CIN Overview SD Module

8/13/2019 CIN Overview SD Module

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INDIALOCALIZATION

WITHRESPECTTO SD


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MODUSOPERANDI

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.


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INTRODUCTION

Hi Let us Discuss, What are Indian Taxes and

how they are differentiated.


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Indian tax structure

It is of Two Types.

1.Direct Tax.

2.Indirect Tax.

Direct TaxIt consists of the Capital tax and Personnel income tax.

Indirect TaxIndirect 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.


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Types of excise duties

Under the excise laws, the following are the varioustypes 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 ownconsumption.

Additional Excise Duty : Excise duty that is Levied toprotect the local industries. This is varies depending onthe products.

Special Excise duties :Excise duty that is levied in ordercontrol the competition between the states, for example,one state may give more subsidies in order to attract theinvestments or to encourage the industries of that state.


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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 onspecified goods.


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DIFFERENTSALESPROCESS

1.Sales From Factory.

Stock transfers.

2.Sales From Depot.

Scrap Sales.Auction Sales especially for Scrap.

Job works.

Exports.


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SALESFROMFACTORIES.

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 NOTlose its own

identity in the finished goods.


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SALESFROMFACTORY

Supplying Plant DispatchExcise Invoice

J1IIN

Add up to Excise Duty Payable A/c

J1IEX

Capture EI


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STOCKTRANSFERS.

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.


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DEPOTPROCESS

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.


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DEPOTPROCESS:

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 deliverynumber) PGI Billing


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SALESFROMDEPOT

Depot DispatchExcise Invoice

Add up to the Excise Duty Payable A/c

Reduce the Quantity

MIGO

J1IG

J1IJ

Plant

ME21N

J1IIN


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EXPORTPROCESSIn 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.


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WHATISCENVAT!?

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.


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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: OTLCENVAT credit

Rs.35: Rs.50Rs 15


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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 samefinancial 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.


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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 inspecified 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


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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?


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TAXPROCEDURESANDREGISTERS.

How we are going for the CENVAT credit in SAP andWhat 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 theslide.
http://localhost/var/www/DOCUME~1/KUMAR~1.ARM/Desktop/CIN-Settings/taxinj.HTMhttp://localhost/var/www/DOCUME~1/KUMAR~1.ARM/Desktop/CIN-Settings/TAXINN.HTMhttp://localhost/var/www/DOCUME~1/KUMAR~1.ARM/Desktop/CIN-Settings/TAXINN.HTMhttp://localhost/var/www/DOCUME~1/KUMAR~1.ARM/Desktop/CIN-Settings/taxinj.HTM


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Menu pathSPROLogistic GeneralTax on

goods on movementIndiaBasic Settings

Determination of Excise dutyMaintain Excise

defaults.


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Then we need to assign the Tax procedure TAXINN

to county India As shown below.

Menu pathSPROLogistic GeneralTax on

goods on movementIndiaBasic Settings

Determination of Excise dutySelect Tax

Calculation Procedure.


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SALESANDDISTRIBUTIONPRICING

PROCEDURE.


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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 shownto 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


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EXCISEREGISTERS.

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-formainvoice

RG23D: Depot (this indicates both the Quantity and the amount)


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FACTORYPROCESS- REGISTERSRG23 A Part I & Part II

Material is received in the factory as forQuality

inspectionor forDirect Input.

Material after QualityInspectionor when used as

DirectInputwill 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.


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DEPOTPROCESS: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 escalationshappen, 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.


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DEPOTPROCESS

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.


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TRANSACTIONCODESRELEVANTFORREGISTERS.

Activity SAP Transactions

Register Updates J1I5

RG23 A (Part I & II and RG I)

Register Extraction J2I5

Register Printing J2I6

Utilization J2IU


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SOFARWEDISCUSSEDON

Tax Procedures

Pricing Procedure Relevant to SD. CENAVT registers

Transaction Codes.


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TAX/EXCISEDUTYSETUPFORMM & SD

Basic Settings

Master Data

Account Determination

Business Transactions Tools


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BASICSETTINGS

Excise Registration IDs

Company Code Settings

Plant Settings

Excise Groups Series Groups

Excise Duty Indicators


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EXCISEREGISTRATIONIDS

A number assigned to each premises orlocation that has registered as a manufacturer

with the excise authorities.

Mention whether AED, SED, CESSapplicable. If blank will not be available for

inputs

Max no. of lineitems in outgoing EI

Permits deductible /

non deductible ED

at GR


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COMPANYCODESETTINGSUser can edit

Dr account

during JV Utilizes from

PLA in JVFirst month for

excise year

Excise invoice

selection


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PLANTSETTINGSPlant defined as Depot

or not

Multiple plants to one

Excise Registration ID

GRs per EI can be set as

below

Multi GRMulti Credit

Multi GRSingle credit

Single GR


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EXCISEGROUPS

Excise Reg ID linkedto Excise group &

Plant

Depot definition at

Excise Grp & Plant


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SERIESGROUPS


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EXCISETAXINDICATORS


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ACCOUNTDETERMINATIONDESCRIBEWHICHEXCISEACCOUNTS(FOREXCISEDUTYANDCENVAT)ARETOBE

POSTEDTOFORTHEVARIOUSTRANSACTIONTYPESINCLUDINGSUBTRANSACTION

TYPEIFANY


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DURINGTRANSACTIONSSYSTEMDETERMINES WHICHG/LACCOUNTSTO

POSTTOBYLOOKINGATTHE:

EXCISEGROUP, COMPANYCODE& CHARTOFACCOUNTS


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SD SETTINGSRELEVANTTOINDIALOCALIZATION.

Assigning Billing types to Delivery Types.


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MAINTAINEXCISEDEFAULTS.

Maintain the Excise Defaults in order determine

Excise group and Series Group Automatically at

the time of Excise invoice creation.


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MAINTAINUTILIZATIONDETERMINATION.


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MAINTAINSCRIPTSFORREGISTERS.

Maintain the Excise registers Form along with

company code to get the Print out put for Excise

Registers.


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CINMASTER - 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.


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J1ID SCREEN.

EXCISE RATE DETERMINATION


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EXCISERATEDETERMINATION

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

Exciseindicator

Get final

Excise

indicator

Get rate

Based on

Ex Ind & CH ID


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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.


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CREATIONOFEXCISEINVOICE

We will create the Excise invoice with reference to

Commercial invoice it may be Proforma or Normal

invoice.


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REGISTERUPDATIONBYUSINGJ1I5.

First We need to update the RG1 register by

selecting the class RMA and ROP.


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ONCEUCOMPLETETHERG1 UPDATIONWITH


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RMAANDROP WENEEDTODOFORIDH FOR

ISSUES


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THENCONTINUETHENEXTSTEPASSHOWNIN

SLIDE55. ITGIVESTHEFOLLOWINGRESULT.

EXTRACT THE EXCISE REGISTERS


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EXTRACTTHEEXCISEREGISTERS.

WENEEDSELECTTHERG1 INTHEINITIALSCREENAND

EXECUTE.


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SYSTEMGIVETHEFOLLOWINGSCREEN.CLICK

ONCONTINUE.


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PRINTTHEEXCISEREGISTER.

To do this First we need to maintain the Values intable J_2IRG1BAL as follows.

TOOPRINTEXCISEREGISTERSUSET.C. J2I6,


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SYSTEMGIVESTHEALLDETAILSOFRG1

REGISTER.


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CENVAT UTILIZATION

Payment to be made to Excise Department for the Self Removals forthe last month.

Utilization to be done against the last months incoming excise duties

and CVD.

CENVAT utilization to be done before the 5thof next month.


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CENVAT AVAILMENTANDUTILIZATION

On-Line Transactions

Fortnightly Transactions

Excise Duty Utilization

Transaction

DespatchSales 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 PLAAccount

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


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DOFORTNIGHTUTILIZATIONOFCENVAT.


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PASS JV BY USING J1IH


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PASSJV BYUSINGJ1IH,

USEOFJV ISTOADJUSTAMOUNTINRG23AANDRG23C

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


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IMPORTANTTHINGSTOKNOW

Determination of Excise Rate in Sales and Distribution

Information on Tax Procedure and Conditions

FI Entries related to Excise taking place in SD

DETERMINATIONOFED RATEINSALESAND


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DISTRIBUTIONSettings 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


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FI ENTRIESRELATEDTOEXCISEINSD

During the passing of Billing document to Accounting: (VF02)

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/-


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