for the tax deducted and also file with the tax office,
Quarterly & Annual Return‘ of the total taxes deducted during
97
the year under the various sections of the Act.

98. EWT: Vendor TDS
Services
Mumbai plant
Invoice
Vendor Certificate
Vendor
Payment
ABC Ltd
Advance
Payment/Challan
Quarterly
Returns
Income Tax 98
BANK Office

99. EWT: Vendor Transactions
Down
Payment
Reverse Credit
Invoice
Invoice Memo
Clear DP
Cash Journal
Postings
Challan
TDS JV
Update
Logistics
Invoice Bank
Challan
Reprint Print Cancel
Certificate Certificate Certificate
Quarterly
99
Returns

100. EWT: Customer Interest TDS
Mumbai plant
Advance
Customer
Certificate
Interest Payment
ABC Ltd
Payment/Challan
Quarterly Returns
Income Tax
BANK
Office
100

101. EWT: Provisions and Adjustments
 TDS computed on entries in provisional liability accounts
(GR/IR and SR/IR Accounts)
 TDS is computed at each period end on uncleared entries
remaining in the GR/IR and SR/IR accounts
 GR/IR and SR/IR accounts relevant for computing TDS on
provisions identified separately
 GL accounts to which the provisional TDS is posted identified
and document Type used for provisional TDS postings is
separately identified
 JV facility available for carrying out changes to TDS relevant
postings
 Accounts to which losses (non-recoverable TDS) is to be
posted and the document type to be used for TDS adjustment
postings is identified separately
101

102. EWT Activities
Daily Activities Periodic Activities
TDS on Challan
Provisions Update
Posting On payment
Where required due date
TDS
Certificate
Printing,
Reprinting and
Cancellation
Posting on appropriate
Invoice, Credit
due dates
Memo, Down
Payment, etc
Tax
Adjustment
Quarterly
JV
Where required Return
102

103. Questions??
Thank you!
103