sap cin docs
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SAP
Country India Version
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Back ground of Country India Version (CIN)
First version developed in 1996 in response to need of India customers standards product supplied by the SAP
as add-on from 4.70 it is added in the standard pack confirmation to SAP development standard supported by
the SAP development LAB
Country-Specific Functions:
Most of the country-specific functions for India relate to Financials and Logistics. The main areas are as
follows:
Excise duty and the central value-added tax system (CENVAT)
Withholding tax (also known as tax deducted at source)
Sales tax
Maintenance and printing of statutory excise registers
FI covers following areas
1. Taxes (FI-AP/AR)
2. General Ledger Accounting (FI-GL) 3. Accounts Payable (FI-AP)
4. Accounts Receivable (FI-AR)
5. Asset Accounting (FI-AA)
Note: The official help documentation for Country Version India
is here(http://help.sap.com/saphelp_erp2005/helpdata/en/09/ebf138cdd78a4be10000000a114084/frameset.
htm)
Agenda:
Objective Glossary
Interface between SAP and CIN
Indian localization coverage
Configuration – FI-CIN, MM-CIN, SD-CIN
Process in SAP with CIN with
Procurement
Sales
Finance
Report
Objective:
To enlighten the participants on country version India (cin) and the various requirements which are to be
completed under the Indian statute. How CIN interfaces with sap sd, mm and f i pr ocesses and meets the
report requirements .At the end of the presentation, each participant will have a fair knowledge of the
requirements and inter faces of CIN with sap.
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This country version is designed for use by businesses with operations in India. As well as the generic SAP
System functions, it comprises functions designed for laws and business practices particular to India, and a
country template to help you customize the system according to local requirements.
Most of the country-specific functions for India relate to Financials and Logistics. The main areas are as
follows:
Excise duty and the central value-added tax system (CENVAT)
Withholding tax (also known as tax deducted at source) Sales tax Maintenance and printing of statutory excise registers
All of the menu paths given in this document are based on the India Localization role, with the exception of
functions in withholding tax, whose menu paths are given from the SAP Easy Access menu.
Glossary:
INPUT TAX -Tax that is charged by the vendor. A claim for refund of the deductible portion of input tax can be submitted to the tax authorities
OUTPUT TAX -Tax levied on customers at all Levels of production and trade. Output tax represents a tax liability.
SERVICE TAX :
Tax levied on the customer on Services specified by the gover nment.
DEPOT:
Depot is a plant where the material is stored and sold. There is no manufacturing activity at the de pot. Thedepots when registered with the excise authorities can pass on the Modvat / cenvat benefits to the customer .
EXCISE DUTY (BED):
A quantity-based tax which must be paid when a dutiable material is moved from a duty-free (bonded)location to a duty-paid (un-bonded) location or the customer. Also known as excise tax. The excise duty is
based on the quantity / Value of material moved.
AED
Additional Excise duty is a duty which is calculated over and above the Excise Duty payable on the
material.
SED:
Special Excise Duty is an additional duty levied on certain materials depending on the characteristics of the
material. The statute specifies these materials.
CVD:
Countervailing duty is a levy charged on the imports of materials in lieu of excise duty.
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CENVAT
Central Value Added Tax. The tax is levied on the difference between the output and the input value. This is
also referred as MODVAT.
CESS
Cess is a tax imposed for a specific pur pose under different acts with reference to certain goods. Cess is levied
at the time of removal of goods from the factor y.
OCTROI:
Levy payable on the material to the local authorities.
NCCD:
National calamity Contingent Duty. This tax is a special purpose tax levied for prescribed / scheduled
product announced by the Finance ministry of India. This tax is cenvatable.
Purchase TaxThis is a tax levied by some states when the manufacturer received a material from the out side state has to
pay the purchase tax.
Service Tax:
The service provider who has the registration with the Central Excise can collect the tax for the service provided. This is also cenvatable and it can be utilized for payment excise duty or payment of service tax.
VAT:
Government of India introduce the Value Added Tax from April 2005. As the first stage, it is removingvarious sales tax slabs. It is the modif ied version of Local sales tax and it is cenvatable. Education Cess:
Additional tax for the improvement of the regional Education introduced in India union budget in2005.
Higher Secondary Education Cess:
Additional tax for the improvement of the regional Higher Education introduced in India union budget in2007.
ASSESSABLE VALUE:
Denotes the value of goods that you have manufactured in-house at the price as assessed by an authorizedauditor .
SETOFF
A certain percentage of input tax which is refunded by the government to the manufacturer. This refund
does not form part of material cost
CHAPTER ID
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TDS :
Tax deducted at source (Withholding tax) is a form of indirect taxation deducted at the b eginning of the payment flow. Generally, an amount is withheld and paid over or reported to the tax authorities on behalf of(as opposed to by) the person subject to tax, the exception being self- withholding tax. If a withholding taxexemption is available, withholding tax is not withheld.
REGISTERS
The registers are the books prescribed having specific format under the statute e.g. RG23A, RG23C, RG23D,
RG1and PLA
RETURNS
The prescribed forms having a specif ied format under the statute e.g.ER-1, 57AE, ANNUAL RETURN FOR
TDS, Quar terly E-FILE.
CIN interference with SAP:
Country version india installation
Copies the following (upto 4.6c) (tcode o035)
Standard india templatesx
Tax procedure (taxinj / taxinn)
Conditions – excise, taxes on sales & purchase, service tax, cvd e tc Tables , function modules , no.range objects, customer exits
Indian localization coverage
Covers the following;
Central/Local Sales tax/ VAT Sales Tax Set off
Sales Tax Set off
Concessional Tax form
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Service Tax Input/output Tax
Octroi
Basic/Additional/Special Excise duty/Additional duty of Customs/Cess /Education NCCD/Higher
Education Cess
Maintain the of rate on Vendor Class
Maintain the of rate percentage and Utilization of MOVATMonthly payment
CVD(Imports)
Sub-Contracting
Sub-Contracting Challan
Reconciliation of quantities
Maintaince of 57F4 Register
MoDVAT
Updating of part 1 Register for quantities
Updating of part 11 Register for Values
Updating ofRG23D for depot Printing of Excise Registers
Part1 and part 2 Registers
RG 1 Registers
RT12/ER1 return
PLA Register
Facility for down load
Extended With-holding Tax
Withholding Tax on down payment/Invoice/Provision/Accumulation
Multiple Tax line items in one Invoice
Calculation of alternative (Gross, Net, Offset)
Rounding options
Payment due dates by Business Place
Challan update and Accounting Clearing
Surcharges on withholding Tax
Certificate numbering for different section and Business places
Certificate printing with customizable layout
Annual return for various section of income Tax Act
INDIAN LOCALISATION – IMG
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In these steps the Basis team
performs the installation &
activation of Country Version
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IMG- ACTIVATE PROCESSES
ACTIVE INDICATOR
FISCAL YEAR UPTO AND INCLUDING WHICH TRANSACTION APPLIES
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IMG- ACTIVATE PRODUCTS
Activate Component
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IMG- GLOBAL SETTING – COMPANY CODE
ACTIVATE PRODUCT EXTENDED WITHHOLDING TAX
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IMG- GLOBAL SETTING – REGISTARTION ID
1. Company code
2. CENVAT Document Type
3. DR / CR Overwrite Indicator
4. Automatic Balance Adjustment Indicator
5. Beginning of Government Fiscal Year
6. Invoice Selection Procedure – LIFO , FIFO
7. Number of Excise Invoice to be selected
8. Days to be considered for Invoice Selection
9. TDS Document Type
10. Excise Utilization Document Type
11. Excise Duty Rounding in Procurement Cycle 12. Excise duty rounding in sales and Distribution
13. Immediate credit for Capital Goods
14. GL Account for CVD
15. Exchange Rate Type
16. Exchange Rate type for Export
17. Changed By
18. Changed On
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IMG- GLOBAL SETTING – PLANT
Registration ID
ECC NO
Excise Registration No.
Excise Range
Excise Division
Excise Collectorate
Additional Excise Duty
Indicator
Special Duty Indicator
Indicator CESS Indicator
Number Items In Excise
Invoice
Register Set Description
Partial CENVAT credit
Indicator
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IMG- GLOBAL SETTING – EXCISE GROUP
Registration ID
Indicator for Factory /
Depot
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IMG- GLOBAL SETTING – SERIES GROUP
Series Group For
creating Number
Range No Utilization Indicator
Immediate
Utilization of
MODVAT
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IMG- GLOBAL SETTING – EXCISE DEFAULTS
IMG- GLOBAL SETTING – EXCISE DEFAULTS
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IMG- ACCOUNTING – TRANSACTION ACCOUNT
EXCISE TAX INDICATORS
This Identifies the Class
1. Normal
2. SSI
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IMG- ACCOUNTING – ASSIGN GL ACCOUNT
Account Names. This account
names are used by the program
To determine the GL account.
The sub-transaction type used for
determining different account
Transaction Account. These are pre defined in the system
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What will transaction type do?
CIN uses transaction type as a way of differentiating between the various excise related processes. They are:
GRPO – Goods receipt for purchase order in Plant. Also used in Depot for a PO and material document
EWPO – Excise invoice without purchase order
57FC - Subcontracting Challan
57NR – Reversal and Re-credit for Subcontracting Challan
CAPE- Capital Goods credit accounts
OTHR- Excise Invoice for Other Movements
DLFC- Factory Sale and Stock Transfer via SD
CEIV- Cancellation of Generated Excise Invoice
DIEX- Differential Excise Invoice Credit
MRDY- Excise Duty reversal without reference
MRRD- Excise Duty reversal if material used for non-production
MRWO- Excise Duty Reversal for Write off CasesTR6C - PLA account adjustment through TR6 Challan
UTLZ- is used for determining the accounts when a JV is posted with an option of fortnightly payment
57FC - Challan capture/change 1
57NR non receipt 1
CAPE - Capital goods ip
CEIV - Cancellation of excise invoice 22
DIEX - Differential excise through jv ip
Assign GL accoun
to transaction
type, sub-
transaction type
and account
Name defined in
the earlier step.
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DLFC - Goods removal through sales 22
EWPO - Excise invoice without po
GRPO - Excise invoice for goods receipt/po
OTHR - Excise invoice for other movements 10
The Transaction type that are not used : 57CM, 57GR, CAGI, CAGR, GRTR.
IMG- ACCOUNTING – MININIMUM BALANCE
IMG- LOGISTICS – INCOMING EXCISE INVOICE
Maintain Minimum balance for each excise group and account
name. The system will check the balance before utilization.
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IMG- LOGISTICS – FIELD SELECTION
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IMG- LOGISTICS – PROCESSING MODE
In this transaction
the field
characteristics can
be set. (Input /
Required / Display /
Hide) Also the field
can be Highlighted.
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IMG- LOGISTICS – REFERENCE DOCUMENT
IMG- LOGISTICS – REJECTION CODES
In This step set how the system should
reference the data for each transaction
and processing mode.
Set the Active flag for this to work.
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IMG- LOGISTICS – MOVEMENT TYPES
In this Step Define the rejection
code for Incoming Invoice.
The Excise on the rejection can be
assigned to MODVAT on hold
instead of MODVAT clearing by
setting the posting indicator
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IMG- SALES AND DISTRIBUTION
In this step set the sub-
Contacting attributes
such as :-
1. Sub-contract
period
2. Rate of Excise
Duty
3. Movement
group - Issue
4. Movement
group – Receipt
5. Number Range
ID6. How value to be
determined
7. Output Type
For printing
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IMG- ASSIGN BILLING TYPE TO DELIVERY
IMG- EXCISE GRP & SERIES GRP DETERMINATION
In this step assign the Sales and Distribution Deliver type to the Sales and
Distribution Billing type.
Ensure that one entry with blank delivery type is created with Debit note
billing type assigned. This is required to pay supplementary excise duty.
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IMG- FORM TYPES
IMG- FORM TYPES
Populate various fields in the table. The
entries in the tables are used to
automatically determine the excise group
and series group and thus the excise
invoice number and type of sale.
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IMG- FORM TYPES
IMG- EXTENDED WITHHOLDING TAX
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IMG- EWT – BUSINESS PLACE
IMG- EWT – ASSIGN DOCUMENT TYPE
Business place is an entity responsible for
deduction of Tax at source and payment
to the Government on due dates. The
Business place is also responsible for
issuing the certificate and filing of return.
The business place is registered with the
government.
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PROCUREMENT PROCESS
REQUIREMENTS AS PER INDIAN STATUTE
1. Calculation of excise duty based on material and chapter id combination
2. Calculation of excise based on class of vendor
3. Calculation of input tax based on interstate transactions
4. Calculation of input tax setoff on incoming material (applicable to factory).
5. Capture of part i and part ii for cenvat.
6. Subcontracting – u/s 57f4 without payment of excise duty
7. Subcontracting – quantity reconciliation & settlement
8. Subcontracting – payment of excise duty for non-receipt of material after specified period.
In this step Accounting
Document type for each
process
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PROCUREMENT SCENARIOS
HOW TAXES ARE DETERMINED
1. The chapter id from cin table for the material 2. Excise rate derived from chapter id from cin master
3. In tax procedure 100% of the rate is calculated
4. The tax code is entered in the line item and the jurisdiction of the vendor is accetpted as an input.,
5. The cvd is entered manually in the pricing schema.
PROCUREMENT- LOCAL PURCHASE
IMPORT
MATERIALS
SUB -
CONTRACT
ING
CAPITAL
GOODS
LOCAL
MATERIALS
STOCK
TRANSFER
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This also updates the excise header / line item tables.
PROCUREMENT- IMPORT PURCHASE
SAP
CREATE PO
PRICING
GR
IV
Create Excise Invoice for
CVD.
This is entered manually in
Pricing
Update Part I - Qty
Simulate & Post Cenvat.
Update Part II –Val
A/c. Determination
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This also updates the excise header / line item tables.
PROCUREMENT – SUB-CONTRACT
SAP
Create P O
Pricing
GR
IV
CIN
Create Excise Invoice for
CVD.
This is entered manually
in Pricing
Update Part I - Qty
Simulate & Post Cenvat.
Update Part II –
Val A/c. Determination
SAPCIN
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Note
Sub-Contracting Cycle
(1) You have a material that can be procured externally, and you have maintained BOM with components. Any
waste generated and received during subcontracting process can be maintained as component with negative
quantity.
(2) You create a subcontracting PO (PO with Item Category L). You can also maintain Purchase Info Recordfor Subcontract category for material and subcontractor.
(3) You make a transfer posting to issue components for SC PO. Material is sent to subcontractor. As material
remains under your ownership, system does not make any value entry. But quantity is shown as "Material
Provided to Vendor"
(4) You receive finished material against SC-PO. You also specify components consumed in manufacturing of
finished goods. Additionally, if you have negative components in BOM, now you'll also receive subcontracting
by-products. There are three events, so three accounting entries are generated:
DR FG Stock/ SC By-Product Stock
CR Change in Stock (FG/ SC By-Product)
(for finished goods received)
DR Subcontracting Charges
CR GR/IR Clg
(For moneys payable to Subcontractor)
DR Consumption (Components)
Create P O
TRF Posing
GR
IV
Create Sub- Contract
Challan w.r.t mat. doc. Print Excise Challan
Update Register
Settle w.r.t. sub-contract
challan.
Consumes the child
material.
Updates Register
Reconciliation and
Completion of Challan
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CR Change in Stock (FG/ SC By-Product) 0
(Material provided to Vendor is now charged to expense)
(5) You do the IV for SC Invoice, and the process is complete.
Process of Subcontract in MM
Sub-contract business process:
You want to buy material from the supplier (processed material/ assembled item) , but for some reason (quality
of certain item / price ) you will give some component to vendor .
Vendor shall process the item / use the item provided & supplies the final item.
SAP process:
1. Create the finished goods material code.
2. Maintain the BOM for the material.
3. Create PO with item category as "L" .
4. Issue material to vendor with movement type 541
5. Receive the material against the PO with movement type 101.6. MIRO to account for vendor's invoice for the service charge& material used by him.
Note:: At the Time of GR 543 Mvt is up dated for Raw Material.
Can anybody tell me how a process has to be given to subcontracting?
Suppose, I have 3 operations 1) weaving 2) dyeing 3) cutting & packing
If no 2 process (i.e. Dyeing) has to be given to subcontracting, what process should i follow?
The following process to be followed for subcontracting.
1. Item code (material master) to be created at the stage of before dying.
2. Item code (material master) to be created after Dyeing as subcontracted item.(F30)3. Bill of material to be created for the material (2) calling for material (1)
4. Info record and source list to be created for material (2) with the corresponding vendor
5. PO to be released for material (2)
6. Along with PO the material (1) to be issued to vendor
7. on receipt of material when GR is made the stock with vendor will get updated.
PROCUREMENT – CAPITAL GOODS
SAP CIN
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This also updates the excise header / line item tables.
PROCUREMENT – STOCK TRANSFER
Note
For Stock transfer between two storage location use MB1B with movement type 311.
For stock transport order between two plants of the same company code with one step
1) Create a purchase order - ME21N
2) Create a outbound delivery - VL10D
3) Create a Post Goods Issue - VL02N
Creating P O
Pricin
GR
IV
Excise Rate Determination
Based on Material / Chapter
ID and Vendor Class
Simulate & Post Cenvat.
Update Part I -Qty
Update Part II – Val
A/c. Determination
50% - current year 50% -
next year.
SAP
Create Stock transfer
order
GR WRT delivery
CIN
Capture Excise Details in
RG23D Folio No. is created
for each material received.
Update Registers / Tables
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Further Note
Whenever you need to transfer the materials from one plant to another plant belonging to one company or belonging to two
company code stock transfer order is raised by the delivering company.
STO:
Transfer of goods from one location to another location, it may be between plants within the same company code or in
different company code's plants. within the company code, bet plants, receiving plant will raise the STO in
Supplying/issuing plant-ME21n, Supplying plant will deliver the goods to receiving plants , then we need to pick n post the
Goods Issue-VL02n, now when we can observe that the STO qty will be added into receiving plant and reduced in
Delivering plant.
To do this, we need do prior customization in SPRO-IMG,-material should be created in both plants( receiving &
Supplying)
-maintain the stock only in supplying plant
-create a dummy customer in supplying plant's sales area(if u have one sales area, create in tat comp code n sales area)
-Assign this customer number to receiving plant's details along with the sales area,
-Assign the STO doc type (UB) to Supplying plant, along with checking rule-Assign the Del type (NL/NLCC) to Supplying n receiving plant.
Create Stock Transport Order
Post goods issue for stock transport order
Post goods receipt for stock transport order
Note: Quantity "on the road" can be monitored
Delivery costs can be entered in the stock transport order
Internal Procurement (Cross-Company Stock Transfer):
You post a stock transfer from company code to company code the same way as you post a stock transfer from plant to
plant, except that both plants belong to different company codes.
During the stock transfer, two accounting documents are created in addition to the material document:
-An accounting document for the removal from storage at the issuing company code
-An accounting document for the placement into storage at the receiving company code
The stock posting is offset against a company code clearing account.
To display the value of the cross-company-code stock in transit with a report, choose Environment à Stock à Stock in
transit Cc.
The following functions are provided to support the cross company stock transfer:
Create sales order to customer
Run single-level MRP
Creating a purchase order
Creating delivery
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Picking and post goods issue
Posting goods receipt
Create inter-company billing document
Invoice receipt
Create delivery, picking and post goods issue to customer
Billing
SALES PROCESS
REQUIREMENTS AS PER INDIAN STATUTE
1. Calculation of excise duty based on material and chapter id combination
2. Calculation of excise based on concessional forms.
3. Calculation of output tax based on interstate transactions
4. maintenance & printing of excise / st. details of customers on invoices
5. Usage of pre-printed invoice no.6. Excise invoice no. should start with no.1 for every government fiscal year in depot.
7. Maintenance of rg23d register in depots
8. Reproduction of all excise details on depot invoices wrt source document.
9. Identification of depot sales / first stage / second stage dealers in depot
10. Maintaining separate folio no. for all incoming material in depot .
11. Maintaining entry no. for each folio for outgoing material in depot.
12. Levy of service tax on all services rendered from factory / depot.
13. Payment of cess on certain category of materials (if applicable).
14. Maintaining of excise rules
SALES SCENARIOS
Taxes are determined by the system
Factory Sales
Stock Transfer
Depot Sales
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1. The chapter id from cin table for the material
2. Excise rate derived from chapter id from cin master
3. In tax procedure 100% of the rate is calculated
4. The jurisdiction is determined based region maintained in customer master and plant,
5. If the region is same then state level taxes are applicable else federal taxes will be applicable . this
is determined by the routines in tax procedures.
6. The taxes on sales and purchases are determined based on the tax codes
SALES SCENARIOS – FACTORY SALES
This also updates the excise header / line item tables.
SAP
Create S O
Delivery
Post goods Issued
Billing
CIN
Excise Rate
Determination
Based on Material /
Chapter Id / Form
type. ST based on
Jurisdiction and
Tax Codes
Excise Inv. WRT
SAP Billing Doc.
Selection of Rules
Update No. Range
Update Tables
A/c Determination
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SALES SCENARIOS – STOCK TRANSFER
Sales scenarios – depot sales
SAP
Delivery w.r.t sto
Created in
Procurement
Post goods Issued
Billing
CIN
Excise Inv. WRT
SAP Billing Doc.
Selection of Rules
Update No. Range
Update Tables
A/c Determination for
EXCISE
SAP
Create S O
Delivery
Post goods issued
Billing
CIN
Excise Rate Determination
Based on Material / ChapterId.
Excise Inv. WRT SAP Material Doc.
Select Excise Inv. From RG23D register
Selection of Rules Update No. Range
Update Tables
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REQUIREMENT OF FINANCE
Withholding tax
• Accumulation of tax base amount
• Certificate numbering based on business place and it section
• Annual return for each section
• Payment of withhoding tax
• Calculation of surcharge
• Certificate printing showing tax rate inclusive of surcharge
• Payment by due date
Excise duty
• Fortnightly payment
PROCESS OF WITHHOLDING TAX
TDS a ment
Request for down payment
Payment of request
Calculate of TDS
Accounting
TDS on Invoice
Calculate of TDS
Adj for down payment
Payment of TDS
Up date Challan
PRT Certificate
Annual Returns
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Process for payment of excise
STATUTORY REGISTERS / REPORTS
RG23A PART I REGISTER
RG23A PART II REGISTER
RG23C PART I REGISTER
RG23C PART II REGISTER
RG1 REPORT
RT12 REPORT
57F REGISTER
RG23D REGISTER
TDS CERTIFICATES REPORT
TDS ANNUAL RETURN REPORT
IMPORTANT CIN TABLES AND FUNCTION MODULES
Selection of date
Utilization
Selection of Registers
RG23A, RG23C,PLA
Payment
Accounting
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TABLES :- All CIN tables start with J_1I and J_2I. There are 129 tables.
J_1IEXCHDR (Header data of excise doc.)
J_1IEXCDTL (Line item data of excise doc.)
J_2IRULES (Table for maintenance of excise rules )
FUNCTION MODULES :- All CIN function modules start with J_1I . There are 151 Function Modules.
J_1I_DETERMINE_EXCISE_YEAR Determines the excise year
J_1I2_FI_POST_MODVAT_AMOUNT FI posting for a given modvat amt and GR
J_1IEWT_CHALLAN_UPDATE Internal Challan Number Updates. EWT-India.
FISCAL YEAR
All the statutory reports and registers have to be maintained as per the Government Fiscal Year. The
Government Fiscal year starts from 1st of April and ends on 31st of March of the subsequent year. The Income
Tax Depreciation has to be calculated on the basis of the Government Fiscal Year basis.
NUMBER RANGES
Number Range Objects for CIN are different from the standard SAP . There are 21 number range objects.
J_1ICERT: No range for Certificate Printing-EWT India.
J_1IEXCINV: Excise invoice number
The year dependent no.ranges will have to be maintained for all the objects. Number Range in case of
withholding tax certificate should be maintained for a business place and withholding tax section. In case of
Depots the excise invoice number range should start with 1 for every government fiscal year.
How number range are defined in cin
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Tax Procedures
• SAP provides following std. tax procedure for country India
• Formula based tax procedure TAXINJ
• Condition based tax procedure TAXINN
Formula based procedure – TAXINJ VS Condition based tax procedure TAXINN
Definition:
A method that the system uses of determining excise duty in India. This method requires you to create conditionrecords for each combination of vendor or customer and material (and possibly other conditions).When you createa purchasing document, the system calls the tax procedure assigned to India. The tax procedure finds all of thecondition records that you have created for that combination of vendor and material.
Formula-based excise deter mination A method that the system uses of determining excise duty in India.This method was used in the Country Version India Add-On and requires you to maintain additional data in theExcise Rate Maintenance transaction, J1ID.When you create a purchasing document, the system calls the tax
procedure assigned to India. Each of the excise duties in the tax procedure has its own condition types, and each
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condition type is assigned to a formula. This formula instructs the system to calculate the excise duty using the datathat you have maintained in the Excise Rate Maintenance transaction.
Excise Registers
Excise Laws require you to maintain a number of registers in a specified formatrelating to excise duty. They have to be printed out monthly and shown to the
authorities in the event of an audit. The SAP captures this requirement.
Type of Registers:
RG23A PART I
RG23A PART II
RG23C PART I
RG23C PART II
RG I
RG23D
RG23A: Raw Material
The entries pertaining to quantity will go into RG 23 Part I and that of duty will go into Part II
in the appropriate duty column. i.e. Basic Excise, SED, Additional duty, etc
RG23C: Capital Goods
RG23CI-Part I entry: Excise stock entry at the time of GR (only quantity)
RG23CII-Part II entry: Credit entry of Capital goods (only value)
RG-I : Finished Goods (only Quantity)
The finished goods (manufactured, sub-contracted or gained) and sales or stock transfer are
entered in the RG I Register
Register RG I is updated after creation of an excise invoice while dispatching the goods from
the factory premises with reference a commercial invoice or a pro-forma invoice
RG23D: Depot (this indicates both the Quantity and the amount)
CIN – Master
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Maintain Chapter ID‟s
Excise Duty Indicators
Determination of Excise Duty
CIN Details can also be maintained in Material Master, Vendor Master & Customer Master.
CIN data pupation directly possible from
• Material master
• Vendor master
• Customer master
What is CENVAT
• In India, excise duty is a tax on the manufacture of goods that is levied when goods leave the place ofmanufacture. Manufacturers can set off the duty paid on input materials against their output duty, a
procedure known as CENTRAL VALUE ADDED TAX (CENVAT)
• Excise duty is a duty, levied on production or manufacture of goods. It is a tax levied on manufacture of
goods and the liability to pay excise duty arises immediately on manufacture or production of goods
• Once manufacture of goods is complete, excise duty is payable, whether the goods are sold or self-
consumed. Excise duty does not depend on the end 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 removable of goods from the factory.
• CENVAT Credit
WHEN AND HOW MUCH CREDIT CAN BE TAKEN
• The Cenvat Credit in respect of inputs may be taken immediately on receipt of the inputs.
• The Cenvat credit in respect of Capital Goods received in a factory at any point of time in a given
financial year shall be taken only for an amount not exceeding fifty percent of the duty paid on such
capital goods in the same financial year and the balance of Cenvat Credit may be taken in any
subsequent financial year.
• The Cenvat credit shall be allowed even if any inputs or capital goods as such or after being partially
processed are sent to a job worker for further processing, testing, repair etc. and it is established from
the records that the goods are received back in the factory within180 days of their being sent to a job
worker.
• Where any inputs are used in the final products which are cleared for export, the Cenvat Credit in
respect of the inputs so used shall be allowed to be utilised towards payment of duty on any final
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product cleared for home consumption and where for any reason such adjustment is not possible, the
manufacture shall be allowed refund of such amount.
CENVAT Utilization
Payment to be made to Excise Department for the Self – Removals for the last month. Utilization to be doneagainst the last month‟s incoming excise duties and CVD. CENVAT utilization to be done before the 5th of next
month.
SAP Transactions
Activity SAP Transactions
Register Updates J1I5
RG23 A (Part I & II and RG I) Register Extraction J2I5
Register Printing J2I6
Utilization J2IU
Factory Process – Materials
In the Process of Manufacturing the Factory uses two kinds of materials.
Input Material:
Is defined as the one which loses its own identity in the finished product.
Capital Goods:
Is defined as the one which does NOT lose its‟ own identity in the finished goods.
Factory Process- Registers
The Factory uses the following Excise Registers
RG23 A - Part I (Captures the material A/c)
RG23 A - Part II ( Captures the Duty A/c)
RG23 C - (Captures Capital Goods Duty A/c)
RG 1 - Is a finished Goods Register
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Factory Process- Registers
RG23 A – Part I & Part II
Material is received in the factory as “for Quality inspection” or “for Direct Input”.
Material after “Quality Inspection” or when used as “Direct Input” will go into the RG 23 A Registers.
The entries pertaining to quantity will go into RG 23 Part I and that of duty will go into Part II in the
appropriate duty column. i.e. Basic Excise, SED, Additional duty, etc.
Factory Process- Registers
RG23 C
Purchase of Capital Goods by the factory for manufacturing purpose are only passed in RG23 C
Register.
The excise law permits claiming 50% MODVAT Credit in the current year and 50% in the next year
for Capital Goods.
RG I
The finished goods(manufactured, sub-contracted or gained) and sales or stock transfer are entered in
the RG I Register.
Register RG I is updated after creation of an excise invoice while dispatching the goods from the
factory premises with reference a commercial invoice or a pro-forma invoice.
Depot Process:
The RG 23 D register is used to update the excise entries in case of Exciseable Depots.
The Excise duty is payable when the goods are sent from the factory. However, it is not levied again
when the goods are sent from the 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 the RG23 D register and excise recovered from
the customer.
Transactions can happen through two scenarios:
Scenario1: Depot receives goods from the company‟s factory through stock transfer.
Scenario 2: Depot procures goods directly from external sources.
For Doing Goods Receipt:
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Scenario 1: Stock Transfer
Step1: Do GR (Transaction code:MB01)
Step 2: Excise Invoice Capture at Depot (Transaction Code: J1IG)
Scenario 2:
Step 1: Do GR (Transaction Code: MIGO)
Step 2: Excise Invoice Capture at Depot (Transaction Code: J1IG)
India Localization: Sales & Distribution
Features: It covers the following
Sales from Factories
Sales from Depots
Stock Transfer
Export Sales
Export Process
In the process of Exports under bond duty is not payable and the goods move out from the factory against
an ARE1.
However, goods not under bond move out of the factory by paying the duty and refund is separately
claimed on showing proof of export I.e. shipping bill.
In case of Deemed Exports, the same procedure is followed as in exports, However, the form used is ARE3.
Determination of ED Rate in Sales and Distribution
Settings for the same done through configuration & Master Data
Material: Material Chapter ID
Customer Excise Details: Excise Indicator for Customer
Plant Excise Details: Excise Indicator for Plant
Excise Indicator Customer + Excise Indicator Plant = Excise Indicator Final
Material Chapter ID + Excise Indicator Final = Excise Tax Rate
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FI Entries related to Excise in SD
During the passing of Billing document to Accounting: (VF02, Release to
Accounting)
Dr Customer Rs. 125/-
Cr Sale Rs. 100/-
Cr Excise Duty Recoverable Rs. 16/-
Cr Taxes Rs.9/-
During creation of Excise Invoice: (J1IIN)
Dr Excise Duty Recoverable Rs.16/-
Cr Excise Duty Payable Rs.16/-
During Monthly Utilization: (J2IU)
Dr Excise Duty Payable Rs. 16/-
Cr CENVAT Clearing Rs.16/-
Exemption Forms
Some customers may be liable to excise duty at reduced rates or exempt from it altogether (for
example, customers abroad). Such businesses must provide you with a copy of their exemption forms
in order to claim their exemption.
If you make a sale to a customer that is in possession of an exemption form, you have to record the
form number in the sales order. The system then automatically applies the appropriate rate of excise
duty.
When you create the sales order, enter the form, using the customer tax classification fields. Based
on the customer tax classification status, you can use different excise rates for a sale transaction.
If the form has not been submitted by the time you create the pro forma excise invoice, the excise
value will be recalculated at the normal rate.
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Export-Oriented Units (EOU)
Any sales that you make to export-oriented units (EOUs) require special treatment by the SAP
System. You have maintained a zero-rate excise duty indicator for customers that qualify as 100%
EOUs.
When you come to create the excise invoice, the excise value is zero in the pro forma excise invoice
document. No excise duty is debited to the CENVAT account, and so no accounting entries are
generated. However, the sale is marked as a deemed export, and the system generates an outgoing
excise invoice.
Even though the excise duty is zero, when you print the excise invoice, the system calculates the duty
for the purposes of printing.
Exports under Bond
One of the ways of exporting goods without paying basic excise duty is to obtain an excise bond from
the excise authorities and then fill out an ARE-1 document to go with every export.
Excise Bond
A document that effectively licenses a manufacturing plant to remove goods from its premises without
paying basic excise duty, on condition that the goods are then exported.
An excise bond covers a fixed amount of excise duty. The excise duty of the goods exported under
bond cannot exceed the bond value.
In the system, the term "excise bond" also covers letters of undertaking, and all of the excise bond functions
apply equally to letters of undertaking, unless stated otherwise.
When you obtain a bond from the excise department, enter it in the system. The system numbers
each bond automatically.
Exports under Claim for Rebate
If you have not obtained an excise bond, you must pay any excise duty liable when removing goods from yourpremises for export. However, you can claim a rebate for the excise duty once you have completed the export if
you fill out an ARE-1 to go with the export .
Deemed Exports
You can ship deemed exports to any customers in possession of a deemed export license without
paying any basic excise duty, but only if the goods are accompanied by an ARE-3 document.
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Accounting entry in procurement
For Domestic Procurement of Raw Material
During GR
Material Stock Dr.
GR/IR clearing Cr.During Excise Invoice Credit
Cenvat Account Dr.
Cenvat Clearing Cr.
During Invoice Verification
Cenvat Clearing Dr.
GR/IR Clearing Dr.
Vendor Payable Cr.
For Domestic procurement of Capital Goods
During GR
Material Stock Dr.
GR/IR clearing Cr.
During Excise Invoice Credit
Cenvat Account Dr. (50%)
Cenvat On-hold Dr. (50%)
Cenvat Clearing Cr.
During Invoice Verification
Cenvat Clearing Dr.GR/IR Clearing Dr.
Vendor Payable Cr
Subsequent of Capital Goods
Cenvat Account Dr. (50%)
Cenvat On-hold Cr. (50%)
For Import Procurement of Raw Material
During Customs Duty Clearing invoice
Custom Clearing Dr.
Custom Payable Cr.
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During GR
Material Stock Dr.
GR/IR clearing Cr.
During Excise Invoice Credit
Cenvat Account Dr.
Custom Clearing Cr.
During Invoice Verification
GR/IR Clearing Dr.
Vendor Payable Cr.
For Excise Duty Credit of Raw Material without PO
Cenvat Account Dr.
Cenvat Clearing Cr.
For Excise Duty Reversal through Excise JV
Cenvat Clearing Dr.
Cenvat Account Cr.
During Excise Invoice Creation
Cenvat Suspense Account Dr.
Cenvat payable Cr.
For TR6C Challan
PLA Account Dr.
PLA on hold Account Cr.
During Fortnightly Utilization
Cenvat payable Dr.
Cenvat Account Cr.
PLA Account Cr.
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For Subcontracting Challan Reversal
Cenvat Reversal Dr.
Cenvat Account Cr.
For Subcontracting Challan RecreditCenvat Account Dr.
Cenvat Reversal Cr.
Accounting entry in SD
For Factory Sale
During Billing Document
Customer Account Dr.
Sales Account Cr.
Cenvat Suspense Account Cr.
During Excise Invoice Creation
Cenvat Suspense Account Dr.
Cenvat payable Cr.
For TR6C Challan
PLA Account Dr.
PLA on hold Account Cr.
During Fortnightly UtilizationCenvat payable Dr.
Cenvat Account Cr.
PLA Account Cr.
For Stock Transfer through SD
No Accounting entries for Performa Billing Document
During Excise Invoice Creation
Cenvat Suspense Account Dr.
Cenvat payable Cr.
For TR6C Challan
PLA Account Dr.
PLA on hold Account Cr.
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During Fortnightly Utilization
Cenvat payable Dr.
Cenvat Account Cr.
PLA Account Cr.
Note: Cenvat Suspense Account should be cleared appropriately using FI JV‟s.
Maintenance of Excise Master Data
When you execute a business transaction involving materials that are subject to excise duty, the system
automatically calculates the duty for you.
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.
Excise Indicator for Plant
On this screen, you enter your plants' tax registration numbers, which are used for various forms of
correspondence and reports:
Central sales tax (CST) number Local sales tax (LST) registration number Permanent account number (PAN)
Excise Indicator for Plant and Vendor
On this screen, you define the final excise duty indicator
Excise Indicator for Plant and Customer
On this screen, you define the final excise duty indicator