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Sales tax
In Indian Taxing procedure, Excise Duty plays a vital role in manufacturing scenario's. Excise related configuration is
known as CIN configuration. CIN Configuration is a topic in itself.
Here is some information on CIN Configuration. While it may not appear understandable as given below, it will be
understood better when you check on screen.
Country Version India comes with four pricing procedures as follows:
Which taxes the registration covers (additional excise duty, special excise duty, and cess)Fields for any taxes
that are not covered will be hidden in transactions involving excise duty.
transaction. It provides the flexibility to the user to enter the debit account of his choice depending on the nature of
transaction.
Automatic balance Indicator
Excise year start month
The calendar month marking the beginning of the excise year
Use
This start month represents the month for the start of the excise invoice number range. The month 04 is entered here
indicating April of the calendar year as the start month for excise invoices. Any change by the Excise authorities
regarding start month should be taken care of by an entry in this field and initialization.
Excise invoice selection procedure
Excise invoice selection type. To indicate the method opted by the company for selecting the excise invoice. It can be
either earliest or latest invoices that were received.
Number of excise invoices to be selected
Indicates the number of excise invoices that needs to be selected in the excise invoice selection.
Days to be considered for excise invoice selection
Number of days from document date for excise invoice selection.
Example
If the value of this field is 20 and today is 28-03-97. The excise
invoice selection will show the related invoices only for the
period 08-03-97 to 28-03-97.
Document type for TDS FI posting
Financial accounting document type for TDS posting.
Document type for FI posting on Utilisation
Financial accounting document type for TDS posting.
Indicator for item level excise duty round off
This indicator is to be used for deciding whether Item level excise duty amount rounding off is required during
procurement cycle. If marked 'X' then the excise duty amount will be rounded off to the nearest rupee at the Purchase
order level. This will not round off the CENVAT credit to be taken. If the duty amount is less than one rupee then no
rounding is done
Rounding off of Excise duty for outgoing excise invoice
You can round off the Excise amount to be paid during an outgoing Excise invoice by marking this indicator as 'X'. The
rounding is done at the item level for each item where the amount is greater than 1 Rupee.
Immediate Credit on Capital Goods
Instructs the system, when you verify a goods receipt for capital goods, to immediately post half of the input excise duty
to the appropriate CENVAT accounts.
The rest is posted the CENVAT on hold account, for use in the following year.
CVD Clearing Account
Specifies which G/L account the system credits when you take a CENVAT credit on countervailing duty in the Incoming
Excise Invoices transaction.
Exchange rate type
Key representing a type of exchange rate in the system.
Use
You enter the exchange rate type to store different exchange rates.
Example
You can use the exchange rate type to define a buying rate, selling rate, or average rate for translating foreign currency
amounts. You can use the average rate for the currency translation, and the bank buying and selling rates for valuation
of foreign currency amounts.
9. 'Create Part1 for Block Stock' when marked will create a Part1 during the receipt of material into Blocked stock .
10. 'Create Part1 for STO' when marked will create a Part1 during the receipt of material through inter plant transfers.
11. 'Create Part1 for consumption stock' when marked will create a Part1 during the receipt of material into consumption
stock.
Excise Group
Governs which set of excise registers a business transaction will be included in.
Following is the relation between excise group, plant and registration.
Dependencies
In define excise groups in Customizing.
Then, in transactions involving excise duty, for example, when you post a vendor's excise invoice, you specify which
excise group you are using. This information tells the system which G/L accounts to post the excise to.
At the end of the period, when you come to prepare your excise registers, you create different sets for each excise
group.
Indicates that the plant in question is a depot.
Dependencies
Depots are required to prepare register RG 23D, and follow different procedures for goods receipt and invoice
generation.
GR Per Excise Invoice
Multiple GR for one excise invoice , Multiple credit
Multiple GR for one excise invoice , Single Credit
Create Excise Invoice Automatically
Instructs the system to automatically create a Sales and Distribution (SD) excise invoice immediately you create a
commercial invoice or a pro forma invoice.
The excise invoice is created in the background.
Dependencies
If you want to make use of this function, you must also define the default plant, excise group, and series groups in
Customizing for Sales and Distribution (SD), by choosing Excise Group - Series Group Determination.
Use
In this IMG activity, you define the different excise series groups within your company. Series groups allow you to
maintain multiple number ranges for the outgoing excise documents.
Based on excise regulations and exemptions from the authorities you can maintain multiple number series for outgoing
documents. But each of these series has to be declared to the excise authorities.
Activities
? Define excise series groups based on type of outgoing document
? Assign series group to excise registration ID
? If no financial postings are required for an Excise invoice in this seris group then you tick the 'No utilization' indicator.
? If the CENVAT has to be paid immediately and you need not wait for the Fort nightly payment then mark the
'Immediate Utilization' indicator.
Example
You could define two series groups, group 001 for excise invoices, and group 002 for 57 F4 documents.
No account postings for CENVAT in sales cycle
No utilization Flag
If you do not need any CENVAT utilization for an excise invoice but would like to just generate an excise invoice then
you need to mark this indicator.
IF the flag is checked then system will create an Excise invoice in the given Series group but there will not be any
account postings or Part2 postings.
Immediate Utilization of CENVAT
Specifies that when you create an excise invoice, the system immediately pays the amount from CENVAT and creates
the Part II entry. Such invoices will not be listed for fortnightly utilization.
If you have both fortnightly and immediate utilization for the same excise group, the account determination within CIN
IMG should point to the ED interim account.
Account determination for immediate payment will be done exactly the same as being done for fortnightly utilization
program.
Maintain Excise Duty Indicators
Use
In this IMG activity, you maintain the excise duty indicators.
IMG > Logistics - General > Tax On Goods Movement > India > Basic Settings > Determination of Excise Duty >
Select Tax Calculation Procedure
Use
In this IMG activity, you specify which tax procedure you want to use for determining excise duties and sales taxes on
input materials in India.
? If you use condition-based excise determination, use a copy of the tax procedure TAXINN.
? If you use formula-based excise determination, use a copy of the tax procedure TAXINJ.
This tax procedure also supports condition-based excise determination, so that you can work with both concurrently.
We strongly recommend that new customers use condition-based excise determination. Note that once you have
started using a tax procedure, you cannot switch to another one, otherwise you will not be able to display old
documents.
Maintain Excise Defaults
Use
In this IMG activity, you define which tax procedure and pricing condition types are used in calculating excise taxes
using formula-based excise determination.
Activities
If you use condition-based excise determination, fill out the CVD cond. field and leave all the others blank.
If you use formula-based excise determination, fill out all of the fields as follows:
? Enter the tax procedure and the pricing conditions that are relevant for excise tax processing.
? Specify the purchasing and sales conditions types used for basic excise duty, additional excise duty, special excise
duty, and cess.
? Specify the conditions in the sales order that are used for excise rates.
? Specify the countervailing duty condition type used for import purchase orders.
See also
SAP Library -> Logistics -> Country Versions -> Asia-Pacific -> India -> Materials Management (MM) -> ConditionBased Excise Determination and -> Formula-Based Excise Determination.
IMG > Logistics - General > Tax On Goods Movement > India > Basic Settings > Determination of Excise Duty >
Condition-Based Excise Determination
Use
When you enter a purchasing document, for example, a purchase order, the R/3 System automatically calculates the
applicable excise duties using the condition technique.
Features
The standard system comes with two tax calculation procedures. TAXINN is only supports condition-based excise
determination, whereas TAXINJ supports condition-based excise determination and formula-based excise
determination. Both tax procedures contain condition types that cover all of the excise duties and sales taxes
applicable.
Since the exact rates of excise duty can vary on a large number of factors, such as which vendor you purchase a
material from, or which chapter ID the vendor stocks the material under, you create condition records for every sort of
excise duty.
When you come to enter a purchasing document, the system applies the excise duty at the rates you have entered in
the condition records.
Activities
Customizing
Make the settings in Customizing Basic? India?for Logistics - General, by choosing Taxes on Goods Movements
Account? Excise Duties Using Condition Technique and ...?Settings Determination.
These activities include one activity where you define a tax code for condition-based excise determination.
Master Data
Create condition records for all excise duties that apply, and enter the tax code for condition-based excise determination
in each.
Day-to-Day Activities
When you enter a purchase order or other purchasing document, enter the tax code for condition-based excise
determination in each line item. The system then calculates the excise duties using the condition records you have
created.
When the ordered materials arrive, you post the goods receipt and the excise invoice. The system posts the excise duty
to the appropriate accounts for deductible input taxes when you enter the excise invoice.
Creating Condition Records for Excise Duty
1. In the command field, enter FV11 and choose .
2. Enter the condition type that you want to create a condition record for and choose .
The Key Combination dialog box appears.
3. Select the combination of objects that you want to create the condition record for.
On the dialog box, Control Code means "chapter ID."
So, for example, to create a condition record for a tax that applies to a combination of country, plant, and chapter ID,
select Country/Plant/Control Code.
4. Choose .
5. Enter data as required.
In the Tax Code field, enter the dummy tax code that you have defined.
6. Save the condition record.
Formula-Based Excise Determination
Use
When you execute a business transaction involving materials that are subject to excise duty, the system automatically
calculates the duty for you.
Prerequisites
In order for the system to be able to determine which rate of excise duty to apply, you must have maintained all the data
on the Excise Rate Maintenance screen, which you can Master Data?access from the SAP Easy Access screen by
choosing Indirect Taxes Excise Rate Maintenance.?
You maintain the following types of data:
? Plant master data
You assign each of your plants an excise duty indicator. You can use the same indicator for all the plants with the same
excise status from a legal point of view, such as all those that are in an exempt zone.
See also the information about manufacturers that are only entitled to deduct a certain portion of the duty (see Partial
CENVAT Credit).
? Vendor master data
For each of your vendors with the same excise status from a legal perspective, you define an excise duty indicator. You
must also specify the vendor type - for example, whether the vendor is a manufacturer, a depot, or a first-stage dealer.
You must also stipulate if the vendor qualifies as a small-scale industry.
For each permutation of plant indicator and vendor indicator, you then create a final excise duty indicator.
? Customer master data
Similarly, you assign the same excise duty indicator to each of your customers that share the same legal excise status.
Again, for each permutation of plant indicator and customer indicator, you then create a final excise duty indicator.
? Material master data
Each material is assigned a chapter ID.
? Excise tax rate
For every chapter ID and final excise duty indicator, you maintain the rate of excise duty.
If your business only qualifies for partial CENVAT credit, you must customize your system accordingly.
Activities
Let us consider an example to illustrate how the system determines which rate of excise duty to apply to a material.
Assume you are posting a sale of ball bearings to a customer. The system automatically determines the rate of excise
duty as follows:
1. Looks up the customer master data to see what status you have assigned the customer.
Let's assume you've assigned the customer status 3.
2. Looks up the plant master data to see what status you have assigned the plant.
Similarly, your plant has status 2.
3. The system looks up the table under Excise Indicator for Plant and Customer to see what the final excise duty indictor
is for customer status 3 and plant status 2: It is 7.
4. The system determines the chapter ID of the ball bearing for the plant.
Let's assume the chapter ID at plant for the ball bearings is 1000.01.
5. Finally, the system looks up the table under Excise Tax Rate to see what rate of duty applies to chapter ID 1000.01
under status 7.
Define Tax Code for Purchasing Documents
Use : In this IMG activity, you define a tax code for the purposes of calculating excise duty when you enter purchasing
documents.
Only carry out this activity if you use condition-based excise determination.
Activities: Create a new tax code, and set the tax code type to V (input tax). Do not make any other settings for it.
Assign Tax Code to Company Codes
Use
In this IMG activity, assign the tax code for purchasing documents to the company codes where it will be used.
Only carry out this activity if you use condition-based excise determination.
Classify Condition Types
Use
In this IMG activity, you specify which condition types you use for which sort of tax. Note that this only applies to
condition types that you use with the new excise determination method.
The system uses this information when you create a document from another one. For example, when you enter an
incoming excise invoice from a purchase order, or when you create an outgoing excise invoice from a sales order, the
system determines the various excise duties in the excise invoice using the information that you have entered here.
In addition, when you create a purchasing document, the system only uses the condition types that you enter here.
? For taxes on purchases, use the condition types contained in the tax procedure.
? For taxes on sales, use the condition types contained in the pricing procedures.
Standard settings
The standard system comes with sample settings for the tax calculation procedures and pricing procedures.
Use these settings as a basis for your own.
IMG > Logistics - General > Tax On Goods Movement > India > Account Determination
Define G/L Accounts for Taxes
Use
In this IMG activity, you specify which G/L accounts you will use to record which taxes.
Requirements
You have set up G/L accounts for each of the processing keys listed below.
Activities
Assign an account to each of the following posting keys. The accounts for VS1, VS2, and VS3 are used as clearing
accounts during excise invoice verification.
? VS1 (basic excise duty)
? VS2 (additional excise duty)
? VS3 (special excise duty)
J1IU
Process exemption forms
J1IW
Verify and post an incoming excise invoice
J1IX
Create an incoming excise invoice (without reference to purchase order)
J2I8
Transfer excise duty to CENVAT account
J2IU
Remit excise duty fortnightly
J2I9
Monthly CENVAT return
J1IG
Excise invoice entry at depot
J1IGA
Create additional excise entry at depot
J2I5
Extract data for excise registers
J2I6
Print excise registers