Country India Version - CIN Indian Taxation System

June 2010

Indian Taxation - CIN
Topics

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Indian Tax Structure Nature of Taxes levied on domestic sale/purchase. Nature of Taxes levied on Imports / Exports. Cenvat Credit Excise register Excise Master data Purchase processes Domestic procurement Imports Subcontracting External services procurement

Indian Taxation - CIN
Topics
               Balance Credit on Capital Goods TR6 Challan Utilization of CENVAT ER1 Extraction – Monthly Returns Sales documents Billing Document Accounting at Billing Document Excise Invoice for sales Excise Invoice for other movements Excise JV Register update for RG23 Issues & RG1 Excise Registers Extraction Download and Print RG1 Download and Print RG1 Sales from RG23D

 The manufacture or production has to be within India.  The goods must be excisable. Direct Tax – It consists of the Capital tax and Personnel income tax. Indirect Tax. Indirect Tax – Indirect tax constitutes Excise duties.  The goods must be manufactured or produced. 1. Excise duties :  It must be a duty on the goods. Sales Taxes and Service taxes. Direct Tax. 2. .Indian Taxation .CIN Tax Structure  Indian tax structure It is of Two Types.

Taxes: The system covers all types of excise duty.2008 14% From 27. all of which need to be calculated and reported separately. called NCCD.2008 16% From 01.12.2008 10% Special excise duty (SED) This is not applicable to all materials. Basic excise duty (BED) Till 29. . The following are the excise duties and Cess levied in India with rates. Service Tax.CIN Nature of Taxes levied on domestic sale/purchase In India the government of India levy some form of taxes and duties on sales and purchase of goods/ Services called Excise duty.03.Indian Taxation . has been removed and imposed on cellular mobile phones.02. Additional excise duty (AED) It is applicable for some materials like Paper. National calamity contingency duty (NCCD) An excise duty of one per cent on polyester filament yarn. Sales tax (CST & VAT) etc. Plastic materials etc.

CIN Nature of Taxes levied on domestic sales/purchases   ·Education Cess This duty is levied on sum of all Excise duties as 2% ·Higher Secondary Education Cess This duty is levied on sum of all Excise duties as 1%  Service Taxes 12% on Service Charges   Education Cess This duty is levied on Service tax as 2% ·Higher Secondary Education Cess This duty is levied on Service tax as 1% Sales taxes CST @2% with C-form on sum of Basic price + Excise duties (Inter state purchase / sales) VAT (@4% with C-Form & 12.Indian Taxation .5% without C-Form) on sum of Basic price + Excise duties (sales or purchase within state) .

CIN Nature of Taxes levied on Imports / Exports Basic Customs Duty: This duty is levied on Landing price of the material. Special Customs Duty: This duty is applicable to some specific materials only.Indian Taxation . This is non-CENVATable duty. It is also non-CENVATable duty. The rate of duty changes based on various parameters. It is posted into BED component of Excise registers Education cess on CVD This duty is levied on Basic Excise duty as 2%. The rate of duty is variable. Countervailing duty (CVD):This duty is levied on Imports of all materials at par with Basic Excise duty (10%). Higher Secondary Education cess on CVD This duty is levied on Basic Excise duty as 1% · .

Indian Taxation .CIN Nature of Taxes levied on Imports / Exports Additional Duty on customs: This duty is levied on Imports at the rate of 4% Education Cess on all duties: This duty is levied on Imports at the rate of 4% Higher Secondary Education cess on all duties: This duty is levied on Basic Excise duty as 1% · .

 Where any inputs are used in the final products which are cleared for export. the manufacture shall be allowed refund of such amount. The balance 50% is posted in Onhold account. repair etc. . testing.  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. 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. 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. It can avail for the next year.  CAPITAL GOODS: 50% of duties can avail in the current financial / excise year.CIN CENVAT CREDIT  RAW MATERIALS / INPUTS / BOUGHTOUTS: immediately can avail the credit. But ADC (Additional duty on customs) on imports can be availed in the current year. That means can avail within same excise year.Indian Taxation .

) .)  RT12 (Replaced by ER1)  RG23D (For Trading plant)  ER1 & ER2 (This is a monthly report that summarizes the CENVAT and PLA information from the other registers. They have to be printed out monthly and shown to the authorities in the event of an audit.CIN Excise register.  Excise Laws require you to maintain a number of registers in a specified format relating to excise duty. Type of Registers:  RG23A PART I  RG23A PART II  RG23C PART I  RG23C PART II  RG I  PLA (This is the bank account from which you transfer any money owing to the excise authorities. The SAP captures this requirement.Indian Taxation .

CIN Excise Master Data .Indian Taxation .

Indian Taxation . MAINTAIN CHAPTER ID Definition: All materials that are required for manufacturing and subsequently those which are manufactured are classified under the Central Excise Law into chapters. which together form the chapter ID. These chapters are further subdivided into headings and subheadings.CIN Excise Master Data 1. .

Indian Taxation .CIN Excise Master Data .

CIN Excise Master Data Maintain Material and Chapter ID Combination .Indian Taxation .

Indian Taxation .CIN Excise Master Data .

Indian Taxation . Not applicable to purchase process. .CIN Excise Master Data Assessable Value This is applicable for sales and subcontracting purpose only.

CIN Excise Master Data CENVAT Determination It is assigning of input material to output material.Indian Taxation . . it is mandatory for Capturing excise duties and CENVAT utilization.

I stage dealer.CIN Excise Master Data Vendor Excise Details: Supplier Excise Registration Information and nature of supplier (Manufacturer. Imports trader etc). II stage dealer.Indian Taxation . .

who created or changed Service Tax Registration Number.) Explanation Vendor Excise Details: 4 5 6 7 8 9 10 11 12 Exc. range Exc.Ve SSI status Type Excise Range of Vendor Excise Division Excise Commissionerate / Collectorate Input the details as shown in the table and save the data. Indicates whether or not the vendor deducts excise duty on inputs from excise duty on outputs. LST no. 1 2 3 Field Name Vendor ECC number Exc. PAN reference number of Vendor .Reg. Exc. enter the status.Indian Taxation . coll.Ind. Excise Indicator for Vendor (Select 1 for 100% tax. Generally it is 100% If the Vendor is Small Scale Industry. 2 for 50% tax or 3 for Nil tax). This is relevant to vendors that qualify as small-scale industries only. CST no.no Vendor Number / Code ECC number of Vendor Excise Registration number of Vendor (same as ECC no. 13 CENVAT 14 15 16 17 Changed on Changed By Ser. div. PAN Exc. Otherwise not required Type of vendor means that manufacturer.reg. Date of Change or create User ID.No PAN Ref. Manufacturer’s depot or consignment agent etc. select from the dropdown list.CIN Excise Master Data S No.

For entering data select either “New Entries” Tab and enter the relevant data and save .CIN Excise Master Data Customer Excise Details Similar to Vendor details we have to maintain for customer also.Indian Taxation . .

you have to assign this rate while maintaining the vendor excise details as shown in the earlier steps.Indian Taxation . When you are procuring any material from SSI Vendor. Refer the excise rules for SSI rates. .CIN Excise Master Data SSI Rates Maintenance In this node. you have to maintain the SSI rates as per Excise Rules.

Indian Taxation . .CIN Excise Master Data Plant Excise Details You have to maintain the plant excise details for all the plants which are registered as excisable plants.

CIN Excise Master Data Excise Indicator for plant & Vendor Excise indicator for plant & customer .Indian Taxation .

CIN Excise Master Data Maintain Excise Tax Rate In this node. you have to maintain the tax rates chapter ID wise.Indian Taxation . .

CIN Excise Master Data Maintain Exceptional Excise Rate .Indian Taxation .

Procurement of raw material Domestic Procurement Procurement from manufacturer procurement from Dealer / Trader Imports Procurement from foreign Vendor procurement from local trader 2.CIN Incoming Excise process Purchase processes: 1. Subcontracting Process Product subcontracting Process subcontracting (External processing) 4. Procurement of External Services . Procurement of Capital Goods Domestic Procurement Imports 3.Indian Taxation .

You have to post these in the system.CIN Incoming Excise Invoice A business document. an excise invoice accompanies each delivery that your vendors make. that your vendor sends you when it delivers excisable goods. It lists the goods and states how much excise duty applies on them. so that you can then offset the duty against the excise duty that you levy on outputs. You use the excise invoice to claim back the excise that you have paid from the excise authorities.Indian Taxation . When you procure goods externally. in India. This document is required as proof of the excise duty that you have paid. .

Indian Taxation . The tax structure displays as mentioned in the next slide .CIN Procurement of Raw Material from Domestic Vendor What to do in Purchase order (TC: ME21N) Select the appropriate tax code based on the taxes applicable Click the tab.

CIN Procurement of Raw Material from Domestic Vendor What to do in Purchase order (TC: ME21N) .Indian Taxation .

. This will allow you to post into RG23A Part 1 Register. If the material is subjected to taxes. Click on tab “Create excise entry”.Indian Taxation . the incoming excise invoice sub-screen will pop-up.CIN Procurement of Raw Material from Domestic Vendor What to do in Goods Receipt (TC: MIGO) Once you enter the purchase order to do goods receipt with reference to vendor invoice / Delivery note.

which leads the excise department to post into RG23A Part II Register.Indian Taxation .CIN Procurement of Raw Material from Domestic Vendor How to Capture incoming Excise Invoice (TC: J1IEX) This activity allows you to capture the vendor excise invoice data into an internal document. . which is shown in subsequent screens. You can correct the excise values if required.

CIN Procurement of Raw Material from Domestic Vendor How to Capture incoming Excise Invoice (TC: J1IEX) Header level Data: Input by User: Vendor Exc Inv No Inv Date Default data: Vendor No Exc Group Posting date Vendor Excise Dtls .Indian Taxation .

Indian Taxation .CIN Procurement of Raw Material from Domestic Vendor How to Capture incoming Excise Invoice (TC: J1IEX) Item Level details .

Indian Taxation .CIN Procurement of Raw Material from Domestic Vendor How to Capture incoming Excise Invoice (TC: J1IEX) Item Level details .

. Before posting you have to ensure that the correct values are flowing to correct G/L Accounts.CIN Procurement of Raw Material from Domestic Vendor Check: For data correctness.Indian Taxation . Simulate: To Verify the G/L Accounts and value flow.

The system generates internal excise invoice number. save the document. Just click on “Continue button”. Once you click on save icon. the following two sub screens will be displayed. which saves the data.CIN How to Capture incoming Excise Invoice (TC: J1IEX) After verification of all parameters. This number is reference for all further processes.Indian Taxation . .

. Once you post the data you cannot reverse the data. Hence you have to ensure that the data is correct.CIN How to Post Captured Excise Invoice (TC: J1IEX) This activity is allows you to post into CENVAT Registers.Indian Taxation .

CIN How to Post Captured Excise Invoice (TC: J1IEX) .Indian Taxation .

Indian Taxation .CIN How to Post Captured Excise Invoice (TC: J1IEX) Once the document is posted. the accounting document is created with account entries .

Indian Taxation .CIN Procurement of Raw Material from Domestic Vendor How can I display the posted Excise Invoice (TC: J1IEX) .

Indian Taxation . What to do in PO (TC: ME21N) .CIN Imports – Direct or Indirect Materials.

Replace with Customs Vendor of relevant port .Indian Taxation .CIN Imports – Direct or Indirect Materials. What to do in PO (TC: ME21N) Initially the foreign Vendor is displayed.

Indian Taxation . . do LIV for customs vendor w r t BOE.CIN Imports – Direct or Indirect Materials. What to do in Invoice Verification (TC: MIRO) Select the relevant company code Before goods receipt. This will create one commercial invoice which is base for capturing the CENVAT portion of Customs duties.

What to do in Invoice Verification (TC: MIRO) Enter the purchase order as reference document and select “Planned delivery costs” from dropdown list. Enter the values as per the BOE issued by customs dept .CIN Imports – Direct or Indirect Materials.Indian Taxation .

CIN Imports – Direct or Indirect Materials.Indian Taxation . How to Capture excise Invoice? (TC: J1IEX) The pop-up expect the user to enter the Inv No created in earlier transaction .

.CIN Imports – Direct or Indirect Materials.Indian Taxation .

CIN Imports – Direct or Indirect Materials.Indian Taxation . .

CIN Imports – Direct or Indirect Materials.Indian Taxation . .

What You have to do in goods receipt (TC: MIGO) .Indian Taxation .CIN Imports – Direct or Indirect Materials.

What You have to do in goods receipt (TC: MIGO) Select the Excise invoice captured in earlier transaction. .CIN Imports – Direct or Indirect Materials. Save the goods receipt.Indian Taxation . Select “Create excise entry” tab.

Indian Taxation . How to post the excise invoice (TC: J1IEX) .CIN Imports – Direct or Indirect Materials.

Indian Taxation - CIN
Imports – Direct or Indirect Materials.

How to post the excise invoice (TC: J1IEX)

Indian Taxation - CIN
Imports – Direct or Indirect Materials.

How to post the excise invoice (TC: J1IEX)

Indian Taxation - CIN
Imports – Direct or Indirect Materials.

How to post the excise invoice (TC: J1IEX)

Indian Taxation . How to check the account postings for excise invoice (TC: J1IEX) Accounting document entry can be checked. CENVAT On hold RG23C BED .CIN Imports – Direct or Indirect Materials.

Indian Taxation .CIN Subcontracting Process Create SC Challan (TC: J1IF01) .

CIN Subcontracting Process Check the data and save the Challan.Indian Taxation . . It will create Challan and print the same.

CIN FI .Indian Taxation .

Code: J2I8 User has to choose the Company Code. in order to find out how much credit remains from previous years. Indirect Taxes  Procurement  Excise Invoice  Reports  Balance credit for capital goods Tr. This is particularly used in the case of capital items. Plant and Excise Group. Click on the Execute icon .Indian Taxation overview Balance Credit on Capital Goods: You use this report to display a list of the vendor excise invoices where the vendor has levied excise duty but you have not posted it (in full) to your CENVAT account.

Indian Taxation overview Balance Credit on Capital Goods: After clicking the execute icon. system shall show new screen as Capital Goods transfer of Credit Select the invoice number you want to transfer credit by putting tick on the check box and then click “Transfer Credit” push button. .

Before utilizing the balance 50% credit ensure that you are doing this transaction only for the earlier year’s balance of capital goods purchased. select the check box left side of the line item and choose the Transfer Credit icon to avail 50% balance credit. ECess & SECess. and the Available BED. The system will create Accounting Documents and Part 2 entries. ECess & SECess is also shown. . If user wants to utilize balance 50% credit. system shows excise invoice wise list of capital items received and Total BED.Indian Taxation overview Balance Credit on Capital Goods: User can see the report.

. When you post financial accounting document system will not update the PLA Register. User has to note down the PLA payment document number and the amount of PLA deposited.Indian Taxation overview TR6 Challan: You follow this procedure to make a posting when you transfer money to your personal ledger account (PLA) and to update the PLA Register. When user updates the TR6 Challan the update process of the system will update the PLA Register and it will also reverse the PLA On-hold Account. User can use the FB50 / F-02 transaction code for making such payments. User has to post a financial entry for payment on account of PLA by crediting the Bank payment account and by debiting the PLA On-hold Account. Hence while posting financial accounting entry user will post to a PLA clearing account (which could be “PLA On-hold Account”.

. Press Enter to continue. Code: J1IH Click on TR6 challan Give the PLA payment document number.Indian Taxation overview TR6 Challan: For posting the TR6 Challan entry: Country India User menu  Indirect Taxes  Excise JV  Create Tr. Company code. Document year. Plant and Excise Group.

User has to input the value manually for PLA BED. User has to check and confirm that the values are proper and that bifurcation of PLA On-hold is correct.Indian Taxation overview TR6 Challan: System will check the total debit amount and must be equal to the total of the credit amount. Click on Save icon Or press Ctrl+S to post the entry . PLA ECess and PLA SECess.

or whether it should be deducted from the personal ledger account (PLA). Once the report has determined how much you have to pay.e. it allows you to specify where the money should be paid from – whether it should be deducted from the CENVAT credits that you have accumulated in RG23A Register or RG23C Register. You have an option to select the appropriation amounts as required. Excise Invoices must be posted in the system to arrive the CENVAT Payable for deliveries made from the factory. The CENVAT payable amount shall be captured to a clearing account as a liability i.Indian Taxation overview Utilization of CENVAT: Utilization of CENVAT scenario is used to calculate how much excise duty you must remit to the authorities. . Credit At the time of utilization of CENVAT system will post the Debit entry to the same account based on the account assignments in the Customization.

Indian Taxation overview
Utilization of CENVAT:

Tr. Code: J2IUN

Check when last utilization was made Check list of pending invoices of excise liability

Indian Taxation overview
Utilization of CENVAT:

Indian Taxation overview
Utilization of CENVAT:

Tr. Code: J2IUN > User has to select Each of the Cenvat Payable Account and choose from where the Utilization will be made from.

User can Simulate the entry, check the data and then post the transaction.

Indian Taxation overview Utilization of CENVAT: After input of necessary values and matching the input credit and cenvat payable the user can Simulate and check the entries before posting the same. .

Code: J2IER1 .Indian Taxation overview ER1 Extraction – Monthly Returns Tr.

Code: J2IER1 > Header Details .Indian Taxation overview ER1 Extraction – Monthly Returns Tr.

clearance and duty payable .Indian Taxation overview ER1 Extraction – Monthly Returns Tr. Code: J2IER1 > Details of manufacture.

Indian Taxation overview ER1 Extraction – Monthly Returns Tr. Code: J2IER1 > Details of duty paid on excisable goods .

Indian Taxation overview ER1 Extraction – Monthly Returns Tr. Code: J2IER1 > Details of CENVAT credit Availed and Utilized .

Code: J2IER1 > Self Assessment Memorandum .Indian Taxation overview ER1 Extraction – Monthly Returns Tr.

CIN SD .Indian Taxation .

Sales Document > Item Conditions – VA02/VA03 Sales Document > Item Conditions Condition Types UTXJ – Stores the Duty and Tax calculation records as per the country. region of the customer. region of the plant. tax classifications of customer and material JMOD – Determines the % of BED based on material and chapter ID JEX2 – Posts the BED amount in the sale order to a pre-configured GL account JECS – Determines the % ECS based on material and chapter ID JECX – Posts the ECS amount in the sale order to a pre-configured GL account JA1X – Determines the % of SECS based on material and chapter ID JA1Y – Posts the SES amount in the sale order to a pre-configured GL account .

Billing Document > Item Conditions – VF02/VF03 All condition values become basis values to be posted to Excise Invoice in the further step of creating excise invoice Condition values which will be posted to excise invoice: JEX2 – Posts the BED amount in the sale order to a pre-configured GL account JECX – Posts the ECS amount in the sale order to a pre-configured GL account JA1Y – Posts the SES amount in the sale order to a pre-configured GL account .

Country India Version Accounting at Billing Document .

ECS and SECS values get posted from the condition values of the billing document .Country India Version Excise Invoice – J1IIN Excise Invoice BED.

SUB CONTRACTING DOMESTIC SALES EXPORT SALES Ahmedabad Manufacturing Unit Bangalore Manufacturing Unit Bangalore Depot Jamshedpur Depot .Excise Invoice for other movements– J1IS DLFC -Factory sale and stock transfer GRPO -Goods receipt MATD -Material document OTHR -Other Internal for DLFC.SUB CONTRACTING DOMESTIC SALES EXPORT SALES STOCK TRANSFERS AND RETURNS MM . GRPO and MATD External for OTHR X1 X2 X3 X4 X5 X6 X7 X8 Y1 Y2 X1 X2 X3 X4 DOMESTIC SALES EXPORT SALES STOCK TRANSFERS AND RETURNS MM .

Excise removals Sub transaction type is also used for determining the accounts while doing excise removals. Values to be entered manually.Excise Invoice for other movements– J1IS Subcontracting: It determines the subcontracting attributes and determines the accounts for the posting while doing a sub contracting transaction. master data is a pre-requisite .

Excise Invoice for other movements– J1IS .

Excise Invoice for other movements– J1IS Press the insert push button to add a row Enter the material number. ECS % and SECS % System calculates the entered % on the Net assessable value and displays the BED. unit. quantity. ECS & SECS values . BED %. chapter ID. Net assessable value.

Excise Invoice for other movements– J1IS .

Excise Invoice for other movements– J1IS .

Post Excise Invoice for other movements– J1IV Enter or select the document number saved during the creation of excise invoice through J1IS System takes the document year automatically from the document Press enter .

Post Excise Invoice for other movements– J1IV .

Excise JV – J1IH Enter the document number or select from the system Enter the document year Enter or select from the system the company code value Enter or select the correct plant code Enter or select the excise group of the plant Enter or select the sub transaction type Select the relevant register for which posting should happen .

Excise JV – J1IH To enter item details To enter header details Allows the user to simulate the accounting entry before saving the document .

user can save the document .Excise JV – J1IH If this simulated accounting entry right.

J1I5 .Register update for RG23 Issues & RG1 .

Register update for RG23 Issues & RG1 .J1I5 .

J1I5 INXA INXB Ahmedabad Manufacturing Unit Bangalore Manufacturing Unit X1 X2 Ahmedabad Manufacturing Unit Bangalore Manufacturing Unit Please run RG1 daily. otherwise inconsistencies occur Ensure that always the report will be run on the basis of document posting date .Register update for RG23 Issues & RG1 .

the entry will be updated .Register update for RG23 Issues & RG1 .J1I5 Select the line item(s) for which an RG1 entry is to be created Click the create icon If the register balances of incoming and outgoing are correct in the system.

Excise Registers Extraction – J2I5 X1 X2 Ahmedabad Manufacturing Unit Bangalore Manufacturing Unit Select RG1 register Check the last extraced date before extracting data again .

Excise Registers Extraction – J2I5 Expected result after executing the report .

Download and Print RG1 – J2I6 Select RG1 register and press execute Select the excise group. start and end dates and press System gives a provision to download to excel and align with Macros .

either Bangalore or Jamshedpur Enter the material document of the Goods Receipt at the receiving depot. either Bangalore or Jamshedpur .Input to RG23D – J1IG Enter the excise group of the receiving depot.

Input to RG23D – J1IG Enter the excise internal number and the year from the sending plant invoice System copes the excise duty details from the material document and posts the same to RG23D input .

Input to RG23D – J1IG .

Sales from RG23D – J1IJ Create RG23D Invoice with reference to the Outbound Delivery document. from Bangalore or Jamshedpur .

Sales from RG23D – J1IJ Enter or select the Outbound Delivery document. from Bangalore or Jamshedpur Enter or select the relevant excise group. either for Bangalore or Jamshedpur . either for Bangalore or Jamshedpur Enter or select the correct series group.

Sales from RG23D – J1IJ Select the line item and click the push button titled Detail to get the listing of vendor excise details .

Sales from RG23D – J1IJ Select the vendor invoice and press continue .

Sales from RG23D – J1IJ Enter the quantity and press the back button System copies the details of vendor invoice – quantity. duty values and creates an RG23D Invoice .

Indian Taxation .CIN ThanQ for your attention….. Any Qs .

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