SAP

Country India Version

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/ebf138cdd78a4be10000000a
114084/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:

ToenlightentheparticipantsoncountryversionIndia(cin)and thevariousrequirementswhicharetobe
completedundertheIndianstatute.HowCINinterfaceswithsapsd,mmandfi
processesandmeetsthereportrequirements.Attheendofthepresentation,eachparticipantwillhaveafairknowledgeof
therequirementsandinterfacesofCINwithsap.

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:

INPUTTAX-Taxthatischargedbythevendor.
Aclaimforrefundofthedeductibleportionofinputtaxcanbesubmittedtothetaxauthorities

OUTPUTTAX-Taxleviedon customersatall
Levelsofproductionandtrade.Outputtaxrepresentsataxliability.
SERVICETAX:

TaxleviedonthecustomeronServicesspecifiedbythegovernment.

DEPOT:

Depotisaplantwherethematerialisstoredandsold.Thereisnomanufacturingactivityatthedepot.Thedepotswhenregis
teredwiththeexciseauthoritiescanpassontheModvat/cenvatbenefitstothecustomer.

EXCISEDUTY(BED):
Aquantity-basedtaxwhichmustbepaidwhenadutiablematerialismovedfromaduty-free(bonded)locationtoaduty-
paid(un-
bonded)locationorthecustomer.Alsoknownasexcisetax.Theexcisedutyisbasedonthequantity/Valueofmaterialmov
ed.

AED
AdditionalExciseduty isadutywhichis calculatedoverandabovetheExciseDutypayableonthematerial.

SED:

SpecialExciseDutyisanadditionaldutyleviedoncertainmaterialsdependingon
thecharacteristicsofthematerial.Thestatutespecifiesthesematerials.

CVD:

Countervailingduty isalevychargedontheimportsofmaterialsinlieuofexciseduty.

CENVAT
CentralValueAddedTax.Thetaxisleviedonthedifferencebetweentheoutputandtheinputvalue.Thisisalsoreferredas
MODVAT.
CESS
Cessisataximposedforaspecificpurposeunderdifferentactswithreferencetocertaingoods.Cessislevied
atthetimeofremovalofgoodsfromthefactory.

OCTROI:
Levypayableonthematerialtothelocalauthorities.

NCCD:

NationalcalamityContingentDuty.Thistaxisaspecialpurposetaxleviedforprescribed/scheduledproductannounce
dbytheFinanceministryofIndia.Thistaxiscenvatable.

PurchaseTax
Thisisataxleviedbysomestateswhenthemanufacturerreceivedamaterialfromtheoutsidestatehastopaythepurchas
etax.

ServiceTax:

TheserviceproviderwhohastheregistrationwiththeCentralExcisecancollectthetaxfortheserviceprovided.
Thisisalsocenvatableanditcanbeutilizedforpaymentexciseduty orpaymentofservicetax.

VAT:
GovernmentofIndiaintroducetheValueAddedTaxfromApril2005. Asthefirststage, it is
removingvarioussalestax slabs. Itisthemodified versionofLocalsalestaxandit iscenvatable.

EducationCess:
AdditionaltaxfortheimprovementoftheregionalEducationintroducedinIndiaunionbudgetin
2005.

HigherSecondaryEducationCess:

Additionaltaxfortheimprovementoftheregional HigherEducationintroducedinIndiaunionbudgetin2007.

ASSESSABLEVALUE:
Denotesthevalueofgoodsthatyouhavemanufacturedin-houseatthepriceasassessedbyanauthorizedauditor.

SETOFF
Acertainpercentageofinputtaxwhichisrefundedbythegovernmenttothemanufacturer.Thisrefunddoesnot
formpartof materialcost

CHAPTERID
Allmaterialsthatarerequiredfor manufacturingandsubsequentlythosewhichare
manufactured,areclassifiedundertheCentralExciseLawintochapters.Thesechaptersarefurthersubdividedintoh
eadingsandsubheadings,which togetherformthechapterID. ChapterID721618.10isanexample.

INTERSTATETRANSACTIONS:

Atransaction where thegoods/materialaretradedbetweentwo differentstates.

 CONCESSIONALTAXFORMS:

TheGovernmentannouncestaxconcessionsinexciseandtaxesonsalesandpurchase.Thiscanbeavailedbysubmittingt
heformsprescribedbytheGovernment.E.gC form,ARE-1,ARE-3, CT1,CT2
 TDS :

Taxdeductedatsource(Withholdingtax)isaformofindirecttaxationdeductedatthebeginningofthepaymentflow.Ge
nerally,anamountiswithheld
andpaidoverorreportedtothetaxauthoritiesonbehalfof(asopposedtoby)thepersonsubjecttotax,theexceptionbeings
elf-withholdingtax.Ifawithholdingtaxexemptionisavailable,withholdingtaxisnotwithheld.

REGISTERS
The registers are the books prescribed having specific format under the statute e.g.
RG23A, RG23C, RG23D, RG1and PLA

RETURNS

Theprescribedformshavinga specifiedformatunderthestatutee.g.ER-1,57AE,
ANNUALRETURNFORTDS,Quarterly E-FILE.

CIN interference with SAP:

Countryversionindiainstallation
Copiesthefollowing (upto4.6c)(tcodeo035)
Standardindiatemplatesx
Taxprocedure (taxinj/taxinn)
Conditions excise,taxeson sales&purchase, servicetax,cvdetc
Tables,functionmodules,no.rangeobjects,customerexits
Indian localization coverage

Covers the following;

Central/Local Sales tax/ VAT Sales Tax Set off

Sales Tax Set off
Concessional Tax form
 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 MOVAT
Monthly 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 download
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

In these steps the Basis
team performs the
installation & activation
of Country Version
IMG- ACTIVATE FI/CO INTERFACE

ADD ENTRY ZIND FI/CO COMPONENT FOR

COUNTRY VERSION INDIA

IMG- ACTIVATE CIN FOR FISCAL YEARS

 ACTIVE INDICATOR

FISCAL YEAR UPTO AND INCLUDING WHICH

TRANSACTION APPLIES

IMG- ACTIVATE PROCESSES

 Activate Components

IMG- ACTIVATE PRODUCTS

 ACTIVATE PRODUCT EXTENDED
WITHHOLDING TAX

IMG- GLOBAL SETTING COMPANY CODE

 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

IMG- GLOBAL SETTING REGISTARTION ID

 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

IMG- GLOBAL SETTING PLANT

 Registration
ID
Indicator for Factory
/ Depot

IMG- GLOBAL SETTING EXCISE GROUP

IMG- GLOBAL SETTING SERIES GROUP

Immediate
Utilization
of MODVAT

Series Group For

creating Number
Range No Utilization
Indicator
IMG- GLOBAL SETTING EXCISE DEFAULTS

IMG- GLOBAL SETTING EXCISE DEFAULTS

 EXCISE TAX
INDICATORS
This Identifies the
Class

1. Normal
2. SSI

IMG- ACCOUNTING TRANSACTION ACCOUNT

 Account Names. This
account names are used
by the program
To determine the GL

The sub-transaction type

used for determining
different account

Transaction Account. These are pre defined in the system

IMG- ACCOUNTING ASSIGN GL ACCOUNT

 Assign GL
account to
transaction
type, sub-
transaction
type and
account Name
defined in the
earlier step.

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 - SubcontractingChallan
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 Cases
TR6C - 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
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

Maintain Minimum balance for each excise group and account

name.
The system will check the balance before utilization.

IMG- LOGISTICS INCOMING EXCISE INVOICE

IMG- LOGISTICS FIELD SELECTION
 In this transaction
the field
characteristics can
be set. (Input /
Required / Display /
Hide) Also the field
can be Highlighted.

IMG- LOGISTICS PROCESSING MODE

IMG- LOGISTICS REFERENCE DOCUMENT

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.

IMG- LOGISTICS REJECTION CODES

 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

IMG- LOGISTICS MOVEMENT TYPES

IMG- LOGISTICS SUB-CONTRACTING

In this step group

the different
Movement types
used for sub-
contracting

IMG- LOGISTICS SUB-CONTRACTING

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
ID
6. How value to be
determined
7. Output Type For
printing
IMG- SALES AND DISTRIBUTION

IMG- ASSIGN BILLING TYPE TO DELIVERY

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.
IMG- EXCISE GRP & SERIES GRP DETERMINATION

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.

IMG- FORM TYPES

IMG- FORM TYPES

IMG- FORM TYPES

IMG- EXTENDED WITHHOLDING TAX

IMG- EWT BUSINESS PLACE

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
IMG- EWT ASSIGN DOCUMENT TYPE

In this step
Accounting
Document type for
each process

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.
 PROCUREMENT SCENARIOS

LOCAL
MATERIALS

IMPORT
MATERIALS

SUB -
CONTRACT
ING

CAPITAL
GOODS

STOCK
TRANSFER

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

SAP

CREATE PO

Create Excise
Invoice for CVD.
This is entered
PRICING
manually in Pricing
Update Part I - Qty

GR Simulate & Post

Cenvat.
Update Part II Val
A/c. Determination

IV

This also updates the excise header / line item tables.

PROCUREMENT- IMPORT PURCHASE

 SAP
CIN
Create P O

Create Excise Invoice for

CVD.
This is entered manually
Pricing in Pricing
Update Part I - Qty

Simulate & Post

GR Cenvat.
Update Part II
Val
A/c.

IV

This also updates the excise header / line item tables.

PROCUREMENT SUB-CONTRACT

SAP
CIN

PRICING
 Create P O

Create Sub-
Contract Challan
TRF Posing w.r.t mat. doc.
Print Excise
Challan
Update Register

GR Settle w.r.t. sub-contract

challan.
Consumes the child
material.
Updates Register
Reconciliation and
IV
Completion of
Challan

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 Record for
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)
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 ifollow?

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
 Creating P O

Excise Rate Determination

Based on Material / Chapter
Pricing ID and Vendor Class

Simulate & Post Cenvat.

Update Part I -Qty
GR Update Part II Val
A/c. Determination
50% - current year 50% -
next year.

IV

This also updates the excise header / line item tables.

PROCUREMENT STOCK TRANSFER

CIN
SAP

Create Stock
transfer order

Capture Excise
Details in RG23DFolio
No. is created for
GR WRT delivery
each material
received.
Update Registers /
Tables
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
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 Stock 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
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

Factory Sales
 Stock Transfer

Depot Sales

Taxes are determined by the system

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

SAP CIN

Excise Rate
Create S O Determination
Based on Material /
Chapter Id / Form
type. ST based on
Jurisdiction and
Delivery Tax Codes

Post goods Issued

Excise Inv.
WRT
SAP Billing
Billing Doc.
Selection of
Rules
Update No.
This also updates the excise header / line item tables.

SALES SCENARIOS STOCK TRANSFER

SAP CIN

Delivery w.r.t sto

Created in
Procurement

Post goods Issued

Excise Inv. WRT

SAP Billing Doc.
Billing
Selection of Rules
Update No. Range
Update Tables

A/c Determination for

EXCISE

Sales scenarios depot sales

SAP CIN
 Create S O Excise Rate Determination
Based on Material / Chapter
Id.
Delivery

Post goods issued Excise Inv. WRTSAP Material Doc.

Select Excise Inv. From RG23D register
Selection of RulesUpdate No. Range
REQUIREMENT OF FINANCE Update Tables
Billing
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 payment TDS on Invoice

Request for down

Calculate of TDS
payment

Payment of request

Adj for down payment

Calculate of TDS
Payment of TDS
AnnualAccounting
Returns Up
PRTdateChallan
Certificate
Process for payment of excise

Selection of date

Utilization

Selection of
Registers
RG23A, RG23C,PLA

Payment

Accounting

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

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 modvatamt andGR

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

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:

Amethodthatthesystemusesof determiningexcisedutyinIndia.Thismethodrequiresyou
tocreateconditionrecordsforeachcombinationof vendororcustomerand
material(andpossiblyotherconditions).Whenyou createapurchasingdocument,thesystemcallsthe
taxprocedureassignedto India.Thetaxprocedurefinds allof the conditionrecordsthatyou have
createdforthatcombinationof vendorandmaterial.

F ormula-basedexcisedetermination Amethodthatthesystemusesof determiningexcisedutyinIndia.

Thismethodwasused intheCountryVersionIndiaAdd-Onandrequiresyou tomaintainadditional
dataintheExciseRateMaintenancetransaction,J1ID.Whenyou
 createapurchasingdocument,thesystemcallsthetaxprocedureassignedto India.Eachof
theexcisedutiesinthetaxprocedurehasitsownconditiontypes,andeachconditiontypeisassignedto
aformula.Thisformulainstructsthesystemtocalculatetheexcisedutyusingthedatathatyou have
maintainedintheExciseRateMaintenancetransaction.

Excise Registers
Excise Laws require you to maintain a number of registers in a specified format
relating 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

Maintain Chapter IDs

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 of
manufacture. 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
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 toExcise Department for the Self Removals for the last month.Utilization to be done
against the last months incoming excise duties and CVD.CENVAT utilization to be done before the 5 th 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

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 areonly 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
fromthe customer.

Transactions can happen through two scenarios:

Scenario1: Depot receives goods from the companys factory through stock transfer.

Scenario 2: Depot procures goods directly from external sources.

For Doing Goods Receipt:

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

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.

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 your
premises 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.

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.

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.

For Subcontracting Challan Reversal

Cenvat Reversal Dr.

Cenvat Account Cr.

For Subcontracting ChallanRecredit

Cenvat Account Dr.
Cenvat Reversal Cr.

Accounting entry in SD

For FactorySale

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 Utilization

Cenvat 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.

During Fortnightly Utilization

Cenvat payable Dr.
Cenvat Account Cr.
PLA Account Cr.

Note: Cenvat Suspense Account should be cleared appropriately using FI JVs.

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