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T.Muthyalappa
www.bcone.com
Introduction
Hi Let us Discuss, What are Indian Taxes and how they are differentiated.
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.
Once manufacture of goods is complete, excise duty is payable, whether the goods are sold or self-consumed. Excise duty does not depend on the end 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 from the factory.
Sales Tax : Sales Tax is a tax on Sales and can be imposed only when there is a Sale.
Additional Duty on specified items under the Act : If the Tariff Commission set up by law recommends that in order to protect the interests of industry, the Central Government may levy additional duties at the rate recommended on specified goods.
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.
Stock transfers.
In Stock transfers we will transfer the Materials from Plant to plant and Plant to Stock yards.
Usually in the stock transfers we create the excise invoice while the goods is moving from plant to Stock yard.
From stockyard to customer usually we are not going to create the Excise invoice, because stock which is coming in to the Stock is not an input, it is just a transfer from one place to other.
There is no price escalations here.
Depot process
Depot is also almost same as Stock yards, and here also we are transferring goods from Plant to Depot, but the difference is in Depots, are Price escalations. In Depots goods is coming as input.
Transactions can happen through two scenarios:
Scenario1: Depot receives goods from the companys factory through stock transfer.
Scenario 2: Depot procures goods directly from external sources.
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 delivery number) PGI Billing
ME21N
J1IIN
MIGO
J1IG Excise Invoice
J1IJ
Plant
Depot
Dispatch
Export Process
In the process of Exports duty under bond is not payable and the
goods move out from the factory against an ARE1. However, goods not under bond move out of the factory by paying the duty 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 in exports, However, the form used is ARE3.
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.
CENVAT Credit
Rs.100 ED: Rs.10
Rs.500 ED:Rs.50
CENVAT!?
WHEN AND HOW MUCH CREDIT CAN BE TAKEN
The Cenvat Credit in respect of inputs may be taken immediately on receipt of the inputs. 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 fifty percent 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 or after 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 received back 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 towards payment of duty on any final product cleared for home consumption and where for any reason such adjustment is not possible, the manufacture shall be allowed refund of such amount.
CENVAT
Rule 1. Short title, extent and commencement.Rule 2. Definitions.Act capital goods Customs Tariff Act exempted goods final products first stage dealer 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 in specified 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
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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?
Menu path SPRO Logistic General Tax on goods on movement India Basic Settings Determination of Excise duty Maintain Excise defaults.
Then we need to assign the Tax procedure TAXINN to county India As shown below.
Menu path SPRO Logistic General Tax on goods on movement India Basic Settings Determination of Excise duty Select Tax Calculation Procedure.
RG23C PART I
RG23C PART II RG I RG23D
Excise registers.
RG23A: Raw Material
The entries pertaining to quantity will go into RG 23 Part I and that of duty will go into Part II in the appropriate duty column. i.e. Basic Excise, SED, Additional duty, etc
RG23D: Depot (this indicates both the Quantity and the amount)
Material after Quality Inspection or when used as Direct Input will go into the RG 23 A Registers.
The entries pertaining to quantity will go into RG 23 Part I and that of duty will go into Part II in the appropriate duty column. i.e. Basic Excise, SED, Additional duty, etc.
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 the DEPOT. However, while taking sale from the DEPOT and if price escalations happen, then the extra excise is paid using a A certificate. These details are entered in the RG23 D register and excise recovered from the customer.
Depot Process
Transactions can happen through two scenarios:
Scenario1: Depot receives goods from the companys factory through stock transfer. Scenario 2: Depot procures goods directly from external sources.
SAP Transactions
J1I5
So Far We discussed on
Tax Procedures Pricing Procedure Relevant to SD. CENAVT registers Transaction Codes.
Basic Settings
Excise Registration IDs
Company Code Settings Plant Settings Excise Groups Series Groups Excise Duty Indicators
Mention whether AED, SED, CESS applicable. If blank will not be available for inputs
Plant Settings
Plant defined as Depot or not
GRs per EI can be set as below Multi GR Multi Credit Multi GR Single credit Single GR
Excise Groups
Excise Reg ID linked to Excise group & Plant
Series Groups
Account Determination
Describe which excise accounts (for excise duty and CENVAT) are to be posted to for the various transaction types including sub transaction type if any
During transactions system determines which G/L accounts to post to by looking at the: Excise group, Company code & Chart of accounts
J1ID Screen.
No
Once u complete the RG1 updation with RMA and ROP we need to do for IDH for ISSUES
Then continue the next step as shown in Slide 55. it gives the following result.
Extract the Excise registers. We need select the RG1 in the initial screen and execute.
Too print Excise registers use T.C. J2I6, System gives the all details of RG1 Register.
CENVAT Utilization
Payment to be made to Excise Department for the Self Removals for the last month. Utilization to be done against the last months incoming excise duties and CVD. CENVAT utilization to be done before the 5th of next month.
Despatch
Fortnightly Transactions
Deposit funds in PLA Account Select Register
PLA Account
Debit PLA A/c
Determination of Excise Rate in Sales and Distribution Information on Tax Procedure and Conditions FI Entries related to Excise taking place in SD
Rs.16/-
Rs.16/-
SPRO Financial Accounting Financial Accounting Global Settings Tax on Sale and Purchase Define Procedure
Procedure: TAXINJ The various Condition types applicable in SD are: