4970854 CIN India LocalizationSD Workshop

8/7/2019 4970854 CIN India LocalizationSD Workshop

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Copyright 2003 Bristlecone, Inc. | Dec 18 th 2004

www.bcone.com

India Localizationwith respect to SD

T.Muthyalappa


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Copyright 2003 Bristlecone, Inc. | April 14 2004 10

Modus OperandiSession - I

Introduction to Indian TaxesDifferent Sales processes.

CENVAT Concept

CENVAT Rules and Terminologies

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.


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Introduction

Hi Let us Discuss, What are Indian Taxes and how they are differentiated.


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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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Excise Duties is Mainly based on 4 Ms1.It Must be Mentioned in Excise laws.

2.It Must be Movable.

3.It must be Manufactured.

4.It is valuable to Money.

Excise duty is a duty on production or manufacture of goods. It is a taxlevied on manufacture of goods and the liability to pay excise duty arisesimmediately on manufacture or production of goods


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Once manufacture of goods is complete, excise duty is payable, whetherthe goods are sold or self-consumed. Excise duty does not depend on theend use of the goods.

Excise Duty is a tax on manufacture of goods but for the sake of administrative convenience, it is collected only on removable of goods fromthe factory.

Sales Tax :

Sales Tax is a tax on Sales and can be imposed only when there is a Sale.


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Difference between Excise duty and Sales Tax.Central Excise Duty has to be distinguished from Sales Tax. Sales Tax is a

tax on Sales and can be imposed only when there is a Sale. On the otherhand, Excise Duty is a duty on the manufacture of the goods. So, duty canbe imposed immediately after goods are manufactured. Whether thesegoods are sold are not is immaterial.

For example: If a Company manufactures soap within the factory for itsown use, there will be no sales tax on the soap. However, the soap will beliable to pay excise duty as it has been manufactured.


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Types of excise dutiesUnder the excise laws, the following are the various types of duties, whichare 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 localindustries. This is varies depending on the products.

Special Excise duties :Excise duty that is levied in order control thecompetition between the states, for example, one state may give moresubsidies in order to attract the investments or to encourage the industriesof that state.


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Additional Duty on specified items under the Act : If the Tariff Commission set up by law recommends that in order to protect theinterests of industry, the Central Government may levy additional duties atthe rate recommended on specified goods.


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Different Sales Process

1.Sales From Factory.Stock transfers.

2.Sales From Depot.

Scrap Sales.

Auction Sales especially for Scrap.

Job works.

Exports.


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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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Sales from Factory

Supplying Plant DispatchExcise Invoice

J1IIN

Add up to Excise Duty Payable A/c

J1IEX

Capture EI


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Stock transfers.

In Stock transfers we will transfer the Materials from Plant to plant andPlant to Stock yards.

Usually in the stock transfers we create the excise invoice while the goodsis moving from plant to Stock yard.

From stockyard to customer usually we are not going to create the Exciseinvoice, because stock which is coming in to the Stock is not an input, it isjust a transfer from one place to other.

There is no price escalations here.


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Depot process

Depot is also almost same as Stock yards, and here also we are transferringgoods from Plant to Depot, but the difference is in Depots, are Priceescalations. In Depots goods is coming as input.

Transactions can happen through two scenarios:

Scenario1: Depot receives goods from the companys factory through stocktransfer.

Scenario 2: Depot procures goods directly from external sources.


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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 deliverynumber) PGI Billing


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Sales From Depot

Depot DispatchExcise Invoice

Add up to the Excise Duty Payable A/c

Reduce the Quantity

MIGO

J1IG

J1IJ

Plant

ME21N

J1IIN


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Export Process In the process of Exports duty under bond is not payable and thegoods move out from the factory against an ARE1.

However, goods not under bond move out of the factory by paying theduty 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 inexports, However, the form used is ARE3.


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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.

For Ex.


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CENVAT Credit

RM-A

RM-B

FG-C

Rs.100 ED: Rs.10

Rs.50 ED: Rs.5 Input Tax credit availed: Rs.15

Rs.500 ED:Rs.50

Tax liability: OTL CENVAT credit

Rs.35: Rs.50 Rs 15


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CENVAT!?

WHEN AND HOW MUCH CREDIT CAN BE TAKEN

The Cenvat Credit in respect of inputs may be taken immediately on receipt of theinputs.

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 fiftypercent 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 orafter 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 receivedback 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 towardspayment of duty on any final product cleared for home consumption and where forany reason such adjustment is not possible, the manufacture shall be allowed refundof such amount.


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CENVAT

Rule 1. Short title, extent and commencement.-

Rule 2. Definitions .-

Act capital goods Customs Tariff Act exempted goods final products first stagedealer 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 inspecified 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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CENVAT

So far

Overview of Indian Tax Structure.

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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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 IndiaFormula 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.
http://../DOCUME~1/KUMAR~1.ARM/Desktop/CIN-Settings/taxinj.HTMhttp://../DOCUME~1/KUMAR~1.ARM/Desktop/CIN-Settings/TAXINN.HTMhttp://../DOCUME~1/KUMAR~1.ARM/Desktop/CIN-Settings/TAXINN.HTMhttp://../DOCUME~1/KUMAR~1.ARM/Desktop/CIN-Settings/taxinj.HTM


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Menu path SPRO Logistic General Tax on goods on movement India Basic Settings Determination of Excise duty Maintain Excise defaults.


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Sales and Distribution Pricing procedure.


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What is Excise register and how many are they.

How the Excise registers are using at Different Business Scenarios and How hese areupdating.

Excise register.

Excise Laws require you to maintain a number of registers in a specified formatrelating 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 IIRG I

RG23D


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Excise registers.

RG23A: Raw MaterialThe entries pertaining to quantity will go into RG 23 Part I and that of duty will go into Part IIin the appropriate duty column. i.e. Basic Excise, SED, Additional duty, etc

RG23C: Capital GoodsRG23CI-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 areentered in the RG I Register

Register RG I is updated after creation of an excise invoice while dispatching the goods fromthe 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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Factory Process- Registers RG23 A Part I & Part II

Material is received in the factory as for Qualityinspection or for Direct Input.

Material after Quality Inspection or when used asDirect Input will go into the RG 23 A Registers.

The entries pertaining to quantity will go into RG 23Part I and that of duty will go into Part II in theappropriate duty column. i.e. Basic Excise, SED,Additional duty, etc.


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Depot Process: The RG 23 D register is used to update the excise entries in case of Exciseable 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 theDEPOT.

However, while taking sale from the DEPOT and if price escalationshappen, then the extra excise is paid using a A certificate. Thesedetails are entered in the RG23 D register and excise recovered fromthe customer.


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Depot Process

Transactions can happen through two scenarios:

Scenario1: Depot receives goods from the companys factorythrough stock transfer.

Scenario 2: Depot procures goods directly from external sources.


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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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So Far We discussed on

Tax Procedures

Pricing Procedure Relevant to SD.

CENAVT registers

Transaction Codes.


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Tax/Excise Duty set up for MM & SD

Basic SettingsMaster Data

Account Determination

Business Transactions

Tools


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Basic Settings

Excise Registration IDsCompany Code Settings

Plant Settings

Excise Groups

Series Groups

Excise Duty Indicators


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Excise Registration IDs

A number assigned to each premises or location that has registered as a manufacturer with the excise authorities.

Mention whether AED, SED, CESSapplicable. If blank will not be available for

inputs

Max no. of lineitems in outgoing EIPermits deductible /non deductible ED

at GR


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Company Code SettingsUser can edit

Dr account

during JV Utilizes fromPLA in JV

First month for excise year

Excise invoiceselection


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Plant Settings

Plant defined as Depotor not

Multiple plants to oneExcise Registration ID

GRs per EI can be set asbelowMulti GR Multi CreditMulti GR Single creditSingle GR


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Excise Groups

Excise Reg ID linkedto Excise group &Plant

Depot definition atExcise Grp & Plant


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Series Groups


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Account DeterminationDescribe which excise accounts (for excise duty and CENVAT) are to beposted to for the various transaction types including sub transaction type if any

d h h b


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During transactions system determines which G/L accounts to post to bylooking at the:Excise group, Company code & Chart of accounts


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SD settings Relevant to India Localization.

Assigning Billing types to Delivery Types.


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Maintain Excise Defaults.

Maintain the Excise Defaults in order determine Excise group and SeriesGroup Automatically at the time of Excise invoice creation.


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Maintain Scripts for Registers.

Maintain the Excise registers Form along with company code to get thePrint out put for Excise Registers.


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CIN Master - J1ID

Maintain Chapter IDs

Excise Duty Indicators

Determination of Excise Duty

Material and Chapter ID Combination

Customer Excise Details

Excise Indicator for plant.

Excise Indicator for Plant and Customer.


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J1ID Screen.

Excise rate Determination


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Excise rate Determination

Is theCustomer

SSI?

Get SSIduty

Rates.

Yes

No

Excp ratesMaintained?

Yes

No

GetExcepdutyrates

Get Ch IDOf the

material

Get Customer Excise

indicator

Get plantExcise

indicator

Get finalExcise

indicator

Get rateBased on

Ex Ind & CH ID


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Let us Discuss on Sap Easy Access relevant to India Localization.

1.Creation Excise Invoice.

Updating the Registers.

Extracting Registers.

Print registers.

Utilization determination.

Pass JV by using J1IH.


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Creation Of Excise invoice

We will create the Excise invoice with reference to Commercial invoice itmay be Proforma or Normal invoice.


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Register Updation By using J1I5.

First We need to update the RG1 register by selecting the class RMA andROP.


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Once u complete the RG1 updation with RMA and


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Once u complete the RG1 updation with RMA andROP we need to do for IDH for ISSUES

Then continue the next step as shown in Slide 55


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Then continue the next step as shown in Slide 55.it gives the following result.

E t t th E i gi t


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Extract the Excise registers.We need select the RG1 in the initial screen and execute.

System give the following screen Click on


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System give the following screen.Click oncontinue.


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Print the Excise register.

To do this First we need to maintain the Values in table J_2IRG1BAL asfollows.

Too print Excise registers use T C J2I6 System


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Too print Excise registers use T.C. J2I6, Systemgives the all details of RG1 Register.


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CENVAT Utilization

Payment to be made to Excise Department for the Self Removals forthe last month.

Utilization to be done against the last months incoming excise dutiesand CVD.

CENVAT utilization to be done before the 5 th of next month.


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CENVAT Availment and UtilizationOn-Line Transactions

Fortnightly Transactions

Excise Duty UtilizationTransaction

DespatchSales ExciseInvoice Process

Excise DutyPayable Account

GoodsReceipt

Vendor ExciseInvoice Process

CENVAT on holdfor Capital goods

CENVAT Account

SelectRegister

PLA Account

Deposit funds in PLAAccount

Credit CENVATon-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


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Do Fortnight Utilization of cenvat.


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Pass JV by using J1iH,


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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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Additional excise is used to Credit the Registers


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Additional excise is used to Credit the Registersthrough J1IH.


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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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l d


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FI Entries related to Excise in SDDuring the passing of Billing document to Accounting: (VF02, Release toAccounting)

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 Payable Rs.16/-

During Monthly Utilization: (J2IU)

Dr Excise Duty Payable Rs. 16/-

Cr CENVAT Clearing Rs.16/-

Information on Tax Procedure and Conditions


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Menu Path:

SPRO Financial Accounting Financial Accounting Global Settings Tax on

Sale and Purchase Define ProcedureProcedure: 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 pricingprocedure

Tax conditions are non-statistical. Since, these are determined from TAXINJ

While defining tax codes (using Transaction Code: FTXP), to maintain ExciseDuty (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 checksin procedure TAXINJ

L Cl if D b


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Lets Clarify our Doubts

4970854 CIN India LocalizationSD Workshop

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