Country India Version (CIN) Overview

Presented By
K V Ramesh Babu

Contents

India Localization 1. India Legal Requirements Overview 2. Logistics Process Overview ( Procurement & Sales ) 3. Utilization

4. Extended Withholding Tax

India Localization Requirements Overview

CENVAT (Excise) VAT

/ LST / CST

Service Tax Cenvat Credit

India Localization Requirements Overview

Central Value Added Tax (Excise)

VAT

(LST) / Central Sales Tax

Service Tax

Cenvat Credit

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

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 excise.
6

for repairs of machinery installed within the factory are exempt from

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

Central Value Added Tax (Excise)

Duty Calculation

Specific duty It is calculated on the basis of

length, weight etc. Eg. cigarette

certain unit,

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

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.
9

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

10

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

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
14

VAT / Central Sales Tax

Tax Impact under VAT System Rs. STAGES I Manufacturer Selling price (excl. tax) 100.00 II Wholesaler Cost price 100.00 III Retailer Cost price 120.00

VAT @ 12.5%
Sale price Tax paid

12.50
112.50 12.50

Overheads & profit @ 20%

Sale price (excl. tax) VAT @ 12.5%

20.00
120.00 15.00

Overheads & profit @ 20%

Sale price (excl. tax) VAT @ 12.5%

24.00
144.00 18.00

Sale price (incl. Tax)

Tax paid (15-12.50)

135.00
2.50

Sale price (incl. Tax)

Tax paid (18-15)

162.00
3.00

15

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 Centrally administered Cenvat Chain cannot be broken on interstate boundaries

General VAT rate @ 4% or 12.5% with exceptions

State administered Chain broken on interstate transactions

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 5th of the next month Service tax is payable on advances

18

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

services which are being exported

used for providing

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

20

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
21

Service Tax
CENVAT Credit on Input Services

Service provider is entitled to take credit of service tax paid on input

services

Credit can be
service

taken only when full payment has been made for the

Credit

may be taken for service tax and also for education Cess , Secondary and Higher Education Cess paid

In case the service provider is engaged in exporting services, he shall

be granted refund of CENVAT on input services

In many cases, various input services will be consumed in the

headquarters/administrative offices of manufacturers and OSPs. In such cases, the invoices indicating the payment of service tax will be in the name of such headquarters/ administrative offices. Provision can be

made for availing credit of such service tax, in the premises where
manufacturing activity is undertaken or the premises where the output services are rendered.
22

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
25

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

26

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
27

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

or loan agreement

goods shall be allowed

even if such goods have been acquired on lease, hire purchase

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

29

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 cost purchase

SSI

units ( turnover below 10 million INR) cannot avail unit

Cenvat credit on inputs but can avail Cenvat credit on Capital goods. But this credit can be utilized only when SSI becomes liable to pay excise.
30

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 Service tax on any output service

taken on capital goods if

such capital goods are removed as such

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

32

CENVAT Availment & Utilization Overview

GOODS RECEIPT

ON-LINE TRANSACTIONS
CENVAT on hold for Cap Goods

SALES EXCISE INVOICE PROCESS

Debit CENVAT on-hold A/c

DESPATCH Credit ED Payable A/c

VENDOR EXCISE INVOICE PROCESS Debit CENVAT A/c

CENVAT Account
Credit CENVAT A/c

Excise Duty Payable A/C

Debit ED Payable A/c (Consolidated Entry)

MONTHLY TRANSACTIONS
DEPOSIT FUNDS IN PLA ACCOUNT Debit PLA Account SELECT REGISTER

PLA A/C
Credit PLA A/c

Excise duty Utilization Transaction

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 Customer

Depot A

Depot B

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
Vendor liable to pay excise to Govt. Vendor Excise Invoice accompanies Goods

Goods Receipt
GR at Factory Gate Excise Invoice Capture Excise Invoice Post (Optional) Excise Stock Part I Register entry

Excise Invoice
Excise Invoice Post CENVAT Part II Register entry

Vendor Invoice
Liability to Vendor - Price - Excise - Other Taxes - Other Costs

39

Domestic Procurement of Raw Materials

Accounting Entries

GR Posting
Inventory Account GR/IR Clearing Account Dr. Cr.

Excise Invoice Posting Excise Duty A/C Dr. Cr. Dr.

CENVAT Clearing Account CENVAT Onhold A/C ( For Capital Goods)

Vendor Invoice Posting CENVAT Clearing A/C GR/IR Clearing A/C Accounts Payable Dr. Dr. 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

CENVAT Adjustment

Scrap

Non-production use
Additional Excise Paid by Vendor

Deposit into PLA through TR6

Flexibility for 100% Compliance

Cancel Excise Invoice

With Reference to External Document

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 FACTORY Sub contractor

Output

46

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

Subcon Order

Transfer Posting

Subcon Challan

Challan Printing

Note: Print Immediate Option to be used

47

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

Goods Receipt

Subcon challan Reconciliation

Complete Challan

Note: Challans on which quantities are not completely returned have the status assigned

48

Subcontracting Process
A. With out Payment of Duty : Reversals

Run Listing Transaction

Get Material Qty not returned on Challan

Reverse Credit availed on Input Material

Note: Listing Transaction gives list of Challans due for Reversal

49

Subcontracting Process
A. With out Payment of Duty : Recredit

Run Listing Transaction

Get Material Qty subsequently returned on Challan

Recredit Reversed Credit

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 Order

Transfer Posting

Excise Invoice Creation

Excise Invoice Posting

Note: Excise Invoice created and Posted under other Movements

51

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

Goods Receipt

Excise Invoice Capture

Excise Invoice Post

Invoice Verification

52

Excise Procurement Scenarios

Domestic Procurement Process Subcontracting Process Stock Transport Process Imports Purchase Service Procurement Process

53

Stock Transport Process

Supplying Plant Delivery

Plant liable to pay excise to Govt. Excise Invoice accompanies Goods

Goods Receipt Receiving Plant

GR at Plant Gate Excise Invoice Capture Excise Invoice Post (Optional) Excise Stock Part I Register entry

Excise Invoice
Excise Invoice Post CENVAT Part II 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 Stock Transfer

No Inter Plant Billing

Excise Invoice Other Movements

55

Excise Procurement Scenarios

Domestic Procurement Process Subcontracting Process Stock Transport Process Imports Purchase Service Procurement Process

56

Imports Purchase

Imports PO
Vendor Outside India Duties to be paid to Customs Credit can be claimed on CVD

Commercial Invoice
Liability to Customs in India CD & CVD

Goods Receipt & Excise Invoicing

GR at Factory Gate Excise Invoice Capture Excise Invoice Post

Invoice Verification
Vendor Invoicing - Price - Other Costs

Excise Stock Part I Register entry CENVAT Part 2 Register

57

Imports Purchase
Accounting Entries

Commercial Invoice Posting

Customs Clearing Customs Payable (Commissioner) Dr. Cr.

GR Posting
Inventory Account GR/IR Clearing Account Dr. Cr.

Excise Invoice Posting

Excise Duty A/C Dr. Cr. Customs Clearing Account

Vendor Invoice Posting

GR/IR Clearing A/C Accounts Payable (Vendor) Dr. Cr.
58

Excise Procurement Scenarios

Domestic Procurement Process Subcontracting Process Stock Transport Process Imports Purchase Service Procurement Process

59

Service Procurement

Service PO
PO for Services Service Tax, Ecess and SECESS Service Provider liable to Pay ST to Govt.

Service Entry & Acceptance

Additional Detailing of Individual Services Performed Additional Control of acceptance

Invoice Verification
Vendor Invoicing Inclusive of Service Tax

60

Service Procurement

Vendor Payment
Payment Inclusive of Service Tax

FI - JV
Transfer to Service Tax availed accounts Credit Taken on availed accounts

Utilization
Utilization Service Tax availed against Service Tax Payable

61

Service Procurement
Accounting Entries

Accounting Entry after Vendor Invoice Verification

Accounts Payable (Vendor) GR/IR Clearing Account Service Tax Receivable Account Cr. Dr. 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 Education Cess on Service Tax Availed Account Sec.Education Cess on Service Tax Availed Account Service Tax Receivable Account Education Cess on Service Tax Receivable Account Dr. Dr. Dr. Cr. 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 Duty 16% + 160 Dispatch

Debit: Rs. 160

Excise Duty Payable A/C

Fortnightly utilization CENVAT/Part II Register PLA Register

66

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

Sales Order

Delivery

Proforma Invoice

Excise Invoice

Printing Excise Invoice

Commercia l Invoice

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

68

Sale from Factory

Single Commercial and Excise Invoice

Sales Order

Delivery

Commercia l Invoice

Excise Invoice

Printing Excise Invoice

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

69

Sale from Factory

Excise Document Flow

Excise Invoice Sold to : 2300 Material: 400 Quantity: 5

Sales Order Sold to : 2300 Material: 400 Quantity: 5

Delivery Ship to: 2300 Material: 400 Quantity: 5

Billing Bill to: 2300 Material: 400 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 Transfer Order

Replishme nt Delivery

Proforma Invoice

Excise Invoice

Printing Excise 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

Sales Order

Delivery & PGI

Excise Invoice Capture

Commercia l 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

Material Receipt in Depot Movement / sale from depot

Text Receipt update the quantity and the value in RG23D The / mother invoice details in terms of batches etc captured reference Text

Text

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

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

Supplying Plant Excise Invoice

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

Update Registers

If Exported under bond

If not exported under bond

Debit ED payable a/c 160 Update Cenvat Part II register and PLA register Fortnightly utilization

86

Export Sale

Excise Bonding Document Flow

Excise Invoice Sold to : 2300 Material: 400 Quantity: 5 Bond Register Sold to : 2300 Material: 400 Quantity: 5 Capture Licence Sold to : 2300 Material: 400 Quantity: 5

Sales Order Sold to : 2300 Material: 400 Quantity: 5

Delivery Ship to: 2300 Material: 400 Quantity: 5

Billing Bill to: 2300 Material: 400 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 TR 6 Chllan

Create Excise JV - PLA updation 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
Debit Balance
Perform the Excise Utilization

Output
Credit Balance
Excise duty payable on Customer Invoice

Input Credit from Vendor Material Purchase

Input Credit from Vendor Capital Purchase (50%) RG23C

Total Available Balances RG23A

Total Excise duty payable

PLA Balance

Is the Balance Sufficient

TR6 Challan Payment

NO Yes

Apportion the payable amount between the Registers RG23A, RG23C & PLA

RG23A & C Part II PLA Register

Post the Utilization Accounting document generated & Registers updated based on Amount apportionment

93

CENVAT Availment & Utilization Overview

GOODS RECEIPT

ON-LINE TRANSACTIONS
CENVAT on hold for Cap Goods

SALES EXCISE INVOICE PROCESS

Debit CENVAT on-hold A/c

DESPATCH Credit ED Payable A/c

VENDOR EXCISE INVOICE PROCESS Debit CENVAT A/c

CENVAT Account
Credit CENVAT A/c

Excise Duty Payable A/C

Debit ED Payable A/c (Consolidated Entry)

MONTHLY TRANSACTIONS
DEPOSIT FUNDS IN PLA ACCOUNT Debit PLA Account SELECT REGISTER

PLA A/C
Credit PLA A/c

Excise duty Utilization Transaction

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
Income tax office

Vendor

Deduct Tax from Vendor

Issue 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 Vendor Payment Advance Certificate

ABC Ltd

Payment/Challan

Quarterly Returns

BANK

Income Tax Office

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EWT: Vendor Transactions

Down Payment Reverse Invoice Credit Memo

Invoice

Clear DP Cash Journal Postings Challan Update Logistics Invoice Bank Challan Print Certificate Quarterly Returns Cancel Certificate TDS JV

Reprint Certificate

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EWT: Customer Interest TDS

Mumbai plant

Advance Customer Certificate

Interest Payment

ABC Ltd
Payment/Challan

Quarterly Returns

BANK

Income Tax Office

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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
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EWT Activities

Daily Activities TDS on Provisions Posting

Where required

Periodic Activities Challan Update

On payment due date

TDS Certificate Posting

Invoice, Credit Memo, Down Payment, etc Printing, Reprinting and Cancellation on appropriate due dates

Tax Adjustment JV
Where required

Quarterly Return
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Questions??
Thank you!

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