(IND) Processing Excise Duty, Sales Tax, VAT, and Customs Duty for India in PeopleSoft Payables

This chapter discusses how to:

• Create third-party vouchers with customs duty.

• Process PeopleSoft Payables vouchers with excise duties, sales tax, and VAT.

Creating Third-Party Vouchers with Customs Duty

This section provides an overview of customs duty processing for India and third-party vouchers and discusses how to:

• Create the voucher.

• Add or modify the customs duty amount.

• View recoverable and nonrecoverable amounts.

Understanding Customs Duty Processing for India

Basic customs duty is calculated based on the assessable value of the item. Because the assessable value plus the calculated duty equal the base amount, the duty along with additional and special duty must be calculated in a specific order. The customs duty is calculated in the following order:

1. The customs authority holds and assesses the goods being imported.

   The duty payable must be paid to the customs authority before the goods are released.

2. The customs authority issues a bill of entry (BOE) assessing the duty payable.

3. Send the BOE to purchasing for processing.

4. Pass the BOE to accounts payable where the third-party voucher is used to enter and pay the customs authority.

5. Copy the purchase order (PO) into the third-party voucher to ensure that the items or distribution are reflected on the third-party voucher.

6. Override the amounts copied into the third-party voucher from the PO and enter new custom duty codes (the amounts as shown on the PO are generally different from what is actually payable to customs authorities) using the Invoice Line Custom Duty Tax Detail page.

   When a new customs duty is added to the voucher line, the amount should roll up to the header. Also, at the time of creation of third-party voucher for payment to custom authorities, receiving is not complete; therefore, the third-party voucher cannot be created on the basis of receipts.

7. Pay the customs authority.

8. After the payment is made, the goods are released and a receiver is entered.

   Associate the receiver to the third-party voucher.

9. Run the Landed Cost Extraction Application Engine process (LC_EXTRACT).

   The Landed Cost Extraction process captures any variances between the PO calculated amount and the amount entered on the third-party voucher and correctly cost the inventory.

Note. The customs duty assessable value should not be confused with the excise assessable value defined on the Item Tax Applicability page.

See (IND) Setting Up Excise Duty, Customs Duty, Sales Tax, and VAT.

Understanding Third-Party Vouchers

You must create vouchers for customs duty by copying from the PO. This ensures that the percentage of recoverable and nonrecoverable custom duty populates to VCHR_LN_EXS_DTL. If the actual amounts differ from those on the BOE, override them on the voucher. After you send payment to the government and create the receiver, reopen the voucher and associate the receiver. Otherwise, the Landed Cost Extraction process does not allocate the customs duty.

Note. Customs duty charges are nonprorated.

To create third-party vouchers for customs duty:

1. Create a third-party voucher by selecting Third Party Voucher in the Voucher Style field in the Voucher component (VCHR_EXPRESS).

2. Click the Copy PO button in the Copy from a Source Document group box on the Invoice Information page to copy from the PO to create the third-party voucher.

   This copies the customs duty charges from the PO. The duty amounts appear by default on the Invoice Line Custom Duty Detail page. If you change amounts in the Tax Amount field and tab out, the system recalculates the amounts in the custom duty Recovery Amount and custom duty Non Recovery Amount fields.

   Note. Amount fields are not populated from the PO if the transaction currency of the PO is different than the third-party voucher currency.
   
   For example, if the PO transaction currency is USD (for import purchase orders vendor is normally outside of India) and the third-party voucher transaction currency is INR (for the Indian customs authority), the PO copy function does not populate required fields. In order to copy required fields from the PO, change the transaction currency of the third-party voucher to be in sync with the transaction currency of the PO (USD). After changing the transaction currency on the voucher header, copy from the PO to create the third-party voucher. Specify the correct payment currency at the time of payment (INR).

3. Issue the payment and send it along with the BOE to the appropriate government agency.

4. When the government receives your payment and releases your goods, create the receiver and manually associate the receiver to the third-party voucher.

   Manually associating the receiver enables the Landed Cost Extraction process to properly allocate the nonmerchandise costs.

   Note. The Associate Receiver(s) link on the third-party voucher is only available to custom duty vouchers. This link is not available until the PO copy function is performed. You can then associate receivers to the third-party voucher. The Associate Receiver(s) link is available if the third-party voucher is not posted or posted.

See Also

Entering and Processing Vouchers Online: General Voucher Entry Information

Pages Used to Create Third-Party Vouchers with Customs Duty

See Also

Tax Calculation Code Default Hierarchy

Creating the Voucher

Access the Invoice Information page (Accounts Payable, Vouchers, Add/Update, Regular Entry, Invoice Information).

Copy from a Source Document

Adding or Modifying the Customs Duty Amount

Access the Invoice Line Custom Duty Tax Detail page (click the Custom Duty link in the Invoice Lines group box on the Invoice Information page).

Custom Duty Applicable

This is selected if the vendor is defined as custom duty applicable in the Vendor Location Tax Applicability page.

Custom Duty Details

Viewing Recoverable and Nonrecoverable Amounts

Access the Voucher Custom Duty Summary page (click the Custom Duty Summary icon on the Invoice Information page).

You can view the customs duty recovery and nonrecovery amounts at the voucher level.

Processing PeopleSoft Payables with Excise Duties, Sales Tax, and VAT

This section discusses the PeopleSoft Payables functionality specific to India excise duty, sales tax, and VAT processing, which includes minor changes to data entry and to processing. This section discuss how to:

• Create vouchers with excise duty, sales tax, and VAT.

• Enter voucher excise duty, sales tax, and VAT details.

• Copy PO and receiver information into vouchers.

• Post vouchers.

Pages Used to Process PeopleSoft Payables with Excise Duties, Sales Tax, and VAT

See Also

Tax Calculation Code Default Hierarchy

Creating Vouchers with Excise Duty, Sales Tax, and VAT

Access the Invoice Information page (Accounts Payable, Vouchers, Add/Update, Regular Entry, Invoice Information).

You can create vouchers with excise duty, sales tax, and VAT by using the following voucher styles: regular voucher, reversal voucher, register voucher, or adjustments. When you create vouchers, either online using the Voucher component or in batch using the Voucher Build Application Engine process (AP_VCHRBLD), do not enter the gross amount in the header. Rather, enter only the individual voucher line information. At save time, the system calculates excise, sales taxes, and VAT, and the gross amount.

Note. When you create vouchers online using the Voucher component the system generates an error message if it calculates a gross amount value that is different from the one that you have entered manually. Change the gross amount to the system-calculated value or modify the tax parameters.

When you create vouchers using the Voucher Build process the system will overwrite the header gross amount entered by the user with the amount calculated by the AP India Tax Calculation Application Engine process (APVEDTPREX).

Entering Voucher Excise Duty, Sales Tax, and VAT Details

Access the Invoice Line Excise Duty/Sales Tax/VAT Detail page (click the Excise/Sales Tax link on the Invoice Information page).

Until the voucher is posted, you can enter or override tax information for the following fields:

• Transaction Type.

• Excise Tax Rate Code.

• Tax Rate Code.

• Ship To Location.

Click Calculate to recalculate and display new tax amounts.

Excise, sales tax, and VAT calculations are performed by the global common routine that is called during voucher online creation and the Voucher Build process. The excise, sales tax, and VAT calculations are based on the defaults defined if no changes are made to this page.

Copying PO and Receiver Information into Vouchers

You can copy PO or receiver information in two ways. You can copy:

• An entire PO or receiver.

• Individual lines from one or more POs or receivers from the worksheet.

Because tax rate structures are subject to change, PeopleSoft Payables copies only static information such as tax transaction type and tax category. The Tax Determination process determines the tax rate and codes at the time of voucher save. To determine and calculate tax, PeopleSoft Payables copies:

• Tax transaction type.

• Item tax category for excise duty, sales tax, and VAT.

• Vendor tax category for excise duty, sales tax, and VAT.

Note. Detail tax codes from EXS_PO_SHIP_TAX are not copied from PeopleSoft Purchasing. They are determined in PeopleSoft Payables.

See Also

Invoices from Quick Invoice Entry

Entering and Processing Vouchers Online: General Voucher Entry Information

Posting Vouchers

Sometimes, you can recover a portion of sales tax or VAT. At voucher post, the system creates accounting entries to track and accrue sales tax or VAT, both recoverable and nonrecoverable, and excise tax.

This table lists the accounting entries that the system creates during voucher posting for sales tax, VAT, and excise tax:

This table lists the accounting entries that the system creates during voucher posting for customs duty tax: