Country India Localization

Contents

• Taxes

• Process for BED & Ecess

• Other Taxes

• Materials Management (MM)

• Conversion

• CIN Transaction Codes

TaxesThe Law

Sales Tax• Tax levied on the sales of goods• There is no offset for this tax• Can be central or local depending on business transaction

Excise duty• Duty levied on manufactured goods• Can be offset during sale• The rates are defined by the

government based on materials• For imports it is called Counter Veiling

duty (CVD)

Customs Duty• Import Duty levied purchase of goods• There is no offset for this Dut

Education & Sec. Higher Edu. Cess• Always % on excise duty • Can be if the excise duty can be offset

BED, EcessThe Process

Production

RG23A/CPersonal Ledger Account

(PLA)

RG1

Sale Finished Goods

Purchase Raw Materials

Debit remaining amt from PLA

Declare GI for Production

Declare GI for Sale

Take Credit of BED and Ecess

Utilize the BED and Ecess for sales

Declare GR from Production

Pay duty to government and take credit Government

Other Taxes

Entry Taxes• Certain state has entry tax

• Octroi is another form of entry tax

• It is levied on the total cost of goods

• Has to be loaded on the material cost

Sales Tax To be loaded on the material Cost

Interstate sales tax called central sales tax

Intrastate sales tax called local sales tax

Customs duty Has to be loaded on the material cost

levied on the import of goods

Based on Assessable value which is 1% on CIF

Counter Veiling Duty Similar to excise duty but levied during

import

Can be offset in sales thus can be taken as credit in RG23A

SAP Approach

Materials Management (MM)

• Country Version India comes with functions for calculating, posting, remitting, and reporting excise duty, and for handling incoming and outgoing excise invoices.

• For these purposes, extra fields are available in the vendor master data and material master data for information required in India only.

• Country Version India offers two ways of calculating excise duty, – a condition-based method (TAXINN) and

– a formula-based method (TAXINJ).

SAP Approach

Condition-Based Excise Determination (TAXINN)

• TAXINN is a tax calculation procedure for country version India and it supports condition-based excise determination

• Access Sequences – JTAX

– JST1

• Some MM Excise Conditions– JMOP IN: BED setoff %

– JAOP IN: AED setoff %

– JSOP IN: SED setoff %

– JECI IN: Eces inventory…..etc

• LST/CST/VAT Conditions– JIPS IN Sales tax setoff

– JIPC IN Central sales tax invoice

– JIPL IN Local sales tax invoice

• Service Tax Conditions– JSRT A/P Service Tax

– JEC3 A/P ECS for ST

Formula-Based Excise Determination(TAXINJ)

• TAXINJ is a tax calculation procedure for country version India and it supports formula-based excise determination

• Excise Rate Maintenance transaction (J1ID) is used to maintain excise master data (Plant master, Vendor master, Customer master, Material master, Excise tax rate)

• Some MM Excise Conditions– JMOD IN: A/R BED– JAED IN: A/R AED– JSED IN: A/R SED– JCES IN: A/R Cess– JECS A/R Educational CESS

• LST/CST/VAT Conditions– JIN1 IN: A/R CST– JIN2 IN: AR LST– JIN4 IN: A/R CST Surcharge– JIN5 IN: AR LST Surcharge– JIN7 A/R CST Payable VAT

• Service Tax Conditions– JSE4 Service Tax– JES4 ECS on Service Tax

Excise Invoice (Incoming)

Definition

A business document, in India, that your vendor sends you when it delivers excisable goods. It lists the goods and states how much excise duty applies on them. Your use the excise invoice to claim back the excise that you have paid from the excise authorities.

• You can capture and post excise invoices in one or two steps, depending on your business requirements.– In the two-step procedure, the excise clerk captures the incoming excise

invoice. This means that the clerk enters the data, but the system does not yet create an entry in Part II of the appropriate excise register. Another user (the excise supervisor) checks the excise invoice and posts it. The system then creates a Part II entry.

– In the one-step procedure, the excise clerk captures and posts the incoming excise invoice simultaneously. The system creates the Part II entry automatically.

External Procurement (Imports)

• The countervailing duty (CVD) on imports is levied in place of excise duty.

• Unlike other forms of customs duties, such as basic customs duty or special customs duty, you can credit CVD paid on imports to your CENVAT account.

• During Creation of Purchase order for each material that you will have to pay CVD on when it comes through customs, you enter the CVD as a pricing condition.

• Process flowPurchase order ->Entering Invoices for Bills of Entry->Capturing Excise

Invoices for Bills of Entry->Entering Goods Receipts->Posting Excise Invoices

Subcontracting

• There are two ways of handling the excise invoice on the goods that you provide subcontractor with:– Subcontracting without payment of excise duty (Through Subcontracting

Challan -57F4 challan)

– Subcontracting under full payment of duty

• Country Version India supports both of these approaches.

Stock Transfer 

Process Flow (Two-Step Procedure – Plant)• Create a stock transport order, following the standard procedure, and

send the order to the issuing plant. The issuing plant has processes your order, and when it is ready to ship:

• The storeperson at the issuing plant issues the goods using a transfer posting. The excise clerk there creates an excise invoice The excise supervisor verifies and posts the excise invoice. It then sends the goods to you, together with the excise invoice.

• Once the goods arrive, you follow the standard procedure for incoming excise invoices:

• The excise clerk captures the excise invoice, using the stock transport order as the reference document. The storeperson enters the goods receipt, again using the stock transport order as the reference document. Alternatively, you can first enter the goods receipt and then capture the excise invoice.

• The excise supervisor then posts the excise invoice.

Configuration

• Plant is assigned to an excise groups• All Registers RG23A, RG23C, RG1, RG23D, PLA, are maintained at the excise group• For a plant it is required to be declared as a production facility or a depot based on which various registers will be active• Number ranges for incoming documents are maintained at excise groups• For TAXINJ Tax rates are maintained using a set of CIN master data (J1ID)

– Chapter ID – Material Chapter ID Combination– Cenvat Determination– Excise Tax Rates– Excise Details – Vendor, Customer, plant

• Series group is used to set number ranges of outgoing documents

Configuration

• Set up the organizational units for CIN• Check the default excise values, make sure all conditions are maintained• Maintain script layout settings for printing of registers for the corresponding company code• Setup all the transaction accounts required for the business• Set up number ranges for CIN objects• Maintain table J_1INEXCGRP for number range sub objects

– The data in this table doesn’t gets transported when you transport these sub objects from customizing

CIN Customizing

• For subcontracting make sure you have defined the a sub transaction type• Movement type grouping is required for subcontracting• Specify which movement type will involve excise invoice• For depot make sure you have checked the depot checkbox in the CIN plant settings• Maintain minimum balances in the excise accounts

CIN Conversion

•For production plant upload the balances in various registers directly in the table J_2IACCBAL• You can also upload balances in RG23A using a dummy excise invoice and a dummy material• Other important tables for conversion is J_2IREGBAL and J_2IRG1BAL• CIN masters can be uploaded using LSMW, you need to create batch input for these masters• For Depot issue and receipts has to be shown in RG23D following two methods can be adopted

– Upload using actual sale and purchase transaction– Upload the stock in the existing excise invoice using 561,

consumed Qty can be issued out using 562. For 561 you can capture excise invoice in J1IG and for 562 you can pass on the excise invoice using J1IJ

CIN Transaction CodesTransaction Action

J1ILN CIN Transaction MenuJ1ID Excise Rate Maintenance J1I2 Prepare a sales tax registerJ1I3 Create outgoing excise invoices in batchesJ1I5 Update the RG 1 and Part I registers

J1IEX Incoming Excise Invoices (central transaction)J1IEX_C Capture an incoming excise invoice (excise clerk)J1IEX_P Post an incoming excise invoice (excise supervisor)J1IF01 Create a subcontracting challanJ1IF11 Change a subcontracting challanJ1IF12 Display a subcontracting challanJ1IF13 Complete, reverse, or recredit a subcontracting challanJ1IFQ Reconcile quantities for subcontracting challansJ1IFR List subcontracting challansJ1IH Make a CENVAT adjustment postingJ1IIN Create an outgoing excise invoiceJ1IJ Assign excise invoices to a delivery for sales from depots

J1INJV Adjust withholding tax ItemJ1INREP Reprint a withholding tax certificate for a vendor

J1IQ Year-End Income Tax Depreciation ReportJ1IR Download register dataJ1IS Process an excise invoice (outgoing) for other movementsJ1IU Process exemption formsJ1IW Verify and post an incoming excise invoice

CIN Transaction CodesTransaction Action

J1IX Create an incoming excise invoice (without reference to purchase order)J2I8 Transfer excise duty to CENVAT accountJ2IU Remit excise duty fortnightlyJ2I9 Monthly CENVAT returnJ1IG Excise invoice entry at depot

J1IGA Create additional excise entry at depotJ2I5 Extract data for excise registersJ2I6 Print excise registers