(IND) Processing Tax and Export Invoices

This chapter provides overviews of tax invoices, supplementary tax invoices, export invoices, rounding process, and accounting for rounding, and discusses how to:

• Revise sales orders details.

• Print invoices.

• Reprint invoices.

• Review legal documents.

See Also

Setting Up UDCs for Legal Documents

Understanding Tax Invoices for India

A tax invoice is a legal document that contains information that is required by Indian tax authorities and complies with the regulatory obligations. A tax invoice consists of tax assessments for excise, sales, and service tax, as well as value-added tax (VAT), tax collected at source (TCS), and works contract tax (WCT). The laws in India do not require that you print tax invoices in a specific format; however, they do require that certain information prints on the invoice. Some of the legally required fields on the invoice include the running serial number, the name, address and registration number of the seller and of the purchaser, the date of issue, and the total invoice amount in words.

Excise duty elements such as basic excise duty (BED) (Cenvat), special excise duty (SED), additional excise duty (AED), and Education cess (CESS) on excise must print on the invoice in amounts and in words. Optionally, you can print the total excise duty amount (in words), instead of printing amounts for each excise tax type.

The format of a tax invoice is based on whether the document is generated by a dealer or a manufacturer. Tax invoices generated by a dealer require the dealer format.

For the dealer format, the origin of the goods must print on the invoice. The dealer must track the excise duty amounts that are calculated by the manufacturer. The following information must print at the line level on the tax invoice:

• First Stage Dealer.

  Print the manufacturer details for tax invoice number, excise registration number, and excise tax duty paid.

• Second Stage Dealer.

  Print the manufacturer details for manufacturer tax invoice number, excise registration number, and excise tax duty paid, as well as the First Stage Dealer details (tax invoice number, excise registration number, and excise tax duty paid).

The line amount charged by an excise-registered dealer includes the excise duty. The excise-registered dealer issues an excise tax invoice for the duty paid on goods so that the buyer can claim Cenvat credit.

Quantity of Copies

If your company has an exclusive excise invoice, the Central Excise department requires that you maintain three copies of an invoice:

• The original copy should be marked ORIGINAL FOR BUYER

• The duplicate copy should be marked DUPLICATE FOR TRANSPORTER

• The triplicate copy should be marked TRIPLICATE FOR ASSESSEE.

If your company uses a common tax invoice for multiple tax types, you can print additional copies and mark the purpose of each additional copy. Your company must inform the excise authorities of the number of copies generated.

Legal Numbering for Invoices with Excise Tax

Excise authorities have strict regulatory requirements on the number sequencing of invoices. The legal requirements are:

• The legal number should be consecutive and can be generated by the system.

• Each excise unit can have a different legal numbering sequence.

• The legal number can be reset to number 1 each fiscal year (beginning April 1).

• A manufacturer must use separate tax invoice numbering for internal sales and export transactions.

• The legal number for tax invoices is different for invoices generated by a dealer and invoices generated by a manufacturer. If a company is both a dealer and a manufacturer, it should have two different excise registration numbers.

  There is no restriction to print sub serial number (prefix) based on any logical classification of the transaction. For example, separate sub number.

• No restrictions exist for printing a sub-serial number (prefix) based on any logical classification of the transactions. You can have separate sub-serial numbers for internal organization transfers, interstate trade, intrastate trade, internal consumption, and so on

See Also

(IND) Setting Up Legal Documents for Tax and Export Invoices

Understanding Supplementary Tax Invoices

If you change a sales order for which you have already printed the tax invoice, you must generate the tax invoice again. When you generate the tax invoice again, the system checks for differences between the previous sales order and the current sales order. The differences can be caused by a change in the price of the item or the tax rates. If the system finds a difference in one or more sales orders, the Invoice Print program (R42565) automatically launches the Supplementary Tax Invoice program (R75I042). This program generates the supplementary tax invoice which shows the old sales order amount, new sales order amount, and the net tax amount. The supplementary tax invoice is applicable for excise, sales, and service taxes, as well as VAT and WCT. The system does not generate supplementary tax invoices for sales orders for exported goods.

You send the supplementary tax invoice to the customer with the regenerated invoice to provide details of the difference in the invoice amount. The supplementary tax invoice is not a legal document.

When you generate an invoice, the system generates and prints these invoices:

• Tax invoice. This invoice is based on the new values in all sales orders.

• Supplementary tax invoice. This invoice contains details for only those sales orders for which the item cost or tax rate values have changed.

The Invoice Print program uses next numbers to assign invoice numbers to the supplementary tax invoices.

Note. To create accounts receivable entries, you must generate supplementary tax invoices before you run the Update Customer Sales program (R42800). The Supplementary Tax Invoice program does not create accounts receivable entries after the sales update is processed.

Understanding Export Invoices for India

An export invoice is a legal document that does not include taxes. The legal format mandates that the invoice be printed on an A4 page. The legal format is the same regardless of whether the invoice is generated by a dealer or a manufacturer.

You generate export invoices only for foreign customers who are not located in India. The export invoice prints in a foreign currency, whereas the tax invoice prints in the local currency. For excise purposes, the currency conversion for the foreign currency should be based on customs notified rates, and not corporate exchange rates.

Understanding the Rounding Process for India Taxes

All government taxes must be rounded to the nearest applicable unit. You must define this unit for a combination of tax type and tax regime. The system stores the rounded tax amounts in the Tax Groups-IND-00 table (F75I005).

The system calculates taxes when you enter sales orders, but the rounding is done when you generate the invoice. The rounding applies to each tax type and the Invoice Print program uses rounded amounts to calculate the invoice total. The customer pays the rounded invoice total. The rounding difference does not print on the invoice nor does it appear in the general ledger. You must account for the tax liability at the rounded-off level.

This example shows how the system calculates an unrounded amount of 115 with the rounding value of 10 rupee:

• Divides amount by the rounding value: 115 ÷ 10 = 11.5

• Rounds amount to zero decimal places: 12

• Multiplies rounded value and rounding value to derive the rounded amount: 12 × 10 = 120

Each state defines the rounding rules for its taxes. Like the central government requirement, most state regulations permit rounding up to the nearest rupee on the invoice total. The rounding difference is added to or reduced from the total tax liability that is billed to the customer and paid to the tax authority. You are not required to show the taxes at the line level. You can distribute the rounding difference to the tax calculated by line or to the general ledger and accounts receivable.

An invoice generated by a dealer does not round excise taxes because the excise duty on components shipped is allocated to the shipment, based on matching the shipment to a receipt. The dealer price includes the excise duty.

Understanding the Accounting for Rounding

When you print an invoice in the India Localization (IL) system, the system reads the Price Adjustment Ledger File table (F4074) to retrieve the tax amounts that were calculated when the sales order was entered. The system rounds the amount on the basis of the unit defined in the F75I005 table. It then prints the rounded amount on the invoice and stores the difference between the rounded amount and the original amount in the Display Taxes by Legal Document Line table (F75I035). The system stores this difference by the invoice number. The system does not update general ledger accounts with the rounded amounts until you run the Sales Update program (R42800). When you run the Sales Update program for Indian transactions, the system reads the values in the F75I035 table and uses automatic accounting instruction (AAI) item 4270 to update the general ledger and the customer ledger with the rounded amounts. The system stores the general ledger and the customer ledger details in the Account Ledger (F0911) and Customer Ledger (F03B11) tables and the tax related information in rows rather than columns in the Sales Order Tag File – IND – 42 table (F75I017).

Revising Sales Orders Details

This section provides an overview of sales order review and discusses how to review details for a sales order.

Understanding Sales Order Review

You use the Display SO-Excise Duty/Assessable Value program (P75I366) to verify sales order details, such as the excise duty and the assessable value, before you generate the invoice. If any values are incorrect, use the Sales Order Entry program (P4210) to revise the sales order details.

See Entering Sales Orders.

Forms Used to Revise Sales Order Details

Reviewing Details for a Sales Order

Access the Sales Order - Excise Duty & Assessible Value form.

Printing Invoices in India

This section provides an overview of the invoice process and discusses how to:

• Set processing options for base software Print Invoice (R42545).

• Set processing options for Print Invoice (P7420565).

• Print invoices for India.

Understanding the Invoice Process

You run the standard Invoice Print program (R42565) to generate legal documents for tax and export invoices. If you generate a tax invoice, you must also generate an export invoice. You must set up two versions of the Invoice Print program for these two types of legal documents. Set up the first version to generate the tax invoice in a domestic currency and advance the status of the sales order. Set up the second version to generate the export invoice in a foreign currency and select the sales order status of the previous version.

The Invoice Print program retrieves the sales orders that are specified in the data selection, performs validations and calculations, and then reads the processing options for the Print Invoice program (P7420565) for additional localized information about the invoice. Depending on the version that you run, the program launches one of these programs:

• Tax Invoice (R75I040)

• Supplementary Tax Invoice (R75I042)

• Export Invoice (R75I041)

You can print tax invoices in proof or final mode. If you print in proof mode, the system does not assign a legal number or store information in localized tables. In final mode, the system assigns a legal number, based on the next numbers setup for legal documents, and an internal document number to each invoice. The system also adds a record for each item on the invoice that has excise tax information. The system stores this information in the Consolidated Excise Duty Payment table (F75I319Y).

Setting Processing Options for Base Software Print Invoice (R42565)

This section discusses specific processing option settings for the Invoice Print program (R42565).

Default

Regardless of whether you print tax invoices or export invoices, you must set processing options to identify whether the invoices print in proof or final mode. There is no proof or final mode processing option in the R42565 program. The settings for the first two processing options in this table identify the mode:

Note. For each version of the Print Invoice program (R42565), ensure that the processing option settings for Prevent Next Status Update and Prevent A/R Number Assignment correspond to the processing option setting for Proof/Final in the Print Invoice program (P7420565).

Print

Setting Processing Options for Print Invoice (P7420565)

Before you print invoices, you must set the localization processing options for the Print Invoice program (P7420565). This program appears on the Print Set Up menu (G75IPRINT).

The Print Invoice program (R42565) launches additional processing options when you process invoices. The name of the version for the P7420565 program must be the same as the name of the version for the R42565 program.

General

Shipment Notes

Do not set processing options on this tab.

Error Processing

Specify the last status code and the next status code for sales orders if an error occurs during invoice processing. Leave the processing options blank for shipment notes.

Printing Localization Invoices

Select Print Set Up menu (G75IPRINT), Print Invoice.

Reprinting Invoices

You can use the Reprint Invoices program (P7430031) to reprint selected documents. This section discusses how to reprint an invoice.

Form Used to Reprint Invoices

Reprinting an Invoice

Access the Work with Legal Documents Reprint form.

Reviewing Legal Documents

This section provides an overview of legal document reviews and discusses how to:

• Review a legal document by internal document.

• Set processing options for Sales Legal Document Inquiry by Legal Number (P7420002).

• Review a legal document by legal number.

Understanding Legal Document Reviews

You can review legal documents using these programs:

• Sales Legal Doc. Inquiry by Int. Doc (P7420001)

  Use this program (P7420001) to locate legal documents by order (document type), as well as order company, order number, and order line.

• Sales Legal Doc. Inquiry by Legal Number (P7420002)

  Use this program to locate legal documents by legal number, as well as legal company, legal document type, and issue place.

Forms Used to Review Legal Documents

Reviewing a Legal Document by Internal Document

Access the Sales Legal Document Inquiry by Internal Document form.

Setting Processing Options for Sales Legal Document Inquiry by Legal Number (P7420002)

Processing options enable you to specify the default processing for programs and reports.

General

Versions

Reviewing a Legal Document by Legal Number

Access the Sales Legal Document Inquiry by Legal Number form.