Country India Version (CIN)

Overview

Presented By
K V Ramesh Babu

1
 Contents

India Localization

1. India Legal Requirements Overview

2. Logistics Process Overview ( Procurement & Sales )

3. Utilization

4. Extended Withholding Tax

2
India Localization Requirements -
Overview

 CENVAT (Excise)

 VAT / LST / CST

 Service Tax

 Cenvat Credit

3
India Localization Requirements -
Overview

 Central Value Added Tax (Excise)

 VAT (LST) / Central Sales Tax

 Service Tax

 Cenvat Credit

4
Central 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 5

Central 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. 6
 Central 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

7
Central 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 from
time to time. The duty will be calculated as percentage of tariff
value fixed by the Govt. and not on assessable value

8
Central 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 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.
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 Excise Payment Overview

Vendor Plant Customer

 Pays Excise Duty  Pays Excise Duty for all  Pays Excise component to
outbound goods movement the Vendor

 Claims Cenvat

10
Central Value Added Tax
(Excise)

CENVAT PAYMENT

 Duty to be paid by 5 th
of the following month

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

Duty is paid by debiting PLA

11
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

12
India Localization
Requirements - Overview

 CENVAT (Excise)

 VAT / LST / CST

 Service Tax

 Cenvat Credit

13
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
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 VAT / Central Sales Tax

Tax Impact under VAT System

Rs.
STAGES
I– Manufacturer II – Wholesaler III – Retailer
Selling price 100.00 Cost price 100.00 Cost price 120.00
(excl. tax)
VAT @ 12.5% 12.50 Overheads & profit 20.00 Overheads & 24.00
@ 20% profit @ 20%
Sale price 112.50 Sale price 120.00 Sale price 144.00
(excl. tax) (excl. tax)
Tax paid 12.50 VAT @ 12.5% 15.00 VAT @ 12.5% 18.00

Sale price 135.00 Sale price 162.00

(incl. Tax) (incl. Tax)
Tax paid 2.50 Tax paid 3.00
(15-12.50) (18-15)

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 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 State administered – Chain broken on interstate transactions
interstate boundaries

Cenvat credit can be availed on Services Cenvat credit cannot be availed on Services
16
India Localization Requirements -
Overview

 CENVAT (Excise)

 VAT (LST) / Central Sales Tax

 Service Tax

 Cenvat Credit

17
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 5 th
of the next month

 Service tax is payable on advances

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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 19
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

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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

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 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 output22
services are rendered.
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

23
India Localization Requirements -
Overview

 CENVAT (Excise)

 VAT / LST / CST

 Service Tax

 Cenvat Credit

24
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
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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

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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
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 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

28
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 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

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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.

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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

31
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

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 CENVAT Availment &
Utilization Overview
SALES EXCISE
ON-LINE TRANSACTIONS INVOICE PROCESS
GOODS
RECEIPT
CENVAT on hold
Debit CENVAT for Cap Goods
on-hold A/c DESPATCH
Credit ED Payable A/c
VENDOR EXCISE
INVOICE PROCESS
Debit CENVAT A/c Excise Duty
CENVAT Account
Payable A/C
Credit CENVAT A/c

Debit ED Payable A/c

MONTHLY TRANSACTIONS (Consolidated Entry)

DEPOSIT SELECT
FUNDS REGISTER Excise duty
IN PLA Utilization
ACCOUNT PLA A/C Transaction
Debit Credit PLA A/c
PLA Account

33
 Contents

India Localization

1. India Legal Requirements Overview

2. Logistics Process Overview ( Procurement & Sales )

3. Utilization

4. Extended Withholding Tax

34
 Logistics Process Overview

Domestic Vendor Import Vendor Domestic Vendor

Subcontractor
Plant X Plant Y

Overseas Depot A Depot B

Customer

Domestic Customer
35
Excise Procurement
Scenarios

 Domestic Procurement Process

 Subcontracting Process

 Stock Transport Process

 Imports Purchase

 Service Procurement Process

36
 Typical Procurement Cycle

Payment Processing Requirement Determination

Invoice Verification Vendor Selection

Goods Receipt Order Processing

Purchase Order Monitoring

37
Excise Procurement Scenarios

 Domestic Procurement Process

 Subcontracting Process

 Stock Transport Process

 Imports Purchase

 Service Procurement Process

38
 Domestic Procurement of
Raw Materials

Vendor Delivery Goods Receipt Excise Invoice Vendor Invoice

 Vendor liable to pay  GR at Factory Gate  Excise Invoice Post  Liability to Vendor
excise to Govt.
 Excise Invoice  CENVAT – Part II - Price
 Vendor Excise Invoice Capture Register entry - Excise
accompanies Goods - Other Taxes
 Excise Invoice Post - Other Costs
(Optional)

 Excise Stock – Part I

Register entry

39
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.

40
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.

41
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.

42
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

43
 Procurement: Adjustments & Reversals
Highlights

C E N V A T A d ju s tm e n t

S c rap

N o n -p r o d u c tio n u s e

A d d i t io n a l E x c is e P a id b y V e n d o r

D e p o s it in to P L A th r o u g h T R 6

C a n c e l E x c is e In v o ic e
Flexibility for 100% Compliance
W ith R e fe r e n c e to E x te r n a l D o c u m e n t

Management of CENVAT Credit for Capital Goods

CENVAT Reversals and Adjustments

One-Step Reversal of Excise Invoice 44

Excise Procurement
Scenarios

 Domestic Procurement Process

 Subcontracting Process

 Stock Transport Process

 Imports Purchase

 Service Procurement Process

45
 Subcontracting Process

Input

Challan
Sub contractor
FACTORY

Output

46
 Subcontracting Process

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

Subcon Transfer Subcon Challan

Order Posting Challan Printing

Note: Print Immediate

Option to be used

47
 Subcontracting Process

A. With out Payment of Duty : Receipt of materials from subcontractor

Subcon challan Complete

Goods Receipt
Reconciliation Challan

Note: Challans on which quantities are

not completely returned have the status
assigned

48
 Subcontracting Process

A. With out Payment of Duty : Reversals

Reverse Credit
Run Listing Get Material Qty not
availed on Input
Transaction returned on Challan
Material

Note: Listing Transaction gives list of

Challans due for Reversal

49
 Subcontracting Process

A. With out Payment of Duty : Recredit

Get Material Qty

Run Listing Recredit Reversed
subsequently returned on
Transaction Credit
Challan

Note: Listing Transaction gives list of

Challans due for Recredit

50
 Subcontracting Process

B. Under Full Payment of Duty : Transfer Posting of Input Material to Subcon

Subcon Transfer Excise Invoice Excise Invoice

Order Posting Creation Posting

Note: Excise Invoice

created and Posted
under other Movements

51
 Subcontracting Process

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

Excise Invoice Excise Invoice Invoice

Goods Receipt
Capture Post Verification

52
Excise Procurement
Scenarios

 Domestic Procurement Process

 Subcontracting Process

 Stock Transport Process

 Imports Purchase

 Service Procurement Process

53
 Stock Transport Process

Supplying Plant Goods Receipt –

Excise Invoice
Delivery Receiving Plant
 Plant liable to pay  GR at Plant Gate  Excise Invoice Post
excise to Govt.
 Excise Invoice  CENVAT – Part II
 Excise Invoice Capture Register entry
accompanies Goods
 Excise Invoice Post
(Optional)

 Excise Stock – Part I

Register entry

54
 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

Delivery through MM Excise Invoice –

No Inter Plant Billing
Stock Transfer Other Movements

55
Excise Procurement
Scenarios

 Domestic Procurement Process

 Subcontracting Process

 Stock Transport Process

 Imports Purchase

 Service Procurement Process

56
 Imports Purchase

Goods Receipt &

Imports PO Commercial Invoice Invoice Verification
Excise Invoicing
 Vendor Outside India  Liability to Customs in  GR at Factory Gate  Vendor Invoicing
India
 Duties to be paid to  Excise Invoice - Price
Customs  CD & CVD Capture - Other Costs

 Credit can be claimed  Excise Invoice Post

on CVD

 Excise Stock – Part I

Register entry

 CENVAT – Part 2
Register

57
 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.

58
Excise Procurement
Scenarios

 Domestic Procurement Process

 Subcontracting Process

 Stock Transport Process

 Imports Purchase

 Service Procurement Process

59
 Service Procurement

Service Entry &

Service PO Invoice Verification
Acceptance

 PO for Services  Additional Detailing of  Vendor Invoicing

Individual Services
 Service Tax, Ecess Performed
 Inclusive of Service
and SECESS Tax
 Additional Control of
 Service Provider liable acceptance
to Pay ST to Govt.

60
 Service Procurement

Vendor Payment FI - JV Utilization

 Payment Inclusive of  Transfer to Service  Utilization Service Tax

Service Tax Tax availed accounts availed against
Service Tax Payable
 Credit Taken on
availed accounts

61
 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

62
 Excise Sales Overview

Removal of Goods

From Factory From Depot

Sale Transfer to Factory Sale Transfer to Factory

Return to Vendor Transfer to Depot Return to Vendor Transfer to Depot

Return to Customer Transfer to Subcontractor Return to Customer Transfer to Subcontractor

Full Compliance across the

Distribution Process

63
Excise Sales Scenarios

 Sale from Factory

 Transfers to Depot

 Sale from Depot

 Export Sale

64
Excise Sales Scenarios

 Sale from Factory

 Transfers to Depot

 Sale from Depot

 Export Sale

65
 Sale from Factory

Supplying Plant

Excise Invoice
Price: 1000
Qty : 10 PC Dispatch
Duty 16%
+ 160

Debit:
Rs. 160

Excise
Duty
Payable
A/C

Fortnightly utilization

CENVAT/Part II Register 66
PLA Register
 Sale from Factory

 No CIN related updates

Delivery

 Update Registers and batch utilization

Goods Issue

 ED Payable
 Utilization
Excise Invoice

67
 Sale from Factory

Separate Commercial and Excise Invoice

Printing
Proforma Excise Commercial
Sales Order Delivery Excise
Invoice Invoice Invoice
Invoice

 Posting to Excise duty payable account

 Posting to CENVAT accounts for Utilization

68
 Sale from Factory

Single Commercial and Excise Invoice

Printing
Commercial Excise
Sales Order Delivery Excise
Invoice Invoice
Invoice

 Posting to Excise duty payable account

 Posting to CENVAT accounts for Utilization

69
 Sale from Factory

Excise Document Flow

Excise
Delivery Billing Invoice
Sales Order Bill to: 2300
Sold to : 2300 Ship to: 2300 Sold to : 2300
Material: 400 Material: 400 Material: 400
Material: 400 Quantity: 5
Quantity: 5 Quantity: 5 Quantity: 5

70
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

71
 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

72
 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

73
Excise Sales Scenarios

 Sale from Factory

 Transfers to Depot

 Sale from Depot

 Export Sale

74
 Transfers to Depot

Stock Printing
Replishment Proforma Excise
Transfer Excise
Delivery Invoice Invoice
Order Invoice

75
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.
76
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

77
Transfers to Depot

Depot Receipts for Direct Purchases

GR made against the PO

Individual 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

78
Excise Sales Scenarios

 Sale from Factory

 Transfers to Depot

 Sale from Depot

 Export Sale

79
 Sale from Depot

Delivery & Excise Invoice Commercial

Sales Order
PGI Capture Invoice

 Selling Price 1000 , Quantity 10, ED @ 16% = 160

 RG23D – Reduce quantity by 10, Debit 160

80
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
81
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

82
 RG23D Register

 Text
Receipt update the quantity and the value in RG23D
Material  The Text
 reference / mother invoice details in terms of batches etc captured
Receipt in – Text
Depot
 Reference to the mother invoice is made
Movement /
 Update goods issue quantity
sale from
depot

 Excise amount cannot differ from that paid at the first point of goods
movement

83
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

84
Excise Sales Scenarios

 Sale from Factory

 Transfers to Depot

 Sale from Depot

 Export Sale

85
 Export Sale

 Price 1000, Quantity 10, Duty@ 16% = 160

Supplying
Plant Excise
Invoice
 Update Registers

If Exported
under bond

 Debit ED payable a/c 160

 Update Cenvat Part II register and PLA register
If not exported
 Fortnightly utilization
under bond

86
 Export Sale

Excise Bonding Document Flow

Excise Bond Capture

Delivery Billing Invoice Register Licence
Sales Order Bill to: 2300
Ship to: 2300 Sold to : 2300 Sold to : 2300 Sold to : 2300
Sold to : 2300 Material: 400
Material: 400 Material: 400 Material: 400 Material: 400
Material: 400 Quantity: 5
Quantity: 5 Quantity: 5 Quantity: 5 Quantity: 5
Quantity: 5

 Bonds / LOUT / Licence as applicable in the Business process

87
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

88
 Contents

India Localization

1. India Legal Requirements Overview

2. Logistics Process Overview ( Procurement & Sales )

3. Utilization

4. Extended Withholding Tax

89
 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

90
 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

91
 TR6 Challan Posting with PLA Register
Updation
House Bank Own

Prepare Cheque & TR 6 Chllan

Post Accounting document in FI
to post the payment
Excise PLA hold A/c Dr
House Bank A/c Cr
Banker Transfer the
funds toExcise
Authorities and
Acknowledge the Create Excise JV - PLA updation
TR 6 Chllan TR6 Challan (J1IH )

Enter the Accounting Doct. or

TR6 Challan No., FY,
Plant, Excise Group, etc.,

Allocate the TR6 Challan Amount

as per TR6C i.e. BED / AED / SED

Update the PLA Register &

Accounting Document Posted
EXCISE PLA A/c Dr
Excise PLA hold A/c Cr

PLA Register for Value

92
 Utilization of CENVAT

Input Output
Debit Balance Credit Balance

Perform the Excise

Excise duty payable on
Utilization
Customer Invoice

Input Credit from Vendor

Material Purchase

Input Credit from Vendor

Capital Purchase (50%) Total Available Total Excise duty
RG23C Balances RG23A payable

PLA Balance
Is the Balance
Sufficient

TR6 Challan Payment

NO Yes

Apportion the payable amount

between the
Registers
RG23A, RG23C & PLA

Post the Utilization

RG23A & C Part II Accounting document generated
PLA Register & Registers updated
based on Amount apportionment
93
 CENVAT Availment & Utilization
Overview
SALES EXCISE
ON-LINE TRANSACTIONS INVOICE PROCESS
GOODS
RECEIPT
CENVAT on hold
Debit CENVAT for Cap Goods
on-hold A/c DESPATCH
Credit ED Payable A/c
VENDOR EXCISE
INVOICE PROCESS
Debit CENVAT A/c Excise Duty
CENVAT Account
Payable A/C
Credit CENVAT A/c

Debit ED Payable A/c

MONTHLY TRANSACTIONS (Consolidated Entry)

DEPOSIT SELECT
FUNDS REGISTER Excise duty
IN PLA Utilization
ACCOUNT PLA A/C Transaction
Debit Credit PLA A/c
PLA Account

94
 Contents

India Localization

1. India Legal Requirements Overview

2. Logistics Process Overview ( Procurement & Sales )

3. Utilization

4. Extended Withholding Tax

95
 EWT: TDS Overview

Vendor Vendor
Income tax office

Deduct Tax Issue

from Vendor Certificates

Pay Tax to
Government
Bank
96
 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
97
the year under the various sections of the Act.
 EWT: Vendor TDS

Services
Mumbai plant

Invoice

Vendor Certificate
Vendor
Payment
ABC Ltd
Advance

Payment/Challan

Quarterly
Returns

Income Tax 98
BANK Office
 EWT: Vendor Transactions

Down
Payment

Reverse Credit
Invoice
Invoice Memo

Clear DP
Cash Journal
Postings
Challan
TDS JV
Update
Logistics
Invoice Bank
Challan

Reprint Print Cancel

Certificate Certificate Certificate

Quarterly
99
Returns
 EWT: Customer Interest TDS

Mumbai plant

Advance
Customer
Certificate

Interest Payment
ABC Ltd

Payment/Challan

Quarterly Returns

Income Tax
BANK
Office
100
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
101
 EWT Activities

Daily Activities Periodic Activities

TDS on Challan
Provisions Update
Posting On payment
Where required due date

TDS
Certificate
Printing,
Reprinting and
Cancellation
Posting on appropriate
Invoice, Credit
due dates
Memo, Down
Payment, etc
Tax
Adjustment
Quarterly
JV
Where required Return

102
 Questions??
Thank you!

103