Sap cin-overview-training

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Sap cin-overview-training

  1. 1. Country India Version (CIN) Overview Presented By K V Ramesh Babu 1
  2. 2. ContentsIndia Localization1. India Legal Requirements Overview2. Logistics Process Overview ( Procurement & Sales )3. Utilization4. Extended Withholding Tax 2
  3. 3. India Localization Requirements -Overview  CENVAT (Excise)  VAT / LST / CST  Service Tax  Cenvat Credit 3
  4. 4. India Localization Requirements -Overview Central Value Added Tax (Excise) VAT (LST) / Central Sales Tax Service Tax Cenvat Credit 4
  5. 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. 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. 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. 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 fromtime to time. The duty will be calculated as percentage of tariffvalue fixed by the Govt. and not on assessable value 8
  9. 9. Central Value Added Tax (Excise)Duty Calculation Considerations Transaction value is the price actually paid or payable for thegoods and includes any other amount that the buyer is liableto pay in connection with such sale Any additional consideration flowing directly or indirectly tothe seller from the buyer should be added to the transactionvalue. Cost of production is not relevant for the purpose ofdetermining assessable value. Assessable value may be lower than the cost price of thegoods. Goods should be assessed in the form in which they areremoved. 9
  10. 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. 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. 12. Central Value Added Tax(Excise)Excise RegistersStatutory 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. 13. India LocalizationRequirements - Overview  CENVAT (Excise)  VAT / LST / CST  Service Tax  Cenvat Credit 13
  14. 14. VAT / Central Sales TaxHow 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 oneof them Every person carrying on any business is required to chargeVAT / CST, on all sales made by him, and pay it to theGovernment VAT / CST shall be charged at the rate in force as on the dateof sale 14
  15. 15. VAT / Central Sales Tax Tax Impact under VAT System Rs. STAGES I– Manufacturer II – Wholesaler III – RetailerSelling 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. 16. CENVAT vs. VATCenvat VATCentral – Value Added Tax State – Value Added TaxRevenue to Central Government Revenue to State GovernmentTax on Manufactured Goods Tax on Sale of goodsSingle point tax - paid at the first point of goods movement Multi Point Tax – payable at each stage of value chainCredit can be availed Credit can be availed except in case of LSTGeneral CENVAT rate @ 16% with exceptions General VAT rate @ 4% or 12.5% with exceptionsCentrally administered –Cenvat Chain cannot be broken on State administered – Chain broken on interstate transactionsinterstate boundariesCenvat credit can be availed on Services Cenvat credit cannot be availed on Services 16
  17. 17. India Localization Requirements -Overview CENVAT (Excise) VAT (LST) / Central Sales Tax Service Tax Cenvat Credit 17
  18. 18. Service Tax Tax on services rendered Applicable only on those services which have been notifiedby the Government Tax is payable @ 12 % plus education cess & Higher andSecondary education cess Exemptions to persons rendering taxable service below400,000 INR Tax to be paid by 5 th of the next month Service tax is payable on advances 18
  19. 19. Service TaxService Tax Considerations Service tax is payable on value of services Value of service is the gross amount charged by the serviceprovider for the taxable service provided Any discount/rebate given to customer before accepting thepayment would be deducted from the gross amount In most of the cases person providing the taxable service isliable to pay tax Reimbursement of expenses incurred on behalf of customeris not taxable No tax on services which are exported or used for providingservices which are being exported 19
  20. 20. Service TaxExport 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. 21. Service TaxImport 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. 22. Service TaxCENVAT Credit on Input Services Service provider is entitled to take credit of service tax paid on inputservices Credit can be taken only when full payment has been made for theservice 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 shallbe granted refund of CENVAT on input services In many cases, various input services will be consumed in theheadquarters/administrative offices of manufacturers and OSPs. Insuch cases, the invoices indicating the payment of service tax will be inthe name of such headquarters/ administrative offices. Provision can bemade for availing credit of such service tax, in the premises wheremanufacturing activity is undertaken or the premises where the output 22services are rendered.
  23. 23. Service TaxReporting Half yearly return in form ST-3 to be filed within 25 days fromthe end of the half yearReturn needs to be accompanied by TR -6 challan evidencingduty payment 23
  24. 24. India Localization Requirements -Overview  CENVAT (Excise)  VAT / LST / CST  Service Tax  Cenvat Credit 24
  25. 25. CENVAT CreditA manufacturer or producer of the final product or providerof 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. 26. CENVAT CreditWhat items can be considered for taking Credit? A manufacturer or producer of the final product or provider oftaxable services is entitled to take credit of CENVAT paid on theINPUTS used in the manufacturing processINPUTS include inputs in capital goods manufacture which wouldbe used further in manufacturing processInputs need not be contained in the final product. It should havebeen used in the process 26
  27. 27. CENVAT CreditWhat items can be considered for taking Credit?CENVAT paid on the CAPITAL GOODS used in themanufacturing processCapital goods should be used in manufacturing process andnot in any officeService tax and education cess paid on any input service usedin relation to manufacturing processWhen capital or inputs are removed as such (i.e. withoutusing), only the credit availed originally needs to be paidInputs are eligible for Cenvat credit even if the intermediateproducts are exempt 27
  28. 28. CENVAT CreditWhen the Credit may be taken? Cenvat credit in respect of inputs may be taken immediately onreceipt of the inputs Input includes all goods, except diesel and petrol / gasoline,used in relation to the manufacturing whether directly orindirectly and whether contained in the final product or not Credit in respect of inputs shall be available whether suchinputs are lying in stock or used in the manufacturing process 28
  29. 29. CENVAT CreditWhen the Credit may be taken? Cenvat credit in respect of capital goods may be taken for anamount not exceeding 50 % of the duty paid on such capitalgoods in the year in which such goods are received and balancein any subsequent financial year Cenvat credit in respect of the capital goods shall be allowedeven if such goods have been acquired on lease, hire purchaseor loan agreement No Cenvat credit shall be allowed on any input or capital goodwhich is used in the manufacture of exempted goods or inproviding exempted services 29
  30. 30. CENVAT CreditWhen 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 endand any non-utilizable portion should be added to purchasecost SSI units ( turnover below 10 million INR) cannot availCenvat credit on inputs but can avail Cenvat credit on Capitalgoods. But this credit can be utilized only when SSI unitbecomes liable to pay excise. 30
  31. 31. CENVAT CreditHow 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 suchinputs are removed as such An amount equal to Cenvat credit taken on capital goods ifsuch capital goods are removed as such Service tax on any output service 31
  32. 32. CENVAT CreditHow the CENVAT credit may be Utilized? Towards payment of Education cess on excisable goods or ontaxable services Where any input or input service is used in final product whichis cleared for export, the Cenvat credit in respect of input or inputservice so used shall be utilized towards payment of excise dutyon domestic consumption or towards payment of service tax onoutput service Where the adjustment mentioned above is not possible, themanufacturer shall be allowed a refund of such an amount 32
  33. 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/cVENDOR EXCISEINVOICE 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 SELECTFUNDS REGISTER Excise dutyIN PLA UtilizationACCOUNT PLA A/C Transaction Debit Credit PLA A/c PLA Account 33
  34. 34. ContentsIndia Localization1. India Legal Requirements Overview2. Logistics Process Overview ( Procurement & Sales )3. Utilization4. Extended Withholding Tax 34
  35. 35. Logistics Process Overview Domestic Vendor Import Vendor Domestic Vendor Subcontractor Plant X Plant YOverseas Depot A Depot BCustomer Domestic Customer 35
  36. 36. Excise ProcurementScenarios Domestic Procurement Process Subcontracting Process Stock Transport Process Imports Purchase Service Procurement Process 36
  37. 37. Typical Procurement Cycle Payment Processing Requirement DeterminationInvoice Verification Vendor Selection Goods Receipt Order Processing Purchase Order Monitoring 37
  38. 38. Excise Procurement Scenarios  Domestic Procurement Process  Subcontracting Process  Stock Transport Process  Imports Purchase  Service Procurement Process 38
  39. 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. 40. Domestic Procurement ofRaw MaterialsAccounting 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. 41. Procurement: Cancellation ofCENVAT Credit It is possible to cancel the CENVAT credit after it has beenavailed. In the first step, the material document has to be cancelled. This is followed by canceling the CENVAT credit. 41
  42. 42. Procurement: Vendor Returns Vendor returns possible by creating an excise invoice for Othermovements Avail the credit for the materials/goods that are received. Create an excise invoice for the materials/goods returned to thevendor and pay excise duty by posting this invoice. 42
  43. 43. Procurement: Additional Adjustments A supplementary excise invoice for extra excise duty sent by avendor can be captured and credit availed CENVAT credit for Materials destroyed, lost, etc. can be writtenoff Surrender of credit for the excisable materials which are usedfor non-productive purposes All these are taken care by Excise JV Transaction 43
  44. 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 eFlexibility 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. 45. Excise ProcurementScenarios Domestic Procurement Process Subcontracting Process Stock Transport Process Imports Purchase Service Procurement Process 45
  46. 46. Subcontracting Process Input Challan Sub contractorFACTORY Output 46
  47. 47. Subcontracting ProcessA. 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. 48. Subcontracting ProcessA. 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. 49. Subcontracting ProcessA. 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. 50. Subcontracting ProcessA. 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. 51. Subcontracting ProcessB. 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. 52. Subcontracting ProcessB. Under Full Payment of Duty : Receipt of Material from Subcon Excise Invoice Excise Invoice Invoice Goods Receipt Capture Post Verification 52
  53. 53. Excise ProcurementScenarios Domestic Procurement Process Subcontracting Process Stock Transport Process Imports Purchase Service Procurement Process 53
  54. 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. 55. Stock Transport ProcessFEATURES 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. 56. Excise ProcurementScenarios  Domestic Procurement Process  Subcontracting Process  Stock Transport Process  Imports Purchase  Service Procurement Process 56
  57. 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. 58. Imports PurchaseAccounting 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. 59. Excise ProcurementScenarios  Domestic Procurement Process  Subcontracting Process  Stock Transport Process  Imports Purchase  Service Procurement Process 59
  60. 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. 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. 62. Service ProcurementAccounting 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. 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 SubcontractorFull Compliance across theDistribution Process 63
  64. 64. Excise Sales Scenarios Sale from Factory Transfers to Depot Sale from Depot Export Sale 64
  65. 65. Excise Sales Scenarios  Sale from Factory  Transfers to Depot  Sale from Depot  Export Sale 65
  66. 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 utilizationCENVAT/Part II Register 66 PLA Register
  67. 67. Sale from Factory  No CIN related updates Delivery  Update Registers and batch utilizationGoods Issue  ED Payable  UtilizationExcise Invoice 67
  68. 68. Sale from FactorySeparate 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. 69. Sale from FactorySingle 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. 70. Sale from FactoryExcise 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. 71. Sale from FactoryExcise Invoice Features Excise invoice created automatically in background duringcreation of billing document Feature made optional and triggered based on customizationsettings Excise group and Series group automatically determinedbased on customization Provision to print excise invoice immediately after automaticcreation of excise invoice 71
  72. 72. Sale from FactoryUtilization 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. 73. Sale from FactoryBatch 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. 74. Excise Sales Scenarios  Sale from Factory  Transfers to Depot  Sale from Depot  Export Sale 74
  75. 75. Transfers to Depot Stock Printing Replishment Proforma ExciseTransfer Excise Delivery Invoice Invoice Order Invoice 75
  76. 76. Transfers to DepotDepot Excise RequirementsDistribution of Excisable goods at depot involves maintenanceof RG23D registers.Incoming Excise Invoice reference is required to be mentionedon depot Sales InvoiceAt the Factory gate, Excise is paid on the declared value of thegoods to be sold at depot.Depot should charge from the customer the same Excise dutyfrom that was paid at factory/source.In case of price escalations at depot the difference needs to bepaid at the factory. 76
  77. 77. Transfers to DepotDepot 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 throughcustomization Item details are proposed for stock returns 77
  78. 78. Transfers to DepotDepot Receipts for Direct PurchasesGR made against the POIndividual excise invoice details copied from PO item or canbe 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. 79. Excise Sales Scenarios  Sale from Factory  Transfers to Depot  Sale from Depot  Export Sale 79
  80. 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. 81. Sale from DepotDepot SalesSeparate steps for Excise Invoice create and verificationOption for Single step creation and verification throughcustomizationOption to cancel excise invoice before verificationProvision to create depot invoice before post goods issue based ondelivery documentOption to restrict incoming excise invoice selection from the samesource of supplyUser-exits for unit conversion and Excise / Series groupdetermination 81
  82. 82. Sale from DepotDepot Sales: A-Certificate Selection Pick up the A-certificates relevant for the current removal A-certificate can be selected along with the corresponding exciseinvoice 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 duringBilling 82
  83. 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 madeMovement /  Update goods issue quantitysale from depot Excise amount cannot differ from that paid at the first point of goodsmovement 83
  84. 84. Depot OperationsComprehensive solution for Depot functionalityRG23D Maintenance and Printing functionality is availableProvision to receive Internal as well as External ExciseInvoice at Depot.Close integration with MM and SD processes 84
  85. 85. Excise Sales Scenarios  Sale from Factory  Transfers to Depot  Sale from Depot  Export Sale 85
  86. 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 registerIf not exported  Fortnightly utilization under bond 86
  87. 87. Export SaleExcise 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 : 2300Sold to : 2300 Material: 400 Material: 400 Material: 400 Material: 400 Material: 400Material: 400 Quantity: 5 Quantity: 5 Quantity: 5 Quantity: 5 Quantity: 5 Quantity: 5  Bonds / LOUT / Licence as applicable in the Business process 87
  88. 88. Export SaleDeemed 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. 89. ContentsIndia Localization1. India Legal Requirements Overview2. Logistics Process Overview ( Procurement & Sales )3. Utilization4. Extended Withholding Tax 89
  90. 90. UtilizationMonthly 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. 91. UtilizationUtilization 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. 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 CrPLA Register for Value 92
  93. 93. Utilization of CENVAT Input Output Debit Balance Credit Balance Perform the Excise Excise duty payable on Utilization Customer InvoiceInput Credit from Vendor Material PurchaseInput 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. 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/cVENDOR EXCISEINVOICE 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 SELECTFUNDS REGISTER Excise dutyIN PLA UtilizationACCOUNT PLA A/C Transaction Debit Credit PLA A/c PLA Account 94
  95. 95. ContentsIndia Localization1. India Legal Requirements Overview2. Logistics Process Overview ( Procurement & Sales )3. Utilization4. Extended Withholding Tax 95
  96. 96. EWT: TDS OverviewVendor Vendor Income tax officeDeduct Tax Issuefrom Vendor Certificates Pay Tax to Government Bank 96
  97. 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. 98. EWT: Vendor TDS Services Mumbai plant Invoice Vendor CertificateVendorPayment ABC Ltd Advance Payment/Challan Quarterly Returns Income Tax 98 BANK Office
  99. 99. EWT: Vendor Transactions Down Payment Reverse Credit Invoice Invoice Memo Clear DPCash Journal Postings Challan TDS JV Update Logistics Invoice Bank Challan Reprint Print Cancel Certificate Certificate Certificate Quarterly 99 Returns
  100. 100. EWT: Customer Interest TDS Mumbai plant Advance Customer Certificate Interest Payment ABC Ltd Payment/Challan Quarterly Returns Income TaxBANK Office 100
  101. 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. 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 appropriateInvoice, Credit due dates Memo, Down Payment, etc Tax Adjustment Quarterly JV Where required Return 102
  103. 103. Questions??Thank you! 103

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