11971937sd7 Sap Cin Overview Training Ppt

1

Country India Version (CIN) Overview

Presented By

K V Ramesh Babu

2

India Localization

1.1. India Legal Requirements OverviewIndia 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


Central Value Added Tax (Excise)

VAT (LST) / Central Sales Tax

Service Tax

Cenvat Credit

5


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


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


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


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


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


CENVAT PAYMENT

Duty to be paid by 5th of the following month

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

Duty is paid by debiting PLA

12


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


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

16

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


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 5th of the next month

Service tax is payable on advances

19

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


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


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


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 holdfor Cap Goods

CENVAT Account

VENDOR EXCISEINVOICE PROCESS

GOODS RECEIPT

DESPATCH

SALES EXCISEINVOICE PROCESS

Excise Duty Payable A/C

PLA A/C

DEPOSIT FUNDSIN PLA ACCOUNT

Debit PLA Account

SELECTREGISTER Excise duty

Utilization Transaction

ON-LINE TRANSACTIONS

MONTHLY TRANSACTIONSDebit 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

2.2. Logistics Process Overview ( Procurement & Sales )Logistics Process Overview ( Procurement & Sales )

3. Utilization


Contents

35

Logistics Process Overview

OverseasCustomer

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





Imports Purchase


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% ComplianceFlexibility 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

W ith Reference to External Docum ent

CENVAT Adjustm ent

45





Imports Purchase


46


Input

Output

Challan

FACTORYSub contractor

47


A. With out Payment of Duty: Removal of Materials from Factory

Note: Print Immediate Option to be used

Subcon Order

Transfer Posting

SubconChallan

Challan Printing

48


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 ReceiptSubcon challan Reconciliation

Complete Challan

49


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


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


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


52


B. Under Full Payment of Duty : Receipt of Material from Subcon

Goods ReceiptExcise Invoice

CaptureExcise Invoice

PostInvoice

Verification

53





Imports Purchase


54


Plant liable to pay

excise to Govt.

Excise Invoice

accompanies Goods

GR at Plant Gate


Excise Invoice Post

(Optional)


Excise Invoice Post

CENVAT – Part II Register entry

Supplying Plant Delivery

Goods Receipt – Receiving Plant

Excise Invoice

55


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 BillingDelivery through MM

Stock TransferExcise Invoice –

Other Movements

56





Imports Purchase


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 Post


CENVAT – Part 2 Register

Vendor Invoicing

- Price

- Other Costs

Imports PO Commercial InvoiceGoods 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 Duty A/C Dr.

Customs Clearing Account Cr.

Vendor Invoice Posting

GR/IR Clearing A/C Dr.

Accounts Payable (Vendor) Cr.

59





Imports Purchase


60

Service Procurement

Service POService Entry &

AcceptanceInvoice 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 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


Sale from Factory

Transfers to Depot

Sale from Depot

Export Sale

66

Sale from Factory

Supplying Plant

Price: 1000Qty : 10 PCDuty 16%

+ 160

Excise Invoice

Dispatch

Fortnightly utilization

CENVAT/Part II RegisterPLA 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 DeliveryProforma

InvoiceExcise Invoice

Printing Excise Invoice

Commercial Invoice

69

Sale from Factory

Single Commercial and Excise Invoice

Sales Order DeliveryCommercial

InvoiceExcise Invoice


Posting to Excise duty payable account Posting to CENVAT accounts for Utilization

70

Sale from Factory

Excise Document Flow

Sales OrderSold to : 2300Material: 400Quantity: 5

DeliveryShip to: 2300Material: 400Quantity: 5

BillingBill to: 2300Material: 400Quantity: 5

Excise Invoice

Sold to : 2300Material: 400Quantity: 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


Sale from Factory

Transfers to Depot

Sale from Depot

Export Sale

75

Transfers to Depot

Stock Transfer

Order

ReplishmentDelivery

Proforma Invoice

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 POIndividual 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


Sale from Factory

Transfers to Depot

Sale from Depot

Export Sale

80

Sale from Depot

Sales OrderDelivery &

PGIExcise Invoice

CaptureCommercial

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


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 OrderSold to : 2300Material: 400Quantity: 5

DeliveryShip to: 2300Material: 400Quantity: 5

BillingBill to: 2300Material: 400Quantity: 5

Excise Invoice


Bond Register


CaptureLicence


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



3.3. UtilizationUtilization


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 updationTR6 Challan (J1IH )

PLA Register for Value

Post Accounting document in FI

to post the paymentExcise PLA hold A/c Dr House Bank A/c Cr

Prepare Cheque & TR 6 Chllan

Enter the Accounting Doct. orTR6 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 DrExcise PLA hold A/c Cr

93

Utilization of CENVAT

Total Available Balances RG23A

Input

Debit Balance Credit Balance

Is the BalanceSufficient

NO Yes

Output

RG23A & C Part II

PLA Register

TR6 Challan Payment

Input Credit from VendorMaterial 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 UtilizationAccounting document generated

& Registers updated based on Amount apportionment

94

CENVAT Availment & Utilization Overview

CENVAT on holdfor Cap Goods

CENVAT Account

VENDOR EXCISEINVOICE PROCESS

GOODS RECEIPT

DESPATCH

SALES EXCISEINVOICE PROCESS

Excise Duty Payable A/C

PLA A/C

DEPOSIT FUNDSIN PLA ACCOUNT

Debit PLA Account

SELECTREGISTER Excise duty

Utilization Transaction

ON-LINE TRANSACTIONS

MONTHLY TRANSACTIONSDebit 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



3. Utilization

4.4. Extended Withholding TaxExtended 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 7th 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

BANKIncome Tax Office

Quarterly Returns

99

EWT: Vendor Transactions

Down Payment

Reverse Invoice

InvoiceCredit Memo

Clear DP

ChallanUpdate

TDS JV

Bank Challan

Reprint Certificate

PrintCertificate

Cancel Certificate

Quarterly Returns

Cash Journal Postings

Logistics Invoice

100

EWT: Customer Interest TDS

ABC Ltd

Mumbai plant

BANKIncome 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

PostingInvoice, 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

JVWhere required

Periodic ActivitiesDaily Activities

TDS on Provisions

PostingWhere required

103

Thank you!

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