1Country India Version (CIN) Overview
2India Localization
1.1. India Legal Requirements OverviewIndia Legal Requirements Overview
2. Logistics Process Overview ( Procurement & Sales )
3. Utilization
4. Extended Withholding Tax
Contents
3India Localization Requirements - Overview
CENVAT (Excise)
VAT / LST / CST
Service Tax
Cenvat Credit
4India Localization Requirements - Overview
Central Value Added Tax (Excise)
VAT (LST) / Central Sales Tax
Service Tax
Cenvat Credit
5Central Value Added Tax (Excise)
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
6Central Value Added Tax (Excise)
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.
7Central Value Added Tax (Excise)
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
8Central Value Added Tax (Excise)
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 fromtime to time. The duty will be calculated as percentage of tariff value fixed by the Govt. and not on assessable value
9Central Value Added Tax (Excise)
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 transactionvalue.
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
Central Value Added Tax (Excise)
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
Central Value Added Tax (Excise)
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
India Localization Requirements - Overview
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 RetailerSelling 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
India Localization Requirements - Overview
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 theheadquarters/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
India Localization Requirements - Overview
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
When the Credit may be taken?
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 balancein 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
When the Credit may be taken?
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
4. Extended Withholding Tax
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
Excise Procurement Scenarios
Domestic Procurement Process
Subcontracting Process
Stock Transport Process
Imports Purchase
Service Procurement Process
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% 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
With Reference to External Document
CENVAT Adjustment
45
Excise Procurement Scenarios
Domestic Procurement Process
Subcontracting Process
Stock Transport Process
Imports Purchase
Service Procurement Process
46
Subcontracting Process
Input
Output
Challan
FACTORYSub contractor
47
Subcontracting Process
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
Subcontracting Process
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 Receipt Subcon challan ReconciliationComplete Challan
49
Subcontracting Process
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
Subcontracting Process
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
Subcontracting Process
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
Excise Invoice Posting
52
Subcontracting Process
B. Under Full Payment of Duty : Receipt of Material from Subcon
Goods Receipt Excise Invoice CaptureExcise Invoice
PostInvoice
Verification
53
Excise Procurement Scenarios
Domestic Procurement Process
Subcontracting Process
Stock Transport Process
Imports Purchase
Service Procurement Process
54
Stock Transport Process
Plant liable to pay excise to Govt.
Excise Invoice accompanies Goods
GR at Plant Gate
Excise Invoice Capture
Excise Invoice Post (Optional)
Excise Stock Part I Register entry
Excise Invoice Post
CENVAT Part II Register entry
Supplying Plant Delivery
Goods Receipt Receiving Plant Excise Invoice
55
Stock Transport Process
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 Billing Delivery through MMStock TransferExcise Invoice
Other Movements
56
Excise Procurement Scenarios
Domestic Procurement Process
Subcontracting Process
Stock Transport Process
Imports Purchase
Service Procurement Process
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 Capture
Excise Invoice Post
Excise Stock Part I Register entry
CENVAT Part 2 Register
Vendor Invoicing - Price - Other Costs
Imports PO Commercial Invoice Goods 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 Invoice Posting Excise Duty A/C Dr.
Customs Clearing Account Cr.
Vendor Invoice Posting GR/IR Clearing A/C Dr.
Accounts Payable (Vendor) Cr.
59
Excise Procurement Scenarios
Domestic Procurement Process
Subcontracting Process
Stock Transport Process
Imports Purchase
Service Procurement Process
60
Service Procurement
Service PO Service Entry & Acceptance Invoice 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
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
Excise Sales Scenarios
Sale from Factory
Transfers to Depot
Sale from Depot
Export Sale
66
Sale from Factory
Supplying Plant
Price: 1000Qty : 10 PCDuty 16%
+ 160
Excise InvoiceDispatch
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 Delivery Proforma InvoiceExcise Invoice
Printing Excise Invoice
Commercial Invoice
69
Sale from Factory
Single Commercial and Excise Invoice
Sales Order Delivery Commercial InvoiceExcise Invoice
Printing Excise 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
Excise Sales Scenarios
Sale from Factory
Transfers to Depot
Sale from Depot
Export Sale
75
Transfers to Depot
Stock Transfer
Order
ReplishmentDelivery
Proforma Invoice
Excise Invoice
Printing 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 markedShip-from can be captured at Excise Invoice for depot.Multiple P.O.s can be combined in one receiptFolio number generated based on customization
79
Excise Sales Scenarios
Sale from Factory
Transfers to Depot
Sale from Depot
Export Sale
80
Sale from Depot
Sales Order Delivery &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
Excise Sales Scenarios
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
Sold to : 2300Material: 400Quantity: 5
Bond Register
Sold to : 2300Material: 400Quantity: 5
CaptureLicence
Sold to : 2300Material: 400Quantity: 5
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
1. India Legal Requirements Overview
2. Logistics Process Overview ( Procurement & Sales )
3.3. UtilizationUtilization
4. Extended Withholding Tax
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 payment
Excise 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 IIPLA 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
1. India Legal Requirements Overview
2. Logistics Process Overview ( Procurement & Sales )
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 VendorIncome 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
CertificateVendor Payment
BANKIncome Tax Office
Quarterly Returns
99
EWT: Vendor Transactions
Down Payment
Reverse Invoice Invoice
Credit 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
BANK Income 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!
Questions??
Country India Version (CIN) OverviewContentsIndia Localization Requirements - OverviewSlide 4Central Value Added Tax (Excise)Slide 6Slide 7Slide 8Slide 9Excise Payment Overview Slide 11Slide 12Slide 13VAT / Central Sales Tax Slide 15CENVAT vs. VATSlide 17Service Tax Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24CENVAT CreditSlide 26Slide 27Slide 28Slide 29Slide 30Slide 31Slide 32CENVAT Availment & Utilization OverviewSlide 34Logistics Process OverviewExcise Procurement Scenarios Typical Procurement CycleSlide 38Domestic Procurement of Raw MaterialsSlide 40Procurement: Cancellation of CENVAT CreditProcurement: Vendor ReturnsProcurement: Additional AdjustmentsProcurement: Adjustments & Reversals HighlightsSlide 45Subcontracting ProcessSlide 47Slide 48Slide 49Slide 50Slide 51Slide 52Slide 53Stock Transport ProcessSlide 55Slide 56Imports PurchaseSlide 58Slide 59Service ProcurementSlide 61Slide 62Excise Sales OverviewExcise Sales Scenarios Slide 65Sale from FactorySlide 67Slide 68Slide 69Slide 70Slide 71Slide 72Slide 73Slide 74Transfers to DepotSlide 76Slide 77Slide 78Slide 79Sale from DepotSlide 81Slide 82RG23D RegisterDepot OperationsSlide 85Export SaleSlide 87Slide 88Slide 89UtilizationSlide 91TR6 Challan Posting with PLA Register UpdationUtilization of CENVATSlide 94Slide 95EWT: TDS OverviewEWT: TDS (Tax Deducted at Source)EWT: Vendor TDSEWT: Vendor TransactionsEWT: Customer Interest TDSEWT: Provisions and AdjustmentsEWT ActivitiesSlide 103
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