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Category: Country India Version (CIN) Overview

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SAP Country India Version (CIN) Overview

Training Presentation

Posted on September 15, 2012May 16, 2013 by Jayanth Maydipalle

In this presentation, you will nd well noted instructions related to India localization, which is knowns
as CIN, in SAP. After reading this document, you will get fair knowledge about:

India Legal Requirements Overview: CENVAT (Excise), VAT (Central Sales Tax), Service Tax,
Cenvat Credit

Lets start Step by step

India Localization

India Legal Requirements overview

CENVAT (Excise)
VAT / LST / CST
Service Tax
Cenvat Credit

Cenvat (Central Value Added Tax):

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 Tari)

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Every legal entity that manufactures or produces excisable goods shall pay the duty leviable on
such goods
Materials are classied under various tari headings (Chapter Ids).This will be subject to change in
every nancial budget.
Goods consumed in-house also liable for payment of duty.

What is the basis of charge?

Tax Rates Provided by GOI and are subject to change after eachyear based on the budget
Exemption to pay duty on intermediate products in thefollowing cases

used for manufacturing capital goods

-used for manufacturing nal goods which are eligible forCenvat 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 forexports or deemed exports
Goods manufactured in factory for use within the factoryfor repairs of machinery installed within
the factory are exempt from 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

Duty Calculation

Specic duty It is calculated on the basis of certain unit, length, weight etc. Eg. cigare?e
Ad valorem duty It is based on the value of the goods
Duty based on tari value The Govt. may x tari value from time to time. The duty will be
calculated as percentage of tari value xed by the Govt. and not on assessable value.

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 owing directly or indirectly tothe 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 areremoved.

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CENVAT PAYMENT :

Duty to be paid by 5th of the following month.

Duty deposited in bank using TR 6 challan and credited to PLA.

Duty is paid by debiting PLA.

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////////////////////////////////////////////////////////////

India Legal Requirements overview

CENVAT (Excise)
VAT / LST / CST
Service Tax
Cenvat Credit

VAT / LST / CST

How is Sales tax treated in India ?

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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

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 @ 14% 14.00 Overheads & prot @ 20.00 Overheads & prot 24.00
20% @ 20%
Sale price 114.00 Sale price(excl. tax) 120.00 Sale price(excl. tax) 144.00
Tax paid 14.00 VAT @ 14% 16.80 VAT @ 14% 20.16
Sale price(incl. Tax) 136.80 Sale price(incl. Tax) 164.16
Tax paid(16.80-14.00) 2.80 Tax paid(20-16.14) 6.16
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 rst
Multi Point Tax payable at each stage of value chain
point of goods movement
Credit can be availed Credit can be availed except in case of LST
General CENVAT rate @ 10% with
General VAT rate @ 5% or 14% with exceptions
exceptions
Centrally administered Cenvat Chain
State administered Chain broken on interstate
cannot be broken on interstate
transactions
boundaries
Cenvat credit can be availed on
Cenvat credit cannot be availed on Services
Services

India Legal Requirements overview

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CENVAT (Excise)

VAT / LST / CST

Service Tax

Cenvat Credit

Service Tax

Tax on services rendered

Applicable only on those services which have been notied by the Government
Service Tax is payable @ 12 % plus education cess @0.24% & Higher and Secondary education cess @
0.12%
Exemptions to persons rendering taxable service below 10Lakhs INR
th
Tax to be paid by 5 of the next month
Service tax is payable on advances
Half Yearly return for form ST-3 : April to Sep Oct 25th, Oct to Mar- Apr25th
Revision of Form ST-3: ST-3 form can be revised and submi?ed again within 90days from the date of
lling original return

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

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

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

CENVAT Credit on Input Services

Service provider is entitled to take credit of service tax paid on input services

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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 theheadquarters/administrative oces of
manufacturers and OSPs. In such cases, the invoices indicating the payment of service tax will be in
the name of such headquarters/ administrative oces. 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 services are rendered.

Reporting

Half yearly return in form ST-3 to be led within 25 days from the end of the half year
Return needs to be accompanied by TR -6 challan evidencing duty payment

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