VAT (Value Added Tax) Process

Definition: -VAT will replace all the state sales taxes in India on April 01, 2005. Under Value Added Tax (VAT) Regime, an organization can avail credit arising from Input Tax paid on Purchase of goods. Thus, tax liability shall be only on Value Addition at each stage of Sale made within the State.

1. Setups required for Value Added Tax

1.1 Define VAT Regime Registration.

Navigation: --India Localization>India TCS/VAT/Service Tax/FBT>Setup>Regime Registration

Click on the Tax Types

The Tax Types it will determine the Accounting Information, The same accounts will effect at time of P2P and O2C Transactions Process, If we attached Recoverable Service Tax Codes.

Click on the Organization

Here we have to attach the Inventory Organization. India Localization ion VAT Functionality will work at Inventory org and Operating Unit Level only.

Primary Registration Number is nothing but an Organization VAT Registration Number.

Click on the Tax Types.

Header Tax Types accounting details will copy to Organization level. If we want we can change the Accounting details. Based on the client requirement.

1.2 Define Item Classification

Item Master basically defined at the Inventory level. The same Items we will assign to VAT Item Classification.

Navigation:-India Localization>Setup>Item Setup>VAT/EXCISE - Item Classification.

Click on Find, If the Item already attached to VAT Item Template, it will display the Details, If Not assigned to VAT Item Classification. Remove the Item Name and Click on the NEW

The below form will be Opened after click on New,

Select the Regime Name=Value Added Tax

Select the Organization =CARS-TRS-KOLKOTA

Enter the Item=HAA140155

After enter the Item click on TAB the below details will be appear.

If the Item is belongs to Recoverable enter the below details.

Applicable=Yes

Item Class=Raw Material

Recoverable=Yes.

Save the Data and close the form.

1.3 Define Claim Terms

To Claim the VAT Claim Term Definition to be defined.

Navigation: --India Localization>India TCS/VAT/Service Tax/FBT>Setup>VAT Claim Term Definition

According to Business requirement the above options to be enabled. If we have a multiple Inventory Organization has to be assigned in the same form.

Location also to assigned. Save and close the form

1.4 Define Document Sequence

Basically VAT Invoice Number generation using for the Sales Orders and RTV

Navigation: --India Localization>India TCS/VAT/Service Tax/FBT>Setup>VAT Document Generation

The VAT Invoice at Operating unit and Inventory Organization base.

1.5 Define the VAT Tax Codes

Define VAT Tax codes

Navigation:-India Localization>Setup>Tax Setup>Taxes

Credit Percentage if we entered 100%, it wills Recoverable tax.

Here we have defined one Tax Code; it can be multiple tax codes.

1.6 Define the Supplier/Customer additional Information and enter the VAT Registration Number to the Supplier/Customers.

Define the Supplier Additional with out site; this is the common practice for all India Localization Suppliers

Navigation:-India Localization>Suppliers>Additional Information

Enter the VAT Registration Number of the supplier

Define the Supplier additional Information with Site.

Define the Supplier Additional with out site; this is the common practice for all India Localization Suppliers

Scroll down and add the supplier site details.

Enter the VAT Registration Number of the Supplier.

Define the Customer Additional information with out site.

Navigation:-India Localization>Customer>Additional Information

Enter the Customer Service Tax Registration Number and Service type should be what kind of services we are providing to the Customer.

Define the Customer additional Information with site

Enter the Customer Service Tax Registration Number and Service type should be what kind of services we are providing to the Customer.

1.7 Create VAT Tax Authority Supplier.

Service Tax Supplier Site should be India VAT Authority Rest of the supplier creation as usual.

2.VAT Process

2.1 Define the Purchase Order along with VAT Taxes.

Navigation:-India Localization>Purchase Orders> Purchase Orders (Localized)

Close the Header form and attach Taxes

Click on the Taxes the below form will be opened.

Attach the VAT Tax Code and click on Apply and then only amount will be calculated.

Open the PO Header form and approve the PO Order

Close the PO Form.

2.2 Create the Receipt against PO

Navigation:-India Localization>Receipts>Receipts (Localized)

Receipt creation there is no changes.

Note: While Closing the Receipt form, it will display the Message Like Create Accounting Yes/No.

If you click on Yes, System automatically creates the accounting, after accounting system will not allow do any changes on Receipt.

If You Click on No, System will not creates the accounting entries, it will allow updating the changes on Receipts.

2.3 Create the AP Invoice against PO/Receipt

Navigation:-Invoices>Entry>Invoices

Invoice match with either PO or Receipt is similar process. The difference only after match with PO/Receipt system by default ran the concurrent program to import Taxes.

Note: After complete the Complete the concurrent program only Taxes will import to AP Module.

Concurrent Program Name= TO INSERT TAX Distributions (India - To Insert Tax Distributions)

2.4 Make the payment against Invoice

Navigation: -Payments> Entry>Payments

Payment Creation no changes.

2.5 Create the AR Manual Invoice and attach the VAT taxes to the Invoice.

Navigation:-India Localization>Transactions>Transactions (Localized)

Header data no changes

After enter the Header save and close the form.

Attach Taxes to AR Invoice.

Click on the Taxes and attach Taxes.

After attach taxes click on apply and save the Taxes.

After Save Taxes System will automatically ran the concurrent program, once complete the concurrent program only complete the Invoice.

Open the Invoice and Complete the Invoice

2.7 Create the Receipt against the Transaction

Navigation: -Receipts>Receipts

Receipt Creation No changes

Click on Apply

Save the data and close the Receipts.

2.8 Claim the VAT Claim.

Query the Receipt

Navigation:-India Localization>Receipts>Receipts (Localized)

Click on the Claim VAT the below form will be open.

Enter the Processing Action=Claim

Enter the Invoice=xxxxx

Enter the Invoice Date=

And click on the Populate Defaults after that these details will be copy to below.

After save data and query the claim form it will show the Recovered amount.

2.9 VAT Settlement Process

Navigation:-India Localization>India TCS/VAT/Service Tax/FBT>Period End>Settlement

VAT settlement is nothing but a Liability-Recovery=Amount is paying to VAT Authority.

Credits is nothing but a P2P Amounts (Supplier)

Debits is nothing but a O2C Amounts (Customer)

Select the VAT Authority Supplier

Select the VAT Authority Supplier site

Enter the Challan No

Enter the Challan Date

Finally Click On Process, If you want process or not to Process click on the Cancel