Professional Documents
Culture Documents
Notice
This document contains information that is proprietary and confidential to Tata
Consultancy Services, which shall not be disclosed outside Tata Consultancy
Services Ltd.(TCS), transmitted, or duplicated, used in whole or in part for any
purpose other than its intended purpose. Any use or disclosure in whole or in part of
this information without express written permission of Tata Consultancy Services is
prohibited.
Copyright, Tata Consultancy Services (TCS).
Document details
Name
Version no.
1.0
Description
This manual contains details statutory/legal
related to Excise, VAT and Service tax etc.
requirements mapped in SAP
Revision details
Action taken
(add/del/change)
Previous
page no.
New page
no.
Revision description
Date:
Authorized by:
Date:
TCS Confidential
ii
PF2060C
Revision
date
TCS Confidential
Revision
description
Page
no.
Previous
page no.
Action
taken
Addenda/
New page
Release
notice
reference
iii
Intended Audience
The document is intended to provide a broad overview of the how to map the Statutory rules
applicable in India done in Sales & Distribution Module, Material Management, Finance Accounting
Modules of SAP ECC6.0. The target audience is the SAP consultant working for CIN.
Confidential
iv
Description
Chapter 1
Chapter 2
Chapter 3
Master Data
Chapter 4
Business Processes
Chapter 5
Excise Registers
Chapter 6
Chapter 7
Reports
Chapter 8
Appendix A
Appendix B
TCS Confidential
Contents
1
History................................................................................................................................................... 11
1.2
1.3
Excise Duty........................................................................................................................................... 12
1.3.1
1.4
Sales Tax............................................................................................................................................... 13
1.5
1.6
1.7
1.8
1.9
Service Tax............................................................................................................................................ 16
Language.............................................................................................................................................. 17
2.2
Currency................................................................................................................................................ 17
2.3
2.4
Fiscal year............................................................................................................................................. 17
2.5
Master Data..........................................................................................20
3.1
Customer Master................................................................................................................................... 20
3.2
Material Master..................................................................................................................................... 24
3.3
Business Process...................................................................................28
4.1
Domestic Sales..................................................................................................................................... 29
4.2
4.2.1
4.3
4.3.1
4.4
4.4.1
4.4.2
Withholding tax types are maintained for TCS on base, surcharge, ECS and SECess...................60
4.4.3
Create the access sequence for withholding tax for TCS in SD Module..........................................61
4.4.4
4.4.5
Withholding tax types must be assigned to condition types maintained in SD for TCS....................65
4.4.6
4.4.7
4.4.8
Confidential
vi
4.4.9
4.4.10
4.5
Depot Sales........................................................................................................................................... 70
4.6
Excise Registers....................................................................................74
5.1
RG1 Register........................................................................................................................................ 74
5.1.1
5.1.2
5.1.3
5.1.4
Billing Document................................................................................................................................... 78
6.2
Excise Invoice....................................................................................................................................... 78
6.3
Monthly Utilization................................................................................................................................. 78
Reports................................................................................................. 79
TCS Confidential
vii
List of Abbreviations
Abbreviation/ Acronym
Expansion
SAP
ECC
VAT
CST
TCS
CENVAT
ARE
TCS Confidential
viii
1.
2.
Indirect Taxes- Consists of Excise Duties, Sales taxes and Service Taxes.
Confidential
10
Excise Duty
All goods that are produced or manufactured in India shall be charged a duty of excise called
Cenvat at the rates specified in the Central Excise Tariff.
Every person who manufactures, produces, carries on trade, holds warehouses for excisable
goods shall have to obtain registration under the excise laws.
No excisable goods may be removed from the factory or a warehouse except under an
invoice signed by the owner of the factory or his authorised agent.
Every assessee has to submit to the superintendent of Central Excise a monthly return in the
specified form. For specified situations such as manufacture of goods exempt under a
notification, a prescribed declaration and/ or a financial statement needs to be filed.
Credit of service tax paid on input services, by a manufacturer of goods, is now available, in
addition to the credit that was available in respect of inputs/ capital goods.
CENVAT- Amount that is paid on the value that is added at the time of sale to the Govt.
Basic Excise Duty (BED) : Excise Duty that is levied at the time of goods removal, either it is
for sales or for own consumption(Except Salt)
Additional Excise Duty (AED) : On all excisable goods by Central Govt. to counter balance
sales tax exceptions by state Govt.
Secondary & Higher Education Cess : Levied @ 1% on each of the Central Indirect Taxes.
TCS Confidential
11
Once manufacture of goods is complete, excise duty is payable, whether the goods are solld
or self-consumed. Excise duty does not depend on the use of the goods.
Excise Duty is a tax on manufacture of goods but for the sake of administrative convenience,
it is collected only on removal of goods from the factory.
Input Materials- Is defined as the one which loses its own identity in the finished
product.
Capital Goods- Is defined as the which does NOT lose its own identity in the
finished goods.
Sales Tax
A sales tax is a consumption tax charged at the point of purchase for certain goods and
services. The tax is usually set as a percentage by the government charging the tax. There is usually
a list of exemptions. The tax can be included in the price (tax-inclusive) or added at the point of sale
(tax-exclusive).
Most sales taxes are collected by the seller, who pays the tax over to the government which
charges the tax. The economic burden of the tax usually falls on the purchaser, but in some
circumstances may fall on the seller. Sales taxes are commonly charged on sales of goods, but many
sales taxes are also charged on sales of services. In a highly idealized case, a sales tax would have a
high compliance rate, be difficult to avoid, and be simple to calculate and simple to collect.
Sales tax is a tax on sales and can be imposed only when there is a sale.
TCS Confidential
12
Rate of Tax VAT proposes to impose two types of rate of tax mainly:
10-12% on goods called Revenue Neutral Rates (RNR). There would be no fall in
such remaining goods.
Two special rates will be imposed-- 1% on silver or gold and 20% on liquor. Tax on
petrol, diesel or aviation turbine fuel are proposed to be kept out from the VAT system
as they would be continued to be taxed, as presently applicable by the CST Act.
Under the CST Act, the tax is collected at one stage of purchase or sale of goods.
Therefore, the burden of the full tax bond is borne by only one dealer, either the first
or the last dealer. However, under the VAT system, the tax burden would be shared
by all the dealers from first to last. Then, such tax would be passed upon the final
consumers.
Under the CST Act, the tax is levied at a single point. Under the VAT system, the
retailers are not subject to tax except for the retail tax.
Under the CST Act, general and specific exemptions are granted on certain goods
while VAT does not permit such exemptions. Under the CST law, concessional rates
TCS Confidential
13
are provided on certain taxes. The VAT regime will do away with such concessions as
it would provide the full credit on the tax that has been paid earlier.
Under VAT law, first, the dealer pays tax on the sale or purchase of goods. The
subsequent dealer pays tax on the portion of the value added upon such goods.
Thus, the tax burden is shared equally by the last dealer. To illustrate the whole
procedure of VAT,
For Example,
At the first point of sale, the value of goods is Rs.100. The tax on this is 12.5%. Therefore,
the net VAT would be 12.5%. At the second change of sale, the sale value is Rs.120 and the tax
thereon is 15%. The tax that is to be paid at every point is 15%. The input tax is 15%. You will get
a credit for first change in sale of 2.5%-- i.e. 15% -12.5%. Therefore, 2.5% will be the net rate. At
the third change of sale, the sale value is Rs.150 and the tax on this is 18.75%. At the last stage,
the tax paid is 18.75%. The Input Tax is 18.75%. You get a credit for second change in sale?i.e.
18.75% -15% = 3.75%. Therefore, 3.75% would be the net VAT. This means that VAT is paid in
the last point tax under the sale tax regime
Nature Of Goods
Alcoholic Liquor
Percentage/Rate Of Tax
2.5
2.5
Tender Leaves
TCS Confidential
14
2.5
1
Service Tax
Service Tax is a form of indirect tax imposed on specified services called "taxable services".
Service tax cannot be levied on any service which is not included in the list of taxable services. Over
the past few years, service tax been expanded to cover new services. The objective behind levying
service tax is to reduce the degree of intensity of taxation on manufacturing and trade without forcing
the government to compromise on the revenue needs. The intention of the government is to gradually
increase the list of taxable services until most services fall within the scope of service tax. For the
purpose of levying service tax, the value of any taxable service should be the gross amount charged
by
the
service
provider
for
the
service
rendered
by
him.
Service Tax was first brought into force with effect from 1 July 1994. All service providers in
India, except those in the state of Jammu and Kashmir, are required to pay a Service Tax in India.
Initially only three services were brought under the net of service tax and the tax rate was 5%.
Gradually more services came under the ambit of Service Tax. The rate of tax was increased from 5%
to 8% w.e.f 14 May 2003. From 10 September 2004 the rate of Service Tax was enhanced to 10%
from 8%. Besides this 2% education cess on the amount of Service Tax was also introduced. In the
Union Budget of India for the year 2006-2007, service tax was increased from 10% to 12%. On
February 24, 2009 in order to give relief to the industry reeling under the impact of economic
recession, The rate of Service Tax was reduced from 12 per cent to 10 per cent.
TCS Confidential
15
Currency
The currency in INR. Foreign exchange rates are maintained on a daily/ monthly basis. The rates are
published by Reserve Bank of India.
Fiscal year
The fiscal year is April to March for Financial reporting under statutory obligation and Taxation
purpose. Though in case of multination companies, the fiscal year may vary based on the parent
company regulations.
Define Country
Release Id
ECC 6.0
Menu path
Transaction Code
OY01
TCS Confidential
16
Required Fields
Configuration
Prerequisites
NA
Configuration Rationale
The country key contains information that the system uses to check entries
such as the length of the postal code or bank account number.
The international motor vehicle country code or a country-specific code is
generally used to identify the Country, since it has Global acceptability and
recognition.
Reference COEs
TCS Confidential
NA
17
TCS Confidential
18
3 Master Data
Customer Master
Menu path
Transaction Code
OMT3E
Figure : Assign Users to Material Master Screen Sequence for Excise Duty
By adding the User id here a CIN tab gets activated for that user in the Vendor and customer master
screens.
TCS Confidential
19
In customer master
will be maintained.
TCS Confidential
20
Here Customers Central Sales Tax Number (CST no.), Local Sales Tax Number (LST no.) and
Service Tax Registration number will be maintained.
iii. Withholding Tax
TCS Confidential
21
Transaction Code
J1ID
Related Tables:
TCS Confidential
22
Material Master
Menu path
Transaction Code
J1ID
i.
Chapter ID
Chapter ID is stored in the control code field. When you enter a material's
Chapter ID in the material master, the system copies the Chapter ID to the control
code field. When you create a condition record, the filed name is control code.
TCS Confidential
23
Related Tables:
TCS Confidential
24
RG1 register maintained at Manufacturing Plants for excisable finished goods. The register
shows goods movements from the factory to a store and stores to customer, specifically for
excisable finished goods. The R/3 System generates all the necessary entries in the register.
This report only creates register entries for goods movements that have not already been
entered. It does not create duplicate entries.
TCS Confidential
25
TCS Confidential
26
4 Business Process
Sales Order
VA01/VA02/VA03
Outbound Delivery
VL01N/ VL02N/ VL03N
Accounting
Document
RG1 Entry
Billing Document
VF01/ VF02/ VF03
Sales
Type
Export
Customer
Domestic
Customer
Deemed Export
Customer
Excise Invoice
J1IIN
Excise Invoice
J1IIN
Excise Invoice
J1IIN
Print Excise
Invoice (J1IP)
Print Excise
Invoice (J1IP)
Print Excise
Invoice (J1IP)
Create/Post/Print
/Update/Close ARE-1
J1IA101
TCS Confidential
Create/Post/Print
/Update/Close ARE -3
J1IA301
27
Domestic Sales
Sales Order :
Menu path
Transaction Code
VA01
Related Tables:
Outbound Delivery:
Menu path
Transaction Code
VL01N
Billing :
Menu path
Transaction Code
VF01
TCS Confidential
28
Transaction Code
J1IIN
Click On
TCS Confidential
29
TCS Confidential
2. Posting date
30
On the create excise invoice screen check the excise values and select the save
button.
Result :
A message will be displayed stating that the Excise invoice was saved, with the Excise invoice
number, please note the Excise invoice number.
To display Excise Invoice Go to J1IIN Transaction code select display excise invoice and select the
display icon button.
TCS Confidential
31
32
Enter the excise invoice number, Excise Year and Series group and click on OK
button.
On the display excise invoice screen click on the accounting tab button
excise values are posting to corresponding G/L accounts.
TCS Confidential
and check
33
Transaction Code
J1IP
TCS Confidential
34
Transaction Code
VA01
Outbound Delivery:
Menu path
Transaction Code
VL01N
Billing :
Menu path
Transaction Code
VF01
Transaction Code
J1IIN
TCS Confidential
35
Click on
Enter the Billing Document number, Posting Date and Subtransaction Type and click
TCS Confidential
36
icon.
Click on
TCS Confidential
37
.
and SAVE
Result :
A message will be displayed stating that the Excise invoice was saved, with the Excise invoice
number, please note the Excise invoice number.
To display Excise Invoice Go to J1IIN Transaction code select display excise invoice and select the
display icon button.
Transaction Code
J1IP
38
4.2.1
Original
White
Duplicate
Buff
Triplicate
Pink
Quadruplicate
Green
Quintuplicate
Blue
It will be sufficient if the copies of ARE.1 contain a colour band on the top or right hand corner
in accordance with above colour scheme.
TCS Confidential
39
Transaction Code
J1IA101
TCS Confidential
40
TCS Confidential
41
In Bond/ UT-1 Details tab, enter bond number & bond year, Hit ENTER.
Kindly check Duty rates (In Duty Rates tab), and Duty Values (In Duty Values Tab).
TCS Confidential
42
TCS Confidential
43
Clears the excise duty from the bond's reservation amount and debits it to the bond
You can no longer change the ARE-1. However, you can still reverse it, if need be. Otherwise,
the next step is to update it.
TCS Confidential
44
Transaction Code
J1IIN
TCS Confidential
45
TCS Confidential
46
icon.
Then Click on
TCS Confidential
47
Then Click on
and SAVE
Result :
A message will be displayed stating that the Excise invoice was saved, with the Excise invoice
number, please note the Excise invoice number.
To display Excise invoice, Go to J1IIN Transaction code select display excise invoice and select the
display icon button.
TCS Confidential
48
Transaction Code
J1IP
TCS Confidential
49
4.3.1
In the case of deemed exports where the customer is in india but is considered export on
account of regulation or since it indirectly leads to exports, ARE-3 is used. Scenarios include
exports to an exporter who uses it in his manufacture or trade, exports to a SEZ, 100% EOU
or to a project which is declared by Govt as deemed such as a Power project..
Customer will provide you a copy of its deemed export license and you have entered the
license in the system.
After recieving a sales order from the customer for goods covered by this license. In the R/3
System, you have already created the delivery and the outgoing excise invoice. In the excise
invoice, you have set the excise invoice type to Deemed Exports.
Process Flow :
The export clerk creates an ARE-3 and, when he is ready, posts it.
He also prints out the ARE-3 and encloses a copy with the delivery.
The shipping department sends the goods to the customer, together with the excise invoice
and the ARE-3.
When the customer's warehouseman receives the goods, he checks whether the excise
invoice and the ARE-3 match the goods.
If he finds that there are fewer goods than stated on the ARE-3, he enters the shortfall in the
ARE-3. He then fills out Part 2 of the ARE-3 (Certificate of Warehousing by the Consignee)
and sends it back to the excise clerk.
When the excise clerk receives the ARE-3, he updates the ARE-3 in the R/3 System.
He fills out the various certification dates in the ARE-3 (for example, the date when the ARE-3
arrived back at your company).
If the warehouseman noted a shortfall in the quantity of goods, the excise clerk enters the
shortfall as well. Since the whereabouts of the missing goods cannot be accounted for, they
no longer qualify for exemption from basic excise duty. You must therefore pay the excise
duty on the shortfall, plus interest, backdated to the date when you removed the goods from
your premises. The clerk specifies which excise registers to pay the excise duty from.
TCS Confidential
50
4.3.1.1Create ARE3
Menu path
Transaction Code
J1IA301
TCS Confidential
51
TCS Confidential
52
TCS Confidential
or hit Enter.
53
Result :
The system creates the ARE-3 and assigns it an internal ARE-3 number and also Increases the
bond's reservation amount .
Sets the document status to In Process
The next step you have to carry out in the system is to post the ARE-3.
TCS Confidential
54
4.3.1.2Change ARE-3 :
Once you have created an ARE-3, you can still change the following information until you post it:
4.3.1.3Post ARE-3 :
When you have created an ARE-3 and you are ready to ship the goods, you can post and print the
ARE-3.
You can still make any changes that you need to before you post it.
1.
Select Post.
b.
c.
3.
On the Certification Dates tab, enter the time that the date and time that the goods are being
dispatched.
4.
Result :
The system:
You can no longer change the ARE-3. However, you can still reverse it, if need be. Otherwise, the
next step is to update it.
TCS Confidential
55
4.3.1.4Update ARE-3 :
When the goods arrive at the customers premises, the customer checks them against the excise
invoice and the ARE-3. If there are any shortfalls in the quantity of the goods he records them on the
ARE-3. The customer also fills out Part 2 of the ARE-3 (Certification of Warehousing by the
Consignee) and sends you a copy.
When you receive the ARE-3, you update the ARE-3 in the system to match what the customer has
written on the ARE-3.
Procedure
1.
From the SAP Easy Access screen, choose Indirect Taxes Sales/Outbound Movements
Exports Under Excise Regulations Deemed Exports Central Processing Update ARE3.
2.
3.
a.
Select Update.
b.
c.
4.
Enter any shortfalls that the customer has noted on the ARE-3.
5.
Result
The ARE-3 is now complete.
TCS Confidential
56
Scrap Sales
Sales Order :
Menu path
Transaction Code
VA01
Outbound Delivery:
Menu path
Transaction Code
VL01N
Billing :
Menu path
Transaction Code
VF01
Excise Invoice :
Menu path
Transaction Code
J1IIN
Transaction Code
J1IP
TCS Confidential
57
TCS Confidential
58
4.4.2 Withholding tax types are maintained for TCS on base, surcharge, ECS
and SECess
TCS Confidential
59
Since this withholding tax is configured with Base amount as Modified net amount, the base for the
withholding tax will be the net amount (i.e., not inclusive of the tax condition values.) In case you wish
to add some tax condition values to the base for TCS calculation, you will need to maintain the
posting key assigned to the tax condition type in the pricing procedure along with the combination of
the withholding tax code assigned to the TCS related condition type at the following location:
Menu path
Financial
Accounting
(New)
Financial
Accounting
Global
Settings(New)Extended Withholding Tax Withholding Tax Base
AmountDefine processing key for Modified Net Amount
Transaction Code
SPRO
By doing so, the condition values of the tax condition types assigned for these processing keys will
also be included in the base for the withholding tax calculation.
4.4.3 Create the access sequence for withholding tax for TCS in SD Module
Copy the existing access sequence J1AW and create the new access sequence J1IW with the
following accesses:
TCS Confidential
60
TCS Confidential
61
TCS Confidential
62
TCS Confidential
63
64
Same G/L account should be maintained for transaction key WIT based tax line item and the SD-FI
condition based tax line item. A different G/L account has to be maintained for the transaction key
OFF based line item.
TCS Confidential
65
TCS Confidential
66
TCS Confidential
67
Figure : Assign Condition for FI posting to pricing procedure along with Acc. Key
Similar condition types will have to be created and added to the pricing procedure for ECS on TCS
and SECess on TCS.
TCS Confidential
68
Depot Sales
Excise
Invoice
(J1IIN)
Manufacturing Plant
Delivery (PGI)
VL10G
Depot
Goods
Receipt
(MIGO)
Capture
Excise
Invoice (J1IG)
TCS Confidential
69
DEPOT
Outbound Delivery
Excise Invoice
(J1IJ)
(VL01N)
Billing Document
(VF01)
Customer
RG23D register is used to update the excise entries in case of excisable depots.
The Excise duty is payable when the goods are sent from the factory. However, it Is not
leived again when the goods are sent from th DEPOT.
However, while taking sale from the DEPOT and if price escalations happen, then the
extra excise is paid using a A certificate. These details are entered in RG23 D register
and excise recovered from the customer.
To print RG23 D (Depot Register), Follow the process explained for RG1 register.( Refer
Chap.5 named EXCISE REGISTERS)
TCS Confidential
70
Transaction Code
VA01
Outbound Delivery:
Menu path
Transaction Code
VL01N
Transaction Code
VF01
Credit for Returns Billing Document is created to give Credit to the Customer for the goods
returned by him.
After Creating Billing Document go to VF02 ,enter billing document number then click on
Release to Accounting (Green Flag) Icon .
Capturing Excise Invoice :
The Excise duty for the returned Material needs to be reversed.
Menu path
Transaction Code
J1IEX
TCS Confidential
71
Result :
Document is posted. Internal excise Invoice XXXX generated .
TCS Confidential
72
5 Excise Registers
RG1 Register
RG1 register maintained at Manufacturing Plants for excisable finished goods. The register
shows goods movements from the factory to a store and stores to customer, specifically for
excisable finished goods. The R/3 System generates all the necessary entries in the register.
This report only creates register entries for goods movements that have not already been
entered. It does not create duplicate entries.
To extract the data to RG1 Register, Material numbers has to be maintained in the table J_2IRG1BAL
- Opening/Closing balance table for RG1.
Transaction Code
J1I5
73
Goods issues
RG1
Goods receipts
RMA- Receipt from
manufacture
ROP- Receipt from outside
under any other provision
You can update the RG1 Register by selecting material document header values or Material
document line item level details or both together.
Related Tables : J_2IRG1BAL- Opening/Closing balance table for RG1
System will display the Update of Registers RG1 and RG23 (Part1) screen:
Displays all the line items to meet the selection criteria to update the RG1 Register.
Select the line items which needs to be updated to RG1 Register by selecting the check box
at the beginning of the each line item
Simulate the selection by using the Simulate function or use Shift+F10 to simulate the
selection
System will display the selection Green or Red Traffic lights. The line items which can be
updated will be displayed with Green Traffic Lights and the line items which can not be
updated will be displayed with Red Traffic Lights.
After selecting the right documents select the line item and use the Create button to update
the RG1 Register or use CTRL+Shit+F11 to make register entry.
Result :
Processing over for <number of records selected> records
TCS Confidential
74
This step needs to be performed in order to create the RG1 details into the respective tables.
Prerequisites
You have to complete the update of RG1 Register before performing this step.
Procedure
Menu path
Transaction Code
J2I5
1.
2.
Result :
RG1 data has been extracted
TCS Confidential
75
Transaction Code
J2I6
Click On
System will display the Print parameters maintenance screen assign the out put device name as
Local Printer (LP01) and select the Print Preview option. System will display the output on the screen.
See the output on the screen and based on the requirement print the output using Ctrl + P option or
through menu Text Print.
Result :
RG1 Register ready to print or you can see on the screen.
TCS Confidential
76
Accounting Entries :
Billing Document
Description of Accounting Entry
Dr/Cr
Amount
Customer
Dr
121.77 INR
Sales (Domestic)
Cr
100
INR
Cr
8.24
INR
Cr
13.53 INR
Excise Invoice
Description of Accounting Entry
Dr/Cr
Amount
CENVAT Suspence
Dr
8.24
INR
CENVAT Payables
Cr
8.24
INR
Monthly Utilization
Description of Accounting Entry
Dr/Cr
Amount
CENVAT Payables
Dr
8.24
INR
CENVAT Clearing
Cr
8.24
INR
TCS Confidential
77
7 Reports
J1I7 List of Excise Invoices
J1I6 Cenvat Forecast
J1I2 Sales Register
J1IANX18 - Pro Forma of Running Bond Account
J1IANX19 - Statement Regarding Export of Excisable Goods
J1IARE_AGE - Ageing Analysis for ARE Documents
J1IBONSUM - Bond Summary Report
J1ILICSUM - Deemed Export License Summary
J1IUN - Forms tracking
J1IR Register Data Download
S_ALR_87012357 - VAT Report (Run report for taxcodes which includes VAT)
Other References :
1. www.service.sap.com
2. www.help.sap.com
3. www.cbec.gov.in
TCS Confidential
78