COUNTRY INDIA VERSION Taxes (FI-AP/AR

)
Purpose
The Taxes component covers the most important laws and business practices specific to India. The following documentation describes these aspects of the component. For generic information about Taxes, see Taxes (FI-AP/AR).

Features
Country-Specific Functions
Country Version India uses the standard functions for calculating and collecting withholding taxes. However, both Classic Withholding Tax and Extended Withholding Tax come with additional functions for tax remittance, journal vouchers, creating withholding tax certificates, and preparing annual returns. If you want to handle excise duties, you must post the excisable transactions using the Materials Management (MM) and Sales and Distribution (SD) components. The system calculates the excise duty in these components and creates the appropriate line items in Financial Accounting (FI). However, if you only want to handle withholding taxes, you can use FI on its own.

Country Template
The country template for India comes with settings for calculating and posting withholding taxes, and account determination settings for posting excise duty.

excise duty VAT Service tax WHT Tax Collected at Souce Excise Duty
Use
The SAP system automatically calculates excise duties in Materials Management (MM) and in Sales and Distribution (SD), and posts them in Financial Accounting (FI). The system covers all types of excise duty, all of which need to be calculated and reported separately:         Basic excise duty (BED) Special excise duty (SED) Additional excise duty (AED) National calamity contingency duty (NCCD) Cess Education cess Countervailing duty Additional duty of customs

 Companies that qualify as small-scale industries can levy excise duty on outputs at reduced rates.Features The system of excise duties is complex. and differs from the generic functions for taxes on sales and purchases in a number of ways:  The rate of duty on a single material can vary according to which chapter ID it is listed under.  Your company may only be entitled to offset a portion of the duty on inputs against duty on outputs. Reporting You have to remit the excise duty that you have collected to the central excise authorities. . In addition. It is levied on a wide range of products. the system allows you to prepare printouts of the various excise registers for the tax authorities. In each case. including pan masala. but in SD. and yachts. the system calculates the taxes using a pricing procedure. and machinery. special excise duty (FI) Financial Accounting (FI) A form of excise duty in India on a limited number of goods. leather goods. Excise Determination MM comes with two ways of determining excise duties (and sales taxes) on input materials: formulabased excise determination and condition-based excise determination. Country Version India offers a report to help you do just that (see Remittance of Excise Duty Fortnightly). foodstuffs. SD also supports formula-based and condition-based excise determination. A small number of transactions have to be remitted on the same day (see Other Outward Movements). The system calculates excise duties using a tax procedure. not the tax procedure (see Pricing). you must calculate a different rate of excise duty. The law requires you to remit excise duty twice monthly: for the first half of any given month (1–15 inclusive) and from 16 to month-end. sparkling waters.  You have to record all excise duty (inputs and outputs) in excise registers. mostly luxury goods. Depots cannot offset any input duties at all. so if you purchase materials from these companies. Manufacturing plants can only offset input duties if they can show that the input materials are used to produce output materials. furs.  You cannot offset all excise duty on inputs against outputs. for example. metals. basic excise duty (FI) Financial Accounting (FI) The main type of excise duty in India. jewelry. you are allowed five days to remit the excise duty.

levied on a select range of products. It applies to a range of products. thereby redressing any competitive advantage they might have over goods produced locally. a form of excise duty levied over and above additional excise duty. For example education cess. mostly foodstuffs. Countervailing duty (also known as CVD) is intended to make the imports more expensive. . textiles. cess (FI) Financial Accounting (FI) In India.additional excise duty (FI) Financial Accounting (FI) A form of excise duty. national calamity contingency duty (FI) Financial Accounting (FI) In India. Payroll India (PY-IN) An additional tax calculated based on a person#s income tax payable and levied for particular purpose in India. usually is certain percentage of the total tax payable. in India. on the total excise duty for the product. a tax on the manufacture of certain products. such as tobacco or high-speed diesel and oil. education cess (FI) Financial Accounting (FI) A surcharge of 2% applicable in India. for the most part. countervailing duty (FI) Financial Accounting (FI) A form of excise duty imposed on imports that are subsidized by the country in which they were manufactured.

Monthly Remittance of Excise Duty and Service Tax You use this report to calculate how much excise duty you must remit to the authorities. .for all the goods issued and services provided in the given month. Once the report has determined how much you have to pay. Configure separate tax codes that split the excise and post some as tax and add the rest to the material price. In this case. This duty is applicable on all products and is charged at 4% on the aggregate price plus duties. In each case.additional duty of customs (FI) Financial Accounting (FI) Imports duty in India. Activities Customizing If any of your excise registrations are only entitled to claim partial CENVAT credit. If the service tax is to be paid from the service tax credit and CENVAT credit. Legislation requires you to remit excise duty monthly . by choosing Taxes on Goods Movements  India  Basic Settings  Maintain Excise Registrations. 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. set the indicator in Customizing for Logistics – General. businesses are only allowed to set off a portion of their input excise duty against output duty. basic customs duty and price of the product. This amount is added to the inventory value when you post the goods receipt. you are allowed five days to remit the excise duty and service tax. from the personal ledger account (PLA) or from the service tax clearing accounts. Education Cess is not calculated on ADC. the remainder of the duty is added to the material value. along with the CENVAT credit. over and above the countervailing duty. and the credit available is not sufficient to pay off the service tax. Day-to-Day Activities The portion of the excise duty that is added to the material value is displayed in the excise invoice. Partial CENVAT Credit Use In some industries. then the amount is pushed to the service tax clearing accounts. from the service tax credit accounts.

date (Display last utilization date). To display a list of only the excise invoices for a given period. by choosing Taxes on Goods Movements India Business Transactions Utilization Maintained the various service tax G/L account details in Customizing for Logistics – General. To maintain the G/L accounts. enter data as required:    Organizational data (in the General data group box) Posting date for the CENVAT payment. you can no longer maintain the General Ledger (G/L) accounts. Prerequisites You have:    Customized the system so that when you create an excise invoice for a sale. for any reason. you can do so. under Taxes on Goods Movements India Service Tax Account Assignment . if it is different from the run date The period to be covered by the report (for example. To display the last date when tax was remitted. you want to select an excise invoice individually. Selection On the selection screen. do so in Customizing for Logistics – General.General. under Tax on Goods Movements India Service Tax Assign Service Tax Accounts . Features To access the report. invoices. and choose Display pend. the system automatically debits the excise to a CENVAT clearing account Made the settings in Customizing for Logistics . choose Display last util. invoices. Indirect Taxes Sales/Outbound Movements On the selection screen of this report. choose Display pend. Any entry in the Period field will be disregarded. on the SAP Easy Access screen. select Select pending inv. . choose Monthly Utilization . enter the period in the Period fields. 1-15 January) NOTE If. for period. NOTE To display a list of all the excise invoices whose excise duty you have not yet remitted.NOTE You use the service tax clearing accounts for service payments and personal ledger accounts for CENVAT payments respectively. You can also print the list of pending invoices.

. 2005.00 Credit 50. surcharge. VAT is levied instead of the Local Sales Tax (LST). Output For each sort of excise duty. turnover tax. Similarly. Account CENVAT account Excise duty account Service Tax  Debit 250. the system also generates entries in the Part II table for service tax exemption payable and assigns new register type X. For more information about TAXINN. configure the tax procedure TAXINN. Value Added Tax (VAT) Use In India.00 200. The system assigns a new register type T and also updates the Excise Part II details (J_1IPART2) and the Excise invoice line item details (J_1IEXCDTL) tables with the service tax serial number. Prerequisites You can configure the following tax procedures:  For Condition-Based Excise Determination. additional surcharge. the system shows you:   How much you have to remit (Amounts payable group box) How much credit you have at your disposal on the appropriate CENVAT account and Service Tax account(Available balances) For a list of excise invoices that are considered for the CENVAT payment. You can save the entries only when you have utilized all the duties. choose Display excise invoices. VAT has been levied in certain states from April 1. VAT also replaces other taxes such as. Payment options You can pay the CENVAT and Service Tax payable amount from CENVAT credit or service tax credit accounts. see Configuration of Tax Calculation Procedure TAXINN. The system generates entries in the Part II table for service tax utilization with register type S. The system then:  Creates an accounting document that debits the accounts from which the excise duty or the service tax is to be paid.00  Generates entries in the Part II table for service tax payable. You can print the list and use it as an annexure.

. a month). VAT Number – If your buyer belongs to a state where VAT is levied.000 5.00. Else. VAT Number has to be printed on the excise invoice. You can do this using the Official Document Numbering.000 in a month. the system generates a Bill of Sale number. and input tax rate and output tax rate are 4% and 10% respectively.000 The excise invoice that you capture contains one of the following: 1.If your buyer belongs to a state where VAT is not levied. VAT payable during the month after set-off/input tax credit = INR (20.000 and your sales are worth INR 2.000 – 4. VAT is based on the value addition to the goods. Output sold in the month = INR 2. the system generates the VAT number if the VAT Registration number is maintained in customer master in the Tax Code 2 field. Bill of Sales Number has to be printed on the excise invoice. configure the tax procedure TAXINJ.000 4. These numbers have to printed serially and separately for Bill of Sale. credit and debit notes. Features The essence of VAT is that you can set off the input tax against the tax paid earlier. then input tax credit/set-off and calculation of VAT will be as follows: 1.000) = INR 16. and your VAT liability is calculated by deducting input tax credit from tax collected on sales during the payment period (say.00. 2. Output tax payable = INR 20.00. Input purchased within the month = INR 1. For Formula-Based Excise Determination. Bill of Sale Number .00. see Configuration of Tax Calculation Procedure TAXINJ. Input tax paid = INR 4. You have purchased input worth INR 1. During billing.000 2. VAT invoice. For more information about TAXINJ.000 3.

tenant). landlord). You can do this if you have maintained a separate tax code for each service registration number. and the Secondary and Higher Education Cess) must be paid to the tax authorities.Service Tax This is a tax that is levied on taxable services as defined by law. vendor. Education Cess. In case of partial payment. NOTE If there are multiple tax registration numbers. For every service registration number. Features Service tax has the following features:    It is charged at a certain percentage on the amount the service provider received for the services rendered. customer. The tax payment becomes liable on receipts from the service receiver (for example. Prerequisites In addition to the standard Implementation Guide (IMG) settings for taxes on sales/purchases. this is a deferred tax. . you should have separate account postings to different General Ledger Accounts based on service registration number. you must also have maintained the tax registration numbers of your vendors. the proportional amount of the taxes (Service Tax. and deferred taxes. The Education Cess and the Secondary and Higher Education Cess are applicable at a certain percentage on the service tax. and your own plants. The output taxes that became liable have to be transferred from the deferred tax account to the normal output tax account with the Deferred Tax Transfer (RFUMSV50) program as described in SAP Note 921634. Service providers are responsible for the service tax payment. For the service provider (for example. customers. you should define separate General Ledger Accounts for service tax and education cess on service tax.

the leased-out rental objects are subject to service tax that you need to pay to the responsible federal tax office. Period for payment of tax by individual assessees are also defined. This tax is payable to and administered by the Central Excise Commissionerates working under the Central Board of Excise and Customs (CBES) of the Department of Revenue in the Ministry of Finance.For the service receiver. The final general ledger account contains only the actual amount that you have received or paid. We recommend that you define the tax rate in the condition records of the tax procedure (TAXINN) to cope with the frequent changes in tax rates easily. Consequently. Credit utilization or tax payment amounts are determined from the final general ledger account. In the Flexible Real Estate Management (RE-FX) component. The interim general ledger account contains the total service tax that you have to receive or pay as required. Corporate assessees need to pay the tax on the value of taxable service received in a month. the taxes must be transferred from the deferred tax account to the normal tax account when the payment for the whole invoice is made. the tax credit can be utilized for payment of tax due when the vendor is paid for the whole invoice amount. so you can use the Service Tax credit to set off Basic Excise Duty that is payable by you. The tax codes defined for Service Taxes should not have a tax rate defined in the tax code itself. This means that the corresponding tax codes have to possess a target tax code. In case of partial payment. You identify the federal tax offices with the business place. Example .     Cross-utilization of input credit between Services and Goods is permitted. The interim general ledger account contains the total service tax until the full payment of the invoice or receipt from customer. All the financial documents for which service tax must be paid should contain information about the business place that identifies the tax office that is responsible for collecting the service tax. by a specified period in the following month. the assessee is not eligible to take credit on the proportional amount of the input taxes.

030. Education Cess is INR 20 and Secondary and Higher Education Cess is INR 10. Country Template The country template for India comes with the following settings:   Chart of depreciation Depreciation keys as per the income tax laws . Asset Accounting (FI-AA) Purpose The Asset Accounting (FI-AA) component covers the most important laws and business practices specific to India. Features Country-Specific Functions Country Version India comes with a report for calculating depreciation on asset blocks (asset groups) as required by law for calculating a company's taxable income. For service provider: Assume that the customer makes a partial payment.030. The following documentation describes these aspects of the component. The system updates the interim general ledger account with this amount.000. see Asset Accounting (FI-AA). Total amount the customer needs to pay is INR 11. In such a case. You have to manually update the final general ledger account with this amount. For generic information about FI-AA. You can offset only INR 500 against the payables in that month.000 (10%). Service tax that is applicable is INR 1.The price of the service is INR 10. the credit of INR 1030 can be utilized to pay output tax. out of which INR 500 is against service tax. For service receiver: Assume that you pay the vendor (providing the service) the value of INR 11.

For more information about what settings to make. To access the report. Features Depreciation of Asset Blocks . the system also:   Posts the depreciation to the income tax depreciation area Stores the capital gains amounts from the report in a table for your future reference. Prerequisites You can use the Customizing settings delivered by SAP in order to configure Asset Accounting (FI-AA) with respect to the income tax depreciation area and so that the report works correctly. Calculation of Depreciation Use The program calculates the depreciation on each asset block according to the Income Tax Act. choose Accounting  Financial Accounting  Fixed Assets  Information System  Reports on Asset Accounting  Taxes  Country Specifics  India  Year-End IT Depreciation Report. from the SAP Easy Access screen. Year-End Income Tax Depreciation Report Use You use this report to calculate the depreciation on your assets and any capital gains or losses according to the Income Tax Act. Output The system:   Calculates the depreciation on each asset block Calculates any capital gains or losses If you deselect Test Run. see the following documentation.For more information. see the Release Note structure under FI  Release Notes from Country Version India Add-On  Customizing Settings for Income Tax Act. Features Selection Enter the asset numbers of your group assets and other selection data as required.

called asset groups). To continue the example. the value of the asset block goes down by the sale price. On 31 March the following year. the net book value before depreciation is therefore INR 220. Asset Retirements When you retire an asset. At the beginning of fiscal 20X1. The asset block’s net book value increases when you add assets to it and falls when you sell or retire assets. of INR 300. the amount below zero constitutes a capital gain under the terms of the Income Tax Act.000. Features If you sell an individual asset from a block. Any gains or losses have to be taxed. You also calculate depreciation on the block’s net book value. The depreciation rate depends on the asset block and is prescribed by the government. you can only post half of that. For example.000. assume your company has four trucks. Calculation of Capital Gains or Losses on Sales of Assets Use The system automatically calculates any gains of losses on sales of assets according to the Income Tax Act. instead of posting INR 3. you are not entitled to calculate any depreciation on it in that fiscal year at all. on 1 June 20X2 you sell a truck for IN 30. Instead. the trucks have a total net book value. The total net book value of the block at the beginning of 20X2 is therefore INR 270. it has an unrestricted useful life. At the end of the year. the trucks’ total net book value is INR 270. For example. On 1 April 20X2. on 1 April 20X3 the trucks’ . or INR 30.000. In other words. On 1 February 20X3 you sell one of the trucks for INR 50. Since an asset block may exist for a very long time. an asset group has its own net book value.The Income Tax Act requires you to depreciate all assets in blocks (in the SAP System. assume that you have an asset block of trucks. Capital Gains If the sale of an asset causes the value of the asset block to fall below zero. you do not calculate the depreciation on each individual asset. The system handles this requirement by taking half the acquisition cost and calculating depreciation on that. as you add new assets to it. the net book value has not changed. you are only entitled to depreciate it at half of the normal rate of depreciation.000 depreciation. for income tax purposes. with no acquisitions and no retirements. The total depreciation on all of the trucks is 10% of INR 300. INR 1. New Assets Held for Less Than 180 Days If you purchase an asset less than 180 days before the end of the fiscal year. At the end of the year.000.000. For example.000.000.000.500.

The following year. the net book value of the block is still INR 2. even though there are no assets in it.000.000.000. but the block still has a net book value.000 = – INR 12.total net book value is INR 198. if you have a block with only one asset valued at INR 12. On 31 March 20X4 the system determines the asset block’s net book value as: INR 198. and you sell it for INR 10.000. . Capital Losses If you sell all the assets in a block. which the system stores in a table for your future reference. For example. On 1 December you sell a truck for INR 210. The system stores the capital loss amount in a table for your future reference. the system posts this value as a capital loss.000 This makes a capital gain of INR 12.000 – INR 210.000. the net book value of the asset block is set to zero.000.

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