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Country India Version (CIN)


Overview
Presented By
K V Ramesh Babu
2
India Localization
1. India Legal Requirements Overview
2. Logistics Process Overview ( Procurement & Sales )
3. Utilization
4. Extended Withholding Tax

Contents
3
India Localization Requirements -
Overview

CENVAT (Excise)

VAT / LST / CST

Service Tax

Cenvat Credit

4
India Localization Requirements -
Overview

Central Value Added Tax (Excise)

VAT (LST) / Central Sales Tax

Service Tax

Cenvat Credit

5
Central Value Added Tax (Excise)
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 Tariff)

Every legal entity that manufactures or produces excisable goods
shall pay the duty leviable on such goods

Materials are classified under various tariff headings (Chapter Ids).
This will be subject to change in every financial budget.

Goods consumed in-house also liable for payment of duty

6
Central Value Added Tax (Excise)
What is the basis of charge?
Tax Rates Provided by GOI and are subject to change after each
year based on the budget
Exemption to pay duty on intermediate products in the
following cases
- used for manufacturing capital goods
- used for manufacturing final goods which are eligible for
Cenvat 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 for
exports or deemed exports
Goods manufactured in factory for use within the factory
for repairs of machinery installed within the factory are exempt from
excise.
7
Central Value Added Tax
(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


8
Central Value Added Tax
(Excise)
Duty Calculation

Specific duty It is calculated on the basis of certain unit,
length, weight etc. Eg. cigarette

Ad valorem duty It is based on the value of the goods

Duty based on tariff value The Govt. may fix tariff value from
time to time. The duty will be calculated as percentage of tariff
value fixed by the Govt. and not on assessable value

9
Central Value Added Tax (Excise)
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 flowing directly or indirectly to
the 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 are
removed.

10
Excise Payment Overview




Vendor Plant Customer
Pays Excise Duty Pays Excise Duty for all
outbound goods movement

Claims Cenvat


Pays Excise component to
the Vendor
11
Central Value Added Tax
(Excise)
CENVAT PAYMENT

Duty to be paid by 5
th
of the following month

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

Duty is paid by debiting PLA

12
Central Value Added Tax
(Excise)
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

13
India Localization
Requirements - Overview

CENVAT (Excise)

VAT / LST / CST

Service Tax

Cenvat Credit

14
VAT / Central Sales Tax
How is Sales tax treated in India ?

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


15
VAT / Central Sales Tax
Tax Impact under VAT System



Rs.
STAGES
I Manufacturer II Wholesaler III Retailer
Selling price
(excl. tax)
100.00 Cost price 100.00 Cost price 120.00
VAT @ 12.5% 12.50 Overheads & profit
@ 20%
20.00 Overheads &
profit @ 20%
24.00
Sale price 112.50 Sale price
(excl. tax)
120.00 Sale price
(excl. tax)
144.00
Tax paid 12.50 VAT @ 12.5% 15.00 VAT @ 12.5% 18.00
Sale price
(incl. Tax)
135.00 Sale price
(incl. Tax)
162.00
Tax paid
(15-12.50)
2.50 Tax paid
(18-15)
3.00
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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 first point of goods movement Multi Point Tax payable at each stage of value chain
Credit can be availed Credit can be availed except in case of LST
General CENVAT rate @ 16% with exceptions General VAT rate @ 4% or 12.5% with exceptions
Centrally administered Cenvat Chain cannot be broken on
interstate boundaries
State administered Chain broken on interstate transactions
Cenvat credit can be availed on Services Cenvat credit cannot be availed on Services
17
India Localization Requirements -
Overview

CENVAT (Excise)

VAT (LST) / Central Sales Tax

Service Tax

Cenvat Credit

18
Service Tax

Tax on services rendered

Applicable only on those services which have been notified
by the Government

Tax is payable @ 12 % plus education cess & Higher and
Secondary education cess

Exemptions to persons rendering taxable service below
400,000 INR

Tax to be paid by 5
th
of the next month

Service tax is payable on advances


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Service Tax
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


20
Service Tax
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


21
Service Tax
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


22
Service Tax
CENVAT Credit on Input Services

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

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 the
headquarters/administrative offices of manufacturers and OSPs. In
such cases, the invoices indicating the payment of service tax will be in
the name of such headquarters/ administrative offices. 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.
23
Service Tax
Reporting


Half yearly return in form ST-3 to be filed within 25 days from
the end of the half year


Return needs to be accompanied by TR -6 challan evidencing
duty payment


24
India Localization Requirements -
Overview

CENVAT (Excise)

VAT / LST / CST

Service Tax

Cenvat Credit

25
CENVAT Credit

A manufacturer or producer of the final product or provider
of taxable services is entitled to take credit of

Cenvat (Excise)

Education Cess

Secondary and Higher Education Cess

Secondary and Higher Education Cess

Service tax paid on input services

Countervailing Duty
26
CENVAT Credit
What items can be considered for taking Credit?

A manufacturer or producer of the final product or provider of
taxable services is entitled to take credit of CENVAT paid on the
INPUTS used in the manufacturing process

INPUTS include inputs in capital goods manufacture which would
be used further in manufacturing process

Inputs need not be contained in the final product. It should have
been used in the process




27
CENVAT Credit
What items can be considered for taking Credit?

CENVAT paid on the CAPITAL GOODS used in the
manufacturing process

Capital goods should be used in manufacturing process and
not in any office

Service tax and education cess paid on any input service used
in relation to manufacturing process

When capital or inputs are removed as such (i.e. without
using), only the credit availed originally needs to be paid

Inputs are eligible for Cenvat credit even if the intermediate
products are exempt
28
CENVAT Credit
When the Credit may be taken?

Cenvat credit in respect of inputs may be taken immediately on
receipt of the inputs


Input includes all goods, except diesel and petrol / gasoline,
used in relation to the manufacturing whether directly or
indirectly and whether contained in the final product or not


Credit in respect of inputs shall be available whether such
inputs are lying in stock or used in the manufacturing process
29
CENVAT Credit
When the Credit may be taken?

Cenvat credit in respect of capital goods may be taken for an
amount not exceeding 50 % of the duty paid on such capital
goods in the year in which such goods are received and balance
in any subsequent financial year

Cenvat credit in respect of the capital goods shall be allowed
even if such goods have been acquired on lease, hire purchase
or loan agreement

No Cenvat credit shall be allowed on any input or capital good
which is used in the manufacture of exempted goods or in
providing exempted services
30
CENVAT Credit
When the Credit may be taken?

No time limit for availing CENVAT credit

Unutilized Cenvat credit at the year end should be shown
under Loans & Advances in Balance Sheet

Cenvat credit balance should be reviewed at the year end
and any non-utilizable portion should be added to purchase
cost

SSI units ( turnover below 10 million INR) cannot avail
Cenvat credit on inputs but can avail Cenvat credit on Capital
goods. But this credit can be utilized only when SSI unit
becomes liable to pay excise.
31
CENVAT Credit
How the CENVAT credit may be Utilized?

Cenvat credit may be utilized towards payment of

Excise duty on any final product

An amount equal to Cenvat credit taken on inputs if such
inputs are removed as such

An amount equal to Cenvat credit taken on capital goods if
such capital goods are removed as such

Service tax on any output service




32
CENVAT Credit
How the CENVAT credit may be Utilized?

Towards payment of Education cess on excisable goods or on
taxable services

Where any input or input service is used in final product which
is cleared for export, the Cenvat credit in respect of input or input
service so used shall be utilized towards payment of excise duty
on domestic consumption or towards payment of service tax on
output service

Where the adjustment mentioned above is not possible, the
manufacturer shall be allowed a refund of such an amount




33
CENVAT Availment &
Utilization Overview



CENVAT on hold
for Cap Goods
CENVAT Account
VENDOR EXCISE
INVOICE PROCESS
GOODS
RECEIPT
DESPATCH
SALES EXCISE
INVOICE PROCESS
Excise Duty
Payable A/C
PLA A/C
DEPOSIT
FUNDS
IN PLA
ACCOUNT
Debit
PLA Account
SELECT
REGISTER
Excise duty
Utilization
Transaction
ON-LINE TRANSACTIONS
MONTHLY TRANSACTIONS
Debit ED Payable A/c
(Consolidated Entry)
Credit ED Payable A/c
Credit PLA A/c
Credit CENVAT A/c
Debit CENVAT A/c
Debit CENVAT
on-hold A/c
34
India Localization
1. India Legal Requirements Overview
2. Logistics Process Overview ( Procurement & Sales )
3. Utilization
4. Extended Withholding Tax

Contents
35
Logistics Process Overview




Overseas
Customer
Domestic Vendor
Import Vendor
Domestic Vendor
Domestic Customer
Subcontractor
Plant X Plant Y
Depot A Depot B
36
Excise Procurement
Scenarios

Domestic Procurement Process

Subcontracting Process

Stock Transport Process

Imports Purchase

Service Procurement Process

37
Typical Procurement Cycle




Invoice Verification
Payment Processing Requirement Determination
Goods Receipt
Purchase Order Monitoring
Order Processing
Vendor Selection
38
Excise Procurement Scenarios

Domestic Procurement Process

Subcontracting Process

Stock Transport Process

Imports Purchase

Service Procurement Process

39
Domestic Procurement of
Raw Materials




Vendor liable to pay
excise to Govt.

Vendor Excise Invoice
accompanies Goods





GR at Factory Gate

Excise Invoice
Capture

Excise Invoice Post
(Optional)

Excise Stock Part I
Register entry





Excise Invoice Post

CENVAT Part II
Register entry

Vendor Delivery Goods Receipt Excise Invoice
Liability to Vendor

- Price
- Excise
- Other Taxes
- Other Costs

Vendor Invoice
40
Domestic Procurement of
Raw Materials
Accounting Entries

GR Posting
Inventory Account Dr.
GR/IR Clearing Account Cr.
Excise Invoice Posting
Excise Duty A/C Dr.
CENVAT Clearing Account Cr.
CENVAT Onhold A/C ( For Capital Goods) Dr.
Vendor Invoice Posting
CENVAT Clearing A/C Dr.
GR/IR Clearing A/C Dr.
Accounts Payable Cr.
41
Procurement: Cancellation of
CENVAT Credit

It is possible to cancel the CENVAT credit after it has been
availed.
In the first step, the material document has to be cancelled.
This is followed by canceling the CENVAT credit.








42
Procurement: Vendor Returns

Vendor returns possible by creating an excise invoice for Other
movements

Avail the credit for the materials/goods that are received.

Create an excise invoice for the materials/goods returned to the
vendor and pay excise duty by posting this invoice.








43
Procurement: Additional Adjustments

A supplementary excise invoice for extra excise duty sent by a
vendor can be captured and credit availed

CENVAT credit for Materials destroyed, lost, etc. can be written
off

Surrender of credit for the excisable materials which are used
for non-productive purposes

All these are taken care by Excise JV Transaction
44
Procurement: Adjustments & Reversals
Highlights
Flexibility for 100% Compliance
Management of CENVAT Credit for Capital Goods
CENVAT Reversals and Adjustments
One-Step Reversal of Excise Invoice
Scrap
Non-production use
Additional Excise Paid by Vendor
Deposit into PLA through TR6
Cancel Excise Invoice
With Reference to External Document
CENVAT Adjustment
45
Excise Procurement
Scenarios

Domestic Procurement Process

Subcontracting Process

Stock Transport Process

Imports Purchase

Service Procurement Process

46
Subcontracting Process
Input
Output
Challan
FACTORY
Sub contractor
47
Subcontracting Process
A. With out Payment of Duty: Removal of Materials from Factory
Note: Print Immediate
Option to be used
Subcon
Order
Transfer
Posting
Subcon
Challan
Challan
Printing
48
Subcontracting Process
A. With out Payment of Duty : Receipt of materials from subcontractor
Note: Challans on which quantities are
not completely returned have the status
assigned
Goods Receipt
Subcon challan
Reconciliation
Complete
Challan
49
Subcontracting Process
A. With out Payment of Duty : Reversals
Note: Listing Transaction gives list of
Challans due for Reversal
Run Listing
Transaction
Get Material Qty not
returned on Challan
Reverse Credit
availed on Input
Material
50
Subcontracting Process
A. With out Payment of Duty : Recredit
Note: Listing Transaction gives list of
Challans due for Recredit
Run Listing
Transaction
Get Material Qty
subsequently
returned on Challan
Recredit
Reversed Credit
51
Subcontracting Process
B. Under Full Payment of Duty : Transfer Posting of Input Material to Subcon
Note: Excise Invoice
created and Posted
under other Movements
Subcon
Order
Transfer
Posting
Excise
Invoice
Creation
Excise
Invoice
Posting
52
Subcontracting Process
B. Under Full Payment of Duty : Receipt of Material from Subcon
Goods Receipt
Excise
Invoice
Capture
Excise
Invoice
Post
Invoice
Verification
53
Excise Procurement
Scenarios

Domestic Procurement Process

Subcontracting Process

Stock Transport Process

Imports Purchase

Service Procurement Process

54
Stock Transport Process




Plant liable to pay
excise to Govt.

Excise Invoice
accompanies Goods





GR at Plant Gate

Excise Invoice
Capture

Excise Invoice Post
(Optional)

Excise Stock Part I
Register entry





Excise Invoice Post

CENVAT Part II
Register entry

Supplying Plant
Delivery
Goods Receipt
Receiving Plant
Excise Invoice
55
Stock Transport Process
FEATURES
Applicable for Plants in different registration Ids
Assessable value in excise master used for duty computation
EI capture in receiving plant w.r.t
- STO
- GR
Excise Values copied from supplying plant invoice during EI capture
No Inter Plant Billing
Delivery through MM
Stock Transfer
Excise Invoice
Other Movements
56
Excise Procurement
Scenarios

Domestic Procurement Process

Subcontracting Process

Stock Transport Process

Imports Purchase

Service Procurement Process

57
Imports Purchase
Vendor Outside India

Duties to be paid to
Customs

Credit can be claimed
on CVD

Liability to Customs in
India

CD & CVD
GR at Factory Gate

Excise Invoice
Capture

Excise Invoice Post


Excise Stock Part I
Register entry

CENVAT Part 2
Register
Vendor Invoicing

- Price
- Other Costs
Imports PO Commercial Invoice
Goods Receipt &
Excise Invoicing
Invoice Verification
58
Imports Purchase
Accounting Entries
Commercial Invoice Posting
Customs Clearing Dr.
Customs Payable (Commissioner) Cr.

GR Posting
Inventory Account Dr.
GR/IR Clearing Account Cr.
Excise Invoice Posting
Excise Duty A/C Dr.
Customs Clearing Account Cr.
Vendor Invoice Posting
GR/IR Clearing A/C Dr.
Accounts Payable (Vendor) Cr.
59
Excise Procurement
Scenarios

Domestic Procurement Process

Subcontracting Process

Stock Transport Process

Imports Purchase

Service Procurement Process

60
Service Procurement




Service PO
Service Entry &
Acceptance
Invoice Verification
PO for Services

Service Tax, Ecess
and SECESS

Service Provider liable
to Pay ST to Govt.





Additional Detailing of
Individual Services
Performed

Additional Control of
acceptance




Vendor Invoicing

Inclusive of Service
Tax





61
Service Procurement




Vendor Payment FI - JV Utilization
Payment Inclusive of
Service Tax






Transfer to Service
Tax availed accounts

Credit Taken on
availed accounts




Utilization Service Tax
availed against
Service Tax Payable





62
Service Procurement
Accounting Entries
Accounting Entry after Vendor Invoice Verification
Accounts Payable (Vendor) Cr.
GR/IR Clearing Account Dr.
Service Tax Receivable Account Dr.
Education Cess on Service Tax Receivable Account Dr.
Sec.Education Cess on Service Tax Receivable Account Dr.
FI-JV after Vendor Payment to avail Service Tax Credit
Service Tax Availed Account Dr.
Education Cess on Service Tax Availed Account Dr.
Sec.Education Cess on Service Tax Availed Account Dr.

Service Tax Receivable Account Cr.
Education Cess on Service Tax Receivable Account Cr.
Sec.Education Cess on Service Tax Receivable Account Cr


63
Excise Sales Overview
Full Compliance across the
Distribution Process
Removal of Goods
From Factory From Depot
Sale Transfer to Factory
Return to Vendor Transfer to Depot
Return to Customer Transfer to Subcontractor
Sale Transfer to Factory
Return to Vendor Transfer to Depot
Return to Customer Transfer to Subcontractor
64
Excise Sales Scenarios

Sale from Factory

Transfers to Depot

Sale from Depot

Export Sale


65
Excise Sales Scenarios

Sale from Factory

Transfers to Depot

Sale from Depot

Export Sale


66
Sale from Factory
Supplying Plant
Price: 1000
Qty : 10 PC
Duty 16%
+ 160
Excise Invoice
Dispatch
Fortnightly utilization
CENVAT/Part II Register
PLA Register
Debit:
Rs. 160
Excise
Duty
Payable
A/C
67
Sale from Factory
Delivery
Goods Issue
Excise Invoice
No CIN related updates
Update Registers and batch utilization
ED Payable
Utilization

68
Sale from Factory
Posting to Excise duty payable account
Posting to CENVAT accounts for Utilization
Separate Commercial and Excise Invoice
Sales Order Delivery
Proforma
Invoice
Excise
Invoice
Printing
Excise
Invoice
Commercia
l
Invoice
69
Sale from Factory
Single Commercial and Excise Invoice
Sales Order Delivery
Commercia
l
Invoice
Excise
Invoice
Printing
Excise
Invoice
Posting to Excise duty payable account
Posting to CENVAT accounts for Utilization
70
Sale from Factory
Excise Document Flow
Sales Order
Sold to : 2300
Material: 400
Quantity: 5
Delivery
Ship to:
2300
Material:
400
Quantity: 5


Billing
Bill to: 2300
Material:
400
Quantity: 5


Excise
Invoice
Sold to :
2300
Material:
400
Quantity: 5


71
Sale from Factory
Excise Invoice Features

Excise invoice created automatically in background during
creation of billing document

Feature made optional and triggered based on customization
settings

Excise group and Series group automatically determined
based on customization

Provision to print excise invoice immediately after automatic
creation of excise invoice
72
Sale from Factory
Utilization Due List

Listing of all billing documents due for utilization provided

Also includes ability to view,
- Account balances
- Total duty amount needed to utilize the displayed billing
documents
- Deficit, if any
73
Sale from Factory
Batch Utilization

Excise Invoices can be created in Batches

Provision of additional fields in selection screen like,
- Billing Date
- SD Document Category
- Billing Document Category
74
Excise Sales Scenarios

Sale from Factory

Transfers to Depot

Sale from Depot

Export Sale


75
Transfers to Depot
Stock
Transfer
Order
Replishme
nt
Delivery
Proforma
Invoice
Excise
Invoice
Printing
Excise
Invoice
76
Transfers to Depot
Depot Excise Requirements

Distribution of Excisable goods at depot involves maintenance
of RG23D registers.

Incoming Excise Invoice reference is required to be mentioned
on depot Sales Invoice

At the Factory gate, Excise is paid on the declared value of the
goods to be sold at depot.

Depot should charge from the customer the same Excise duty
from that was paid at factory/source.

In case of price escalations at depot the difference needs to be
paid at the factory.
77
Transfers to Depot
Depot Receipts for Stock Transfer

GR made against the delivery note / stock transfer
Excise invoice details directly copied from factory invoice
Loss in transit taken care of
Ship-from can be captured at Excise Invoice for depot.
Multiple P.O.s can be combined in one receipt
Folio number generation can be switched on through
customization
Item details are proposed for stock returns
78
Transfers to Depot
Depot Receipts for Direct Purchases

GR made against the PO
Individual excise invoice details copied from PO item or can
be entered at item level
For imports CVD can be marked
Ship-from can be captured at Excise Invoice for depot.
Multiple P.O.s can be combined in one receipt
Folio number generated based on customization
79
Excise Sales Scenarios

Sale from Factory

Transfers to Depot

Sale from Depot

Export Sale


80
Sale from Depot
Sales Order
Delivery &
PGI
Excise
Invoice
Capture
Commercia
l
Invoice
Selling Price 1000 , Quantity 10, ED @ 16% = 160
RG23D Reduce quantity by 10, Debit 160
81
Sale from Depot
Depot Sales

Separate steps for Excise Invoice create and verification

Option for Single step creation and verification through
customization

Option to cancel excise invoice before verification

Provision to create depot invoice before post goods issue based on
delivery document

Option to restrict incoming excise invoice selection from the same
source of supply

User-exits for unit conversion and Excise / Series group
determination
82
Sale from Depot
Depot Sales: A-Certificate Selection

Pick up the A-certificates relevant for the current removal

A-certificate can be selected along with the corresponding excise
invoice

Multiple A-certificates can be picked up

Splitting of the A-certificate amount across removals not allowed

Separate RG23D entries in the same folio for better tracking

Value gets added up and cumulative excise proposed during
Billing
83
RG23D Register
Material
Receipt in
Depot
Movement /
sale from
depot
Text
Text
Text
Receipt update the quantity and the value in RG23D
The reference / mother invoice details in terms of batches etc captured
Reference to the mother invoice is made
Update goods issue quantity
Excise amount cannot differ from that paid at the first point of goods
movement
84
Depot Operations

Comprehensive solution for Depot functionality

RG23D Maintenance and Printing functionality is available

Provision to receive Internal as well as External Excise
Invoice at Depot.

Close integration with MM and SD processes
85
Excise Sales Scenarios

Sale from Factory

Transfers to Depot

Sale from Depot

Export Sale


86
Export Sale
Supplying
Plant Excise
Invoice
If Exported
under bond
If not exported
under bond
Price 1000, Quantity 10, Duty@ 16% = 160
Update Registers
Debit ED payable a/c 160
Update Cenvat Part II register and PLA register
Fortnightly utilization

87
Export Sale
Excise Bonding Document Flow
Sales Order
Sold to : 2300
Material: 400
Quantity: 5
Delivery
Ship to:
2300
Material:
400
Quantity: 5


Billing
Bill to: 2300
Material:
400
Quantity: 5


Excise
Invoice
Sold to :
2300
Material:
400
Quantity: 5


Bond
Register
Sold to :
2300
Material:
400
Quantity: 5


Capture
Licence
Sold to :
2300
Material:
400
Quantity: 5


Bonds / LOUT / Licence as applicable in the Business process
88
Export Sale
Deemed Export Sales

Sale is marked as Deemed
Excise status of customer gives complete concession
No amount utilization
Use of local excise invoice range based on series group
89
India Localization
1. India Legal Requirements Overview
2. Logistics Process Overview ( Procurement & Sales )
3. Utilization
4. Extended Withholding Tax

Contents
90
Utilization
Monthly Utilization

Facilitates payment of duty accumulated for each month

Features include
Display of pending invoices
Option for Posting date
Posting to a Business area
Selection based on a range of dates
Optionally, Selection based on a range of invoices
Utilization strategy based on customization settings

Posting of TR6 Challan entry to PLA account
91
Utilization
Utilization Due List

Feature to view list of all billing documents due for utilization

Other features include ability to view
- Account balances
- Total duty amount needed to utilize the displayed billing
documents
- Deficit, if any












92
TR6 Challan Posting with PLA Register
Updation
House Bank Own
Create Excise JV - PLA updation
TR6 Challan (J1IH )
PLA Register for Value
Post Accounting document in FI
to post the payment
Excise PLA hold A/c Dr
House Bank A/c Cr
Prepare Cheque & TR 6 Chllan
Enter the Accounting Doct. or
TR6 Challan No., FY,
Plant, Excise Group, etc.,

Allocate the TR6 Challan Amount
as per TR6C i.e. BED / AED / SED

Banker Transfer the
funds toExcise
Authorities and
Acknowledge the
TR 6 Chllan

Update the PLA Register &
Accounting Document Posted
EXCISE PLA A/c Dr
Excise PLA hold A/c Cr
93
Utilization of CENVAT
Total Available
Balances RG23A
Input
Debit Balance
Credit Balance
Is the Balance
Sufficient
NO Yes
Output
RG23A & C Part II
PLA Register
TR6 Challan Payment
Input Credit from Vendor
Material Purchase
Input Credit from Vendor
Capital Purchase (50%)
RG23C
PLA Balance
Perform the Excise
Utilization
Total Excise duty
payable
Excise duty payable on
Customer Invoice
Apportion the payable amount
between the
Registers
RG23A, RG23C & PLA
Post the Utilization
Accounting document generated
& Registers updated
based on Amount apportionment
94
CENVAT Availment & Utilization
Overview



CENVAT on hold
for Cap Goods
CENVAT Account
VENDOR EXCISE
INVOICE PROCESS
GOODS
RECEIPT
DESPATCH
SALES EXCISE
INVOICE PROCESS
Excise Duty
Payable A/C
PLA A/C
DEPOSIT
FUNDS
IN PLA
ACCOUNT
Debit
PLA Account
SELECT
REGISTER
Excise duty
Utilization
Transaction
ON-LINE TRANSACTIONS
MONTHLY TRANSACTIONS
Debit ED Payable A/c
(Consolidated Entry)
Credit ED Payable A/c
Credit PLA A/c
Credit CENVAT A/c
Debit CENVAT A/c
Debit CENVAT
on-hold A/c
95
India Localization
1. India Legal Requirements Overview
2. Logistics Process Overview ( Procurement & Sales )
3. Utilization
4. Extended Withholding Tax

Contents
96
EWT: TDS Overview
Pay Tax to
Government
Issue
Certificates

Deduct Tax
from Vendor
Vendor Vendor
Income tax office
Bank
97
EWT: TDS (Tax Deducted at Source)
Tax is deducted at source from all payments/provisions which
are hit by the TDS provisions of the Act

Some of the above payments/provisions pertain to services
that come within the scope of Tax Deducted at Source
(TDS) under the Indian Income-tax Act, 1961 (Act).

Tax is not deducted from payment for goods

TDS is required to be deducted at the time of payment or
invoice posting whichever is earlier.

The taxes which are so deducted, will then have to be
deposited to the credit of the Indian Government on or before
7
th
of next every month.

The company will have to issue TDS certificates to the
vendors for the tax deducted and also file with the tax office,
Quarterly & Annual Return of the total taxes deducted during
the year under the various sections of the Act.
98
EWT: Vendor TDS
ABC Ltd

Mumbai plant
Vendor
Advance
Invoice
Services
Payment/Challan
Certificate
Vendor
Payment
BANK
Income Tax
Office
Quarterly Returns
99
EWT: Vendor Transactions
Down
Payment
Reverse
Invoice
Invoice
Credit
Memo
Clear DP
Challan
Update
TDS JV
Bank
Challan
Reprint
Certificate
Print
Certificate
Cancel
Certificate
Quarterly
Returns
Cash Journal
Postings
Logistics
Invoice
100
EWT: Customer Interest TDS
ABC Ltd

Mumbai plant
BANK
Income Tax
Office
Certificate
Advance
Interest Payment
Payment/Challan
Customer
Quarterly Returns
101
EWT: Provisions and Adjustments










TDS computed on entries in provisional liability accounts
(GR/IR and SR/IR Accounts)

TDS is computed at each period end on uncleared entries
remaining in the GR/IR and SR/IR accounts

GR/IR and SR/IR accounts relevant for computing TDS on
provisions identified separately

GL accounts to which the provisional TDS is posted identified
and document Type used for provisional TDS postings is
separately identified

JV facility available for carrying out changes to TDS relevant
postings

Accounts to which losses (non-recoverable TDS) is to be
posted and the document type to be used for TDS adjustment
postings is identified separately
102
EWT Activities
Posting
Invoice, Credit
Memo, Down
Payment, etc
Challan
Update
On payment
due date
TDS
Certificate
Printing,
Reprinting and
Cancellation
on appropriate
due dates

Quarterly
Return

Tax
Adjustment
JV
Where required
Periodic Activities Daily Activities
TDS on
Provisions
Posting
Where required
103
Thank you!
Questions??