Sie sind auf Seite 1von 77

Copyright 2003 Bristlecone, Inc.

| Dec 18
th
2004
www.bcone.com
India Localization
with respect to SD

T.Muthyalappa
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Modus Operandi
Session - I
Introduction to Indian Taxes
Different 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.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Introduction
Hi Let us Discuss, What are Indian Taxes and how they are differentiated.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Excise Duties is Mainly based on 4 Ms
1.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 tax
levied on manufacture of goods and the liability to pay excise duty arises
immediately on manufacture or production of goods

Copyright 2003 Bristlecone, Inc. | April 14 2004 10



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.




Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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 other
hand, Excise Duty is a duty on the manufacture of the goods. So, duty can
be imposed immediately after goods are manufactured. Whether these
goods are sold are not is immaterial.

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




Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Types of excise duties
Under the excise laws, the following are the various types of duties, which
are 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 local
industries. This is varies depending on the products.
Special Excise duties :Excise duty that is levied in order control the
competition between the states, for example, one state may give more
subsidies in order to attract the investments or to encourage the industries
of that state.


Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Different Sales Process
1.Sales From Factory.
Stock transfers.
2.Sales From Depot.
Scrap Sales.
Auction Sales especially for Scrap.
Job works.
Exports.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.



Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Sales from Factory
Supplying Plant
Dispatch
Excise Invoice
J1IIN

Add up to Excise Duty Payable A/c
J1IEX
Capture EI
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.




Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Sales From Depot
Depot
Dispatch
Excise Invoice
Add up to the Excise Duty Payable A/c
Reduce the Quantity
MIGO
J1IG
J1IJ
Plant
ME21N
J1IIN
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.









Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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?

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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 India
Formula 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.


Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Menu path SPRO Logistic General Tax on goods on movement India
Basic Settings Determination of Excise duty Maintain Excise defaults.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.


Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Sales and Distribution Pricing procedure.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
What is Excise register and how many are they.
How the Excise registers are using at Different Business Scenarios and How hese are
updating.
Excise register.
Excise Laws require you to maintain a number of registers in a specified format
relating 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 II
RG I
RG23D


Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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

RG23C: Capital Goods
RG23CI-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 are
entered in the RG I Register
Register RG I is updated after creation of an excise invoice while dispatching the goods from
the factory premises with reference a commercial invoice or a pro-forma invoice

RG23D: Depot (this indicates both the Quantity and the amount)
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Factory Process- Registers
RG23 A Part I & Part II

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

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.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.





Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.




Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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


Copyright 2003 Bristlecone, Inc. | April 14 2004 10
So Far We discussed on


Tax Procedures
Pricing Procedure Relevant to SD.
CENAVT registers
Transaction Codes.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10

Tax/Excise Duty set up for MM & SD

Basic Settings
Master Data
Account Determination
Business Transactions
Tools

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Basic Settings

Excise Registration IDs
Company Code Settings
Plant Settings
Excise Groups
Series Groups
Excise Duty Indicators

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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, CESS
applicable. If blank will not be available for
inputs
Max no. of line
items in outgoing EI
Permits deductible /
non deductible ED
at GR
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Company Code Settings

User can edit
Dr account
during JV
Utilizes from
PLA in JV
First month for
excise year
Excise invoice
selection
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Plant Settings

Plant defined as Depot
or not
Multiple plants to one
Excise Registration ID
GRs per EI can be set as
below
Multi GR Multi Credit
Multi GR Single credit
Single GR
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Excise Groups

Excise Reg ID linked
to Excise group &
Plant
Depot definition at
Excise Grp & Plant
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Series Groups
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Excise Tax Indicators

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
During transactions system determines which G/L accounts to post to by
looking at the:
Excise group, Company code & Chart of accounts
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
SD settings Relevant to India Localization.

Assigning Billing types to Delivery Types.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Maintain Excise Defaults.
Maintain the Excise Defaults in order determine Excise group and Series
Group Automatically at the time of Excise invoice creation.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Maintain Utilization Determination.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Maintain Scripts for Registers.
Maintain the Excise registers Form along with company code to get the
Print out put for Excise Registers.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
J1ID Screen.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Excise rate Determination

Is the
Customer
SSI?
Get SSI
duty
Rates.
Yes
No
Excp rates
Maintained?
Yes
No
Get
Excep
duty
rates
Get Ch ID
Of the
material
Get Customer
Excise
indicator
Get plant
Excise
indicator
Get final
Excise
indicator
Get rate
Based on
Ex Ind & CH ID
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Creation Of Excise invoice
We will create the Excise invoice with reference to Commercial invoice it
may be Proforma or Normal invoice.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Register Updation By using J1I5.
First We need to update the RG1 register by selecting the class RMA and
ROP.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Once u complete the RG1 updation with RMA and
ROP we need to do for IDH for ISSUES
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Then continue the next step as shown in Slide 55.
it gives the following result.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Extract the Excise registers.
We need select the RG1 in the initial screen and execute.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
System give the following screen.Click on
continue.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Print the Excise register.
To do this First we need to maintain the Values in table J_2IRG1BAL as
follows.


Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Too print Excise registers use T.C. J2I6, System
gives the all details of RG1 Register.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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 5
th
of next month.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
CENVAT Availment and Utilization
On-Line Transactions
Fortnightly Transactions
Excise Duty Utilization
Transaction
Despatch
Sales Excise
Invoice Process
Excise Duty
Payable Account
Goods
Receipt
Vendor Excise
Invoice Process
CENVAT on hold
for Capital goods
CENVAT Account
Select
Register
PLA Account
Deposit funds in PLA
Account
Credit CENVAT
on-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
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Do Fortnight Utilization of cenvat.
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Pass JV by using J1iH,
Use of JV is to adjust amount in RG23A and RG23C

In JV we use other adjustments to Debit the amount from the Registers.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10

Copyright 2003 Bristlecone, Inc. | April 14 2004 10

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Additional excise is used to Credit the Registers
through J1IH.

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
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

Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Determination of ED Rate in Sales and Distribution
Settings for the same done through Transaction Code J1ID

Material: Material Chapter ID
Customer Excise Details: Excise Indicator for Customer
Plant Excise Details: Excise Indicator for Plant
Excise Indicator Customer + Excise Indicator Plant = Excise Indicator Final
Material Chapter ID + Excise Indicator Final = Excise Tax Rate


Refer Slide No.27
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
FI Entries related to Excise in SD
During the passing of Billing document to Accounting: (VF02, Release to
Accounting)
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/-
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Information on Tax Procedure and Conditions
Menu Path:
SPRO Financial Accounting Financial Accounting Global Settings Tax on
Sale and Purchase Define Procedure
Procedure: 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 pricing
procedure
Tax conditions are non-statistical. Since, these are determined from TAXINJ
While defining tax codes (using Transaction Code: FTXP), to maintain Excise
Duty (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 checks
in procedure TAXINJ
Copyright 2003 Bristlecone, Inc. | April 14 2004 10
Lets Clarify our Doubts