(IND) Processing Customs, Excise Duties, Sales Tax, and VAT for India

This chapter provides overviews of Indian excise duties, customs duty processing, customs duty calculation, procure-to-pay and order-to-cash transactions with excise duties, sales tax and VAT, and discusses how to:

• Create excise adjustments.

• Update registers and create accounting entries.

• Apply CENVAT using online pages.

• Record accounting entries for excise duty, sales taxes, and VAT.

• Report on tax register information.

• Use tax form tracking.

Understanding Indian Excise Duties

PeopleSoft calculates Indian excise duties, a tax levied on goods manufactured or produced in India. PeopleSoft calculates the excise duty, creates excise invoices, records nonrecoverable excise duty, maintains the excise registers, and posts the accounting entries to record excise duties.

Based on the criteria entered on the transaction, the system determines if excise duty is applicable and calculates the tax. The tax is applied directly to the transaction or on a corresponding excise invoice. PeopleSoft applies Indian excise duty if necessary when:

• A sales order or quotation is created that ships merchandise from an Indian manufacturer to a customer when excise duty is applicable to the transaction.

• A purchase order (PO) is created and merchandise is received from a vendor where excise duty is applicable to the receipt.

In addition, excise duties can be adjusted to reflect adjustments made to the inventory stocked in an Indian factory, such as price adjustments, stock returned by customers, stock returned to vendors, stock quantity adjustments, and other transactions affecting price and stock quantity.

PeopleSoft captures the excise duty for interunit transfer moves of stock from one Indian factory to another factory located in a different Indian tax location through the shipping excise invoice.

Note. The Intercompany Transfers/InterUnit Billing feature does not support excise duty, sales tax, or VAT.

PeopleSoft creates:

• Shipping excise invoices to determine and calculate the excise duty payable for a shipment of goods from a factory location to a customer or another factory.

  This shipping excise invoice must accompany the items during shipment.

• Internal vendor excise invoices to record the excise duty from the vendor for items received into Purchasing that are raw materials for the factory or capital goods.

• Excise adjustments to determine and calculate the excise duty for adjustments to stocked items, shipments, receipts, duty deposits, and other changes.

After the system calculates excise duty for the excise invoice, it updates the tax registers with each transaction's excise duty information. PeopleSoft updates the following tax registers:

• Personal Ledger Account (PLA).

• Daily Stock Account (DSA).

• CENVAT Quantity Register − Raw Material (RG 23 A Part 1).

• CENVAT Quantity Register − Capital Goods (RG 23 C Part 1).

• CENVAT Value Register - Raw Material (RG 23 A Part II).

• CENVAT Value Register - Capital Goods (RG 23 C Part II).

Accounting entries are created and posted into PeopleSoft accounting records to record the excise duty obligations. The accounting entries for excise taxes are stored in the EXD_ACCTG_LINE record. To process these accounting entries into your general ledger system, map the Journal Generator Template to pick up the relevant fields in this table.

See Also

(IND) Determining and Calculating Excise Duty, Sales Tax, VAT, and Customs Duty

Understanding Customs Duty Processing

PeopleSoft enables you to record customs duties for imports into India. Customs duties are recorded on the following transactions:

• Purchase orders in Purchasing.

  To create a purchase order for imported items, use the tax transaction type of Direct Import. The tax transaction type is derived from the vendor tax applicability definition. The Customs duties' Tax Calculation Code and associated tax components are defaulted to import POs based on the tax determination structure and the default hierarchy using parameters such as Vendor Category or Benefit ID.

• Bill of Entry worksheet in Purchasing.

  The Bill of Entry (BOE) worksheet is created from a dispatched import PO or another BOE. When you save a new BOE, actual customs duties are determined and calculated for the BOE. When the imported goods arrive at customs, the BOE is submitted to the customs authorities along with other shipping documentation. You update the BOE based on the assessment by customs officials. Once the BOE is in Assessed or Closed status, no changes can be made and customs duties will not be recalculated.

• Third-party voucher in Payables.

  To pay the customs officials, you create a third-party voucher for the customs duties. This voucher is paid before you receive the goods, unless you are using a bonded warehouse. A bonded warehouse requires receiving before creating the voucher. When creating the voucher, you can manually change the computed customs duties to the actual amounts determined by the customs authorities. Issue the payment and send it along with the BOE to the appropriate government agency. When the government receives your payment and releases your goods, create the receipt ID in Purchasing. You must then reopen the voucher and manually associate the receipt ID with the voucher. This insures that the Landed Cost Extract process can match the actual customs duties from Payables with the calculated customs duties recorded in Inventory. The voucher splits the customs duties into recoverable and nonrecoverable amounts based on the recoverable tax percentage defined for each customs duty. Only the nonrecoverable amount is passed to Inventory by the Landed Cost Extract process.

• Receipts into Purchasing.

  After the imported goods have cleared customs, you receive the items into Purchasing. Like all receipts, you create the receipt ID based on the PO lines. However, for imported purchase orders, you must associate a BOE line (from a BOE in Assessed status) with each receipt line. The quantity open for receiving is the BOE quantity. Customs duties are not recalculated on the receipt.

• Putaway in Inventory.

  After the items are received, the Process Receipts process (PO_RECVPUSH) passes item costs to Inventory and Asset Management. For inventory items, this process also creates landed cost transactions for nonrecoverable customs duty amounts. The nonrecoverable customs duty amount is derived from the BOE line duty record for the corresponding receipt line. The Load Staged Items process (INPSSTGE) and Complete Putaway process (INPPPTWY) in Inventory complete the putaway process.

• Internal vendor excise invoices in Purchasing.

  After the items have been received into Purchasing, you can create an internal vendor excise invoice. With imported items, the internal vendor excise invoice records customs duties instead of excise duties and sales taxes or VAT. Lines from the BOE are copied into the internal vendor excise invoice. Customs duties cannot be changed or recalculated on the internal vendor excise invoice. Only the recoverable customs duties are recorded.

• Register Update process.

  After the internal vendor excise invoice has been completed for a receipt of imported items, the Register Update process posts the customs duty information into the Indian tax registers and creates accounting entries for the duties.

• Landed cost adjustments in Cost Management.

  The inventory item cost can be adjusted to the actual nonrecoverable customs duties amounts once the third-party voucher (from Payables) has been matched and the Landed Cost Extract, Transaction Costing, and Accounting Line Creation processes are run.

See Also

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

Understanding Customs Duty Calculation

To record customs duties, you must first define tax components, tax dependency codes, tax calculation codes, and set up the tax determination. After you have set up your customs duties structure, the system will calculate and record customs duties.

Methods for Calculating Customs Duties

For each customs duty component you define the method to use for calculating customs duties. Define the calculation method on the Tax Calculation Code page. Three methods exist for customs duties:

Applying Customs Duties to the PO

The system applies the customs duty tax calculation code to the correct purchase order schedule line by using the tax determination and the tax calculation.

Recoverable and Nonrecoverable Customs Duties

Each customs duty can be split into the recoverable and nonrecoverable parts based on the recoverable tax percentage defined on the Tax Calculation Code page for the customs duty. The recoverable portion is posted to an expense account. The system calculates the nonrecoverable percentage by subtracting the recoverable percent from 100 percent. The nonrecoverable portion is added as a landed cost to the item's inventory value in Inventory. For example, if the item value is 10,000 INR, the tax rate percentage is 3 percent, and the recoverable tax percentage is 90 percent, then the 30 INR is applied to the cost of the item in inventory, as follows: (10,000 INR * .03) * .10 = 30 INR. When you record the related voucher for customs duties in Payables, any change in the nonrecoverable customs duty can be applied to the item cost using PeopleSoft's landed cost feature.

Multiple customs duty components can be applied to the item's cost as a lump sum or individually by using one or more cost elements for customs duties.

See Also

Setting Up the Customs Duties Foundation

Understanding Procure-to-Pay Transactions with Excise Duties, Sales Taxes, and VAT

In the procure-to-pay business process, excise duties are payable on the local purchase of excisable materials. Sales taxes and VAT are payable on the purchase of taxable goods and are payable to the vendor of the goods.

In the procure-to-pay business process, excise duties are always calculated first, followed by sales taxes or VAT. For sales tax or VAT, the base amount includes the basic value and all excise duties. In addition to the base amount, miscellaneous charges and previously calculated sales tax or VAT amounts can also be included in the calculation.

See Also

Setting Up the Sales Tax and VAT Structure

Understanding Order-to-Cash Transactions with Excise Duties and Sales Taxes

In the order-to-cash business process, the tax transaction type determines if excise duties, sales taxes, or VAT are applicable on the sales order in Order Management. Excise duties are always calculated first, followed by sales taxes or VAT, and they are calculated at the order schedule level.

When inventory stock is shipped to fulfill a sales order, excise duties are calculated and posted for the item using a shipping excise invoice in Inventory. During the Populate Billing process, excise duty, sales tax, and VAT information is passed to the Billing Interface only when there is an excise invoice created for shipping lines.

In Billing, final taxes are calculated and printed on invoices. Billing creates accounting entries for the taxes and passes excise duties, sales tax, and VAT information to Receivables.

You can create return material authorization (RMA) activity in Order Management by referring to sales order history. For this activity, Billing copies all tax parameters from the original invoice when creating the adjustment invoice activity. RMA activity can also be created without reference to sales order history. In this case, Billing determines the tax rules and calculates the taxes.

You can enter and calculate excise, sales taxes, and VAT directly in Receivables or pass them to Receivables for transactions interfaced from Billing.

See Also

(IND) Excise Duty, Sales Tax, and VAT Processing for India

Calculating India Excise, Sales Tax, and VAT in PeopleSoft Billing

Processing Indian Taxes for Sales Orders and Quotes

Setting Up the Organizational Structure

Creating Excise Adjustments

The excise adjustment feature enables you to adjust the values stored in your registers and create adjusting accounting entries.

Understanding Excise Adjustments

Excise adjustments are to be carried out based on internal documents like the shipping ID documents, shipping excise invoices, or any external document like the vendor excise invoice. The reasons to use excise adjustments include:

• Excise duty (CENVAT) reversal for material returned to the vendor (RTVs).

• Excise duty (CENVAT) reversal for material returned by customers (RMAs).

• Excise duty (CENVAT) reversal due to cancellation of any excise invoice for any reason.

• Update the PLA register for payments to the PLA account with TR6 Challan details using categories of payment, such as, CESS, Interest, Penalty, Normal Duty, and so on.

• Update the PLA register for adjustments to CENVAT Utilization.

• Inventory transactions such as inventory counts, manufacturing, or other reasons.

• Excise duty (CENVAT) reversal for overdue items with subcontractor and taking CENVAT credit on subsequent receipt from subcontractor.

• Excise duty (CENVAT) adjustment for additional excise invoice received from the vendor due to price increase or other reasons.

• Additional excise duty (CENVAT) due to price increases or other reasons based on excise invoice sent to customer; short or excess charging of excise duty during sale.

• Price increases for dispatches after dispatch has been made.

• Applying the CENVAT hold for capital goods at the beginning of the year.

• Any other adjustment needed to reverse excise duties (other adjustments).

Adding or Updating an Excise Adjustment

Excise adjustments are recorded by:

1. Entering the adjustment on the Excise Adjustments page.

   1. Identify the adjustment by excise adjustment type.

   2. The excise invoice status must be New to update the adjustment.

   3. Enter excise tax information for your adjustment or enter the appropriate parameters such as business unit, customer, vendor, date, and item; then click the Calculate Tax button to perform the tax determination and tax calculation processes.

      The results are displayed in the Adjustment Line Tax Information section of the page. You can override any information on the line.

   4. Based on the excise adjustment type and register, the relevant ChartFields for excise adjustment can be determined from the Tax Location - ChartFields page.

2. Saving the Excise Adjustment page generates an excise adjustment with a unique adjustment excise number based on the excise document number series defined for this excise transaction type.

   Upon saving, the header and line information (for both item and tax) are stored in the excise adjustment tables (EXD_ADJ_HDR, EXD_ADJ_LINE, and EXD_ADJ_LN_TAX).

3. Running the Register Update process for excise adjustment updates the tax registers for the item quantities and amounts.

   Selecting the Excise Invoice Posting check box also records accounting entries for these adjustments. The following registers can be updated:

   • Personal Ledger Account (PLA).

   • Daily Stock Account (DSA).

   • CENVAT Value Register − Raw Material (RG 23 A Part II).

   • CENVAT Value Register − Capital Goods (RG 23 C Part II).

Recording the Adjustment on the Excise Adjustment Page

An excise adjustment type identifies each adjustment. Based on the excise register selected, the system determines the excise adjustment types to display on the Excise Adjustment page for selection. After the source transaction has been selected, then excise taxes can be calculated and the excise adjustment transaction can be created.

Pages Used to Create Excise Adjustments

Making Excise Adjustments

Access the Excise Adjustment page (Excise and Sales Tax/VAT IND, Excise Adjustments).

Search Criteria

For all adjustments, the following information must be entered:

Depending on the entries at the top of the page, different fields appear in the header and line details sections of this page and the system performs different validations.

Adjustment Header

Adjustment Line

For adjustments to the Daily Stock Account, CENVAT Value - Raw Materials, and CENVAT Value - Capital Goods registers, the following fields are available:

Adjustment Line Tax Information

The bottom portion of this page displays the tax calculations for the adjustment line displayed above. When you save the page or click the Calculate Tax button, the results of tax determination and tax calculations are displayed in this section. The user can override the following values or enter values when tax calculation is not performed.

Adjustment Line

For adjustments to the PLA register, the following fields are available:

Updating Registers and Creating Accounting Entries

The internal vendor excise invoice, shipping excise invoice, and excise adjustment determine and calculate the excise duty for receipts, shipments, and adjustments. The internal vendor excise invoice also records customs duties for imported items. The next step is to post the excise duty or customs duty information into the registers and create accounting entries for the duties. This is accomplished by the Register Update process. This process includes several subprocesses. Based on the type of excise invoice, different subprocesses are used to record excise duty or customs duty information.

Internal vendor excise invoices and customs duties are processed by:

• Excise Quantity Register Update subprocess.

• Value Register Update subprocess.

• Excise Invoice Posting subprocess.

Excise adjustments are processed by:

• Excise Quantity Register Update subprocess.

• Value Register Update subprocess.

• Excise Invoice Posting subprocess.

Shipping excise invoices are processed by:

• Excise Quantity Register Update subprocess.

• CENVAT Utilization subprocess.

• Excise Invoice Posting subprocess.

Note. For shipping excise invoices, the CENVAT Utilization subprocess can be replaced (for a small number of invoices) with the Online CENVAT Utilization page where you can manually allocate the CENVAT credit. Before manual allocation, the Register Update process must be used to process the invoices through the Excise Quantity Register Update subprocess. After manual allocation, the Register Update process must be used to process the invoices through the Excise Invoice Posting subprocess.

See Also

(IND) CreatingShipping Excise Invoices for India

Creating Excise Adjustments

Creating Internal Vendor Excise Invoices Against a BOE

Page Used to Update Registers and Create Accounting Entries

Using the Excise Quantity Register Update Process

The Excise Quantity Register Update process applies to all types of excise invoices (shipping, vendor, and adjustment). This process records the item quantities from each transaction line into the quantity registers that must be maintained for India excise duty. The registers to be updated vary by the type of excise invoice, as follows:

• The internal vendor excise invoices (receipts into Purchasing and BOE worksheets) increase the item quantity of raw materials or capital goods in the factory.

  The internal vendor excise invoice must have a status of New or Ready to be processed by the Excise Quantity Register Update process. The Excise Quantity Register Update process credits the Cenvat Quantity Raw Material (RG 23 A Part I) register for raw materials and the Cenvat Quantity Capital Goods (RG 23 C Part I) register for capital goods. The item tax type of the item determines if the quantity is raw materials or capital goods. If the item tax type is finished goods then no quantities are updated for an internal vendor excise invoice. The Inventory business unit where the items are putaway must be defined as a factory by the attached tax location.

• The shipping excise invoices (depletions from Inventory) decrease the item quantity of finished goods or other items.

  The shipping excise invoice must have a status of Ready to be processed by the Excise Quantity Register Update process. Excise Quantity Register Update process debits the item quantity in the Daily Stock Account register. The Inventory business unit must be defined as a factory by the attached tax location.

• The excise adjustments increase or decrease the item quantity in any of the registers (Daily Stock Account, CENVAT Register - Raw Material or Capital Goods) based on the type of adjustment entered.

When the Excise Quantity Register Update process is complete, the Quantity Register flag on the Excise Invoice table is updated for shipping excise invoices and internal vendor excise invoices.

Using the CENVAT Utilization Process

The CENVAT Utilization process allocates the amount of excise duty due on shipped items to the Cenvat Value - Raw Materials, Cenvat Value - Capital Goods, and PLA registers. (The amount of excise duty payable is calculated when the shipping excise invoice is created.) This process offsets the excise duty payable for items shipped from the factory (using sales orders and interunit transfers) against the cash deposits in the PLA register and the input of raw materials and capital goods into the CENVAT Value - Raw Materials and Cenvat Value - Capital Goods registers. Run this process fortnightly or whenever you need to apply CENVAT credit to your shipping excise invoices. You can also apply CENVAT credit to a selected few shipping excise invoices using the Online CENVAT Utilization page.

The CENVAT Utilization process retrieves lines from the shipping excise invoice and then allocates the total excise duty payable for all items in the shipping excise invoice by:

1. Verifying the CENVAT Value - Raw Material register has an active status for the tax location assigned to the sending Inventory business unit.

   The process then checks for sufficient amounts to cover the excise duty payable in this register. If there are enough funds, the CENVAT Value - Raw Material register is updated for the excise duty payable by creating an entry in the value register table (EXD_RG23_AC2) with a unique serial number and the duty payable amount.

2. If the CENVAT Value - Raw Material register has insufficient balance to cover the entire excise duty payable amount, then the process checks the CENVAT Value - Capital Goods register.

   After verifying the CENVAT Value - Capital Goods register has an active status for the tax location assigned to the sending Inventory business unit, the system checks the amount in the register. If there is enough funds between CENVAT Value - Raw Material and CENVAT Value - Capital Goods registers, then the funds in CENVAT Value - Raw Material are used first and then the remainder is drawn from the CENVAT Value - Capital Goods register. For each register, a line is inserted in the value register table (EXD_RG23_AC2) with a unique serial number and the duty payable amount.

3. If the combined funds of the CENVAT Value - Raw Material and the CENVAT Value - Capital Goods registers are not enough to cover the excise duty payable amount, then the process verifies the active status of the PLA register (for the tax location assigned to the sending Inventory business unit) and checks the current funds in that register.

   If the sum of the CENVAT Value - Raw Material, CENVAT Value - Capital Goods, and PLA registers are sufficient to cover the duty payable amount then the funds are drawn from the CENVAT Value - Raw Material register until funds are exhausted, then funds are pulled from the CENVAT Value - Capital Goods register until funds are exhausted, and the remainder is drawn from the PLA register. For each register, a line is inserted in the value register table (EXD_RG23_AC2) and the PLA register table (EXD_REG_PLA) with a unique serial number and the duty payable amount.

4. If the sum of the CENVAT Value - Raw Material, CENVAT Value - Capital Goods, and PLA registers is not sufficient to cover the excise duty payable amount, then the registers are not updated.

   The process creates a message in the message log of this process run. This message provides the excise invoice number and line for the user to get the details of the shipping excise invoice, including the duty payable for each line and the total duty payable for the Shipping ID.

When CENVAT Utilization process is completed successfully, the CENVAT Utilization flag on the Excise Invoice table is updated.

Note. The CENVAT Utilization subprocess can be replaced (for a small number of invoices) with the Online CENVAT Utilization page where you can manually allocate the CENVAT credit. This enables you to allocate the CENVAT credit in a different sequence and in different amounts than stated above for the CENVAT Utilization process. Before manual allocation, the Register Update process must be used to process the invoices through the Excise Quantity Register Update subprocess. After manual allocation, the Register Update process must be used to process the invoices through the Excise Invoice Posting subprocess.

Using the Value Register Update Process

The Value Register Update process updates the tax registers with the monetary amounts of excise taxes or customs duties included in:

The value register update process can be run after the Excise Quantity Register Update process has been successfully completed. When the Value Register Update process is complete, the Value Register flag on the Excise Invoice table is updated.

Using the Excise Invoice Posting Process

This process creates accounting entries to record the excise and customs duties included in the Indian excise registers.

Note. For internal vendor excise invoices of imported items, the process credits the CENVAT Clearing Imports ACD account and debits the CENVAT on Raw Materials, CENVAT on Capital Goods, and CENVAT Hold on Capital Goods accounts. The CENVAT accounts are the ChartField combinations listed on the Tax Location - ChartFields page by Excise Account Type

Running the Register Update Process

Access the Register Update page (Excise and Sales Tax/VAT IND, Register Update).

Excise Invoice Source	Select the type of excise invoice. Your options are: Shipping Excise Invoice: Enables you to run the Excise Quantity Reg Update to update register quantities, the CENVAT Utilization to allocate register amounts, and the Excise Invoice Posting to create accounting entries. Vendor Excise Invoice: Enables you to run the Excise Quantity Reg Update to update register quantities, the Value Register Update to update register amounts, and the Excise Invoice Posting to create accounting entries. Excise Invoice Adjustment: You must run the Excise Quantity Reg Update to update register quantities and the Value Register Update to update register amounts. You can also run the Excise Invoice Posting to create accounting entries.
Excise Quantity Reg Update	Select to update the item quantities in the tax registers. This process applies to shipping excise invoices, internal vendor excise invoices, and excise adjustments.
CENVAT Utilization	Select to allocate the monetary amounts from shipments in the CENVAT Value - Raw Material, CENVAT Value - Capital Goods, and the PLA registers. This process applies only to shipping excise invoices.
CENVAT As of Date	Enter a date to select transactions for the CENVAT utilization process. All available shipping excise invoices with a header date on or before this date are selected. The default is the current system date. This date cannot be greater than the system date or less than the CENVAT As of Date of any previous Register Update processes.
Value Register Update	Select to update the monetary amounts in the tax registers. This process applies to internal vendor excise invoices and excise adjustments.
Excise Invoice Posting	Select to create the necessary accounting entries to record excise duties and customs duties transactions inserted in the tax registers. This process applies to shipping excise invoices, internal vendor excise invoices, and excise adjustments.
Organization Code	Defines registration details for the organization.
Tax Location Code	Identifies the manufacturer's location of excise applicable goods. The selection is limited to the tax location codes defined for the organization code entered on this page.
Excise Document Series	Enter the excise document number series used for the transactions.
From Invoice Number and To Invoice Number	(Optional) Enter the range of excise invoice numbers for the excise invoices that you want to process.

Note. The Register Update process does not run if the tax location specified on the run control ID is currently locked. A tax location is locked if another Register Update run control is currently processing the Value Register Update subprocess or the CENVAT Utilization subprocess using this tax location. The tax location is also locked if it is currently being used on the Online CENVAT Utilization page.

Applying CENVAT Using Online Pages

This section discusses how to:

• Apply CENVAT credit online.

• Unlock tax locations.

The online CENVAT utilization feature enables you to review all shipping excise invoices not yet processed by the CENVAT Utilization process and manually apply the CENVAT credit from the Cenvat Value - Raw Materials register, Cenvat Value - Capital Goods register, or the PLA register. The credit can be applied in any order needed, for example, you can take part or all of the credit from the PLA register without exhausting the Credit Value registers first. The system default is to exhaust the Cenvat Value registers before using the PLA register.

To use Online CENVAT Utilization page, the shipping excise invoice must have:

• A header status of Ready.

• Successfully complete the Excise Quantity Register Update process.

• Not been processed by the CENVAT Utilization process or another Online CENVAT Utilization page.

The Online CENVAT Utilization page is designed to supplement the CENVAT Utilization process included on the Register Update page. For large numbers of shipping excise invoices, the CENVAT Utilization process should be used. The online page should be used for exceptions and process a smaller volume of invoices. Performance could degrade if large volumes of invoices are used on the Online CENVAT Utilization page.

Once you have allocated CENVAT using the Online CENVAT Utilization page, be sure to run the Register Update run control for the related shipping excise invoices with the Excise Invoice Posting process selected. This creates and posts the necessary accounting entries.

In the course of doing business, the new tax location CENVAT utilization tracking table, as well as related tables like the shipping excise tables and register records can get fairly large. To conserve database space, it is recommended that the transaction data be purged after it is no longer needed with regard to government regulations and business requirements.

Pages Used to Apply CENVAT Online

Applying CENVAT Credit Online

Access the Online CENVAT Utilization page (Excise and Sales Tax/VAT IND, Online CENVAT Utilization).

When you first enter this page, the system calculates the credit available and the suggested utilization from each register. You can clear any of the excise shipping invoices and change the credit used.

Invoice Details

Initiating the Online CENVAT Utilization

Once you have finished allocating CENVAT credit across the registers, click the Save button to:

1. Lock tax location to prevent other users from adjusting the same tax location.

   If the system is unable to get a lock on the tax location then an error message is displayed and your changes are not recorded. You must try again when the tax location is unlocked.

2. Validate that the shipping excise invoices have not been changed by another user.

   If another user has made changes between the time the invoice was first displayed on this page and the Save button was clicked, then an error message is displayed and your changes are not recorded.

3. Recalculate the CENVAT due for each shipping excise invoice line.

4. Validate the entries in the credit used fields against the available credit. The credit used from each register cannot exceed the available credit for that register. For example, if the PLA Register Credit Available field displays 15,000 then the value in the PLA Credit Used field cannot exceed 15,000. If the credit available is insufficient to cover the excise due, then an error message is displayed and your changes are not recorded.

5. The system displays a message asking the user to confirm that the Cenvat Value and PLA registers should be updated with this information.

   Select Yes to write your changes into the tax registers, unlock the tax location, and update the table for online CENVAT utilization.

Unlocking Tax Locations

Access the Unlock Tax Location page (Excise and Sales Tax/VAT IND, Unlock Tax Location Records).

This page displays all tax locations that are currently locked by the system. A tax location is locked if it is currently in use by:

• The Value Register Update process on the Register Update page.

• The CENVAT Utilization process on the Register Update page.

• The Online CENVAT Utilization page.

Locking the tax location code prevents users from accessing the same shipping excise invoices on another Online CENVAT Utilization page. Due to power failures or user error, a tax location may get stuck in the locked status. Use this page to unlock tax locations that are not currently being used by the CENVAT Utilization process or the Online CENVAT Utilization page.

Use the Select check box to select the tax location to be unlocked, then click the Unlock Org Tax Locations button. A warning message displays. The unlock feature should only be used if you are certain that there are no Register Update processes running. Balance integrity issues could occur if tax locations are unlocked in error. Save the page to unlock the tax location.

Warning! Security should be applied to this page to prevent general user access. Only system administrators should use this page.

Recording Accounting Entries for Excise Duties and Customs Duties

The Excise Invoice Posting subprocess creates the accounting entries needed to record excise duties and customs duties. These accounting entries are stored in the EXD_ACCTG_LINE record.

Note. To process these accounting entries into your general ledger system, the Journal Generator Template should be mapped to pick up the relevant fields in EXD_ACCTG_LINE table.

Recording Accounting for Internal Vendor Excise Invoices

For the internal vendor excise invoices, the Excise Invoice Posting subprocess creates accounting entries for the CENVAT Value - Raw Material register (for raw materials) and the CENVAT Value - Capital Goods register (for capital goods). Run this subprocess using the Register Update process page. Once the Excise Invoice Posting subprocess creates the accounting entries, the new details of posting date and accounting document reference are stored in the internal excise invoice table.

This subprocess retrieves each receipt line from the internal vendor excise invoice table and performs the following validations before posting:

• Confirms the Excise Quantity Register Update subprocess was successfully completed.

• Verifies the receipt quantity on the receipt matches the internal vendor excise invoice table.

The internal vendor excise invoice includes either excise duties or customs duties. Excise duties are applied to goods manufactured or produced in India. Customs duties are applied to good imported into India.

Excise Duties

The Excise Invoice Posting subprocess records the excise taxes for each receipt by crediting the CENVAT Clearing account and debiting the appropriate CENVAT account. The CENVAT accounts are the ChartField combinations listed on the Tax Location - ChartFields page by Excise Account Type.

Customs Duties

The Excise Invoice Posting subprocess records customs duties instead of excise taxes for each receipt from an imported item by crediting the CENVAT Clearing Imports ACD account and debiting the appropriate CENVAT account. The CENVAT accounts are the ChartField combinations listed on the Tax Location - ChartFields page by Excise Account Type.

Calculating CENVAT on Capital Goods

The amount of excise taxes or customs duties from the receipt of capital goods is split between the CENVAT on Capital Goods account and the CENVAT Hold on Capital Goods account based on the percentage located on the Tax Location - Excise Group page in the CENVAT % on Capital Goods field. The CENVAT on Capital Goods amount is derived by applying the percentage to the total excise duty or customs duty for the item. The remainder is applied to the CENVAT Hold on Capital Goods account.

The amount in the CENVAT Hold account is moved into the CENVAT on Capital Goods account in the subsequent year. Record this adjustment at the beginning of the subsequent year by entering a manual adjustment using the Excise Adjustment page.

See Also

Creating Internal Vendor Excise Invoices Against a BOE

Recording Accounting for Shipping Excise Invoices

For the shipping excise invoices, the Excise Invoice Posting subprocess creates accounting entries for the excise registers. Shipping excise invoices include shipments from Inventory business units to customers (based on a sales order) or interunit transfers to another Inventory business unit in a different tax location (based on an interunit material stock request). The Excise Invoice Posting subprocess can be run using the Register Update process page. The shipping excise invoice must have a status of Ready before posting is done. After the Excise Invoice Posting subprocess has created the accounting entries, the internal excise invoice table is updated with the details of posting date and accounting document reference.

The Excise Invoice Posting subprocess records the excise tax for each shipping excise invoice by crediting or debiting the appropriate CENVAT account. The CENVAT accounts are the ChartField combinations listed on the Tax Location - ChartFields page by Excise Account Type assigned to the Tax Location relevant to the sending Inventory business unit. The accounting entries are allocated to CENVAT accounts based on the allocation by the CENVAT Utilization process of the total excise duty payable amount. The following excise account types are used:

See Also

Creating Internal Vendor Excise Invoices for BOE Transactions

Recording Accounting for Excise Adjustments

For the excise adjustment invoices, the Excise Invoice Posting subprocess creates accounting entries for the PLA, CENVAT Value - Raw Material, and CENVAT Value - Capital Goods registers. This subprocess can be run using the Register Update process page. After the Excise Invoice Posting subprocess creates the accounting entries, the internal excise invoice table is updated with the details of posting date and accounting document reference.

The Excise Invoice Posting subprocess records the excise tax for each adjustment by debiting and crediting the appropriate CENVAT accounts. The CENVAT accounts are the ChartField combinations listed on the Tax Location - ChartFields page by Excise Account Type. ChartField combinations for excise adjustments are determined based on the excise adjustment type code, register to be updated, item tax type, and increase/decrease indicator. The following table displays the excise account type for each combination:

Applying CENVAT Hold on Capital Goods

The CENVAT on Hold is moved into the CENVAT on Capital Goods account in the subsequent year. Record this adjustment at the beginning of the subsequent year by entering a manual adjustment using the Excise Adjustment page.

For Return to Vendor Transactions

When items are returned to vendor, use the Excise Adjustment page to record the return. This entry reverses the accounting entry recorded when the items were received using the internal vendor excise invoice. The system uses existing RTV functionality to reverse voucher accounting entries. When an express issue is made against the RTV voucher for inventory depletion, no update is necessary for the Quantity register. The excise invoice is printed for dispatch of items to vendor without accounting entries.

For Return Material Authorization Transactions

No excise duty is calculated on the RMA Form. Create an excise adjustment to reverse the excise duty posted by the originating shipping excise invoice. The existing RMA adjust process creates an adjustment bill in Billing to reverse the product costs and excise duty recorded.

PLA

No accounting entries are created by the Excise Invoice Posting process when you enter an excise adjustment to update the PLA register for payment (increase) to your PLA account. Instead, Payables records the payment and its accounting entries.

See Also

Setting Up for Journal Generator

Using the CENVAT Utilization Process

Defining Excise Account Type ChartFields

Reporting on Tax Register Information

The Register Abstract process extracts information from the tax registers and stores the data in abstract tables.

Understanding Tax Register Information

You can use the abstract tables to create customized reports or queries for monthly, quarterly, or annual reporting requirements. The abstract records created include:

The primary purpose of the abstract table is to generate the monthly and quarterly returns prescribed by the Indian authority.

Pages Used to Report on Tax Register Information

Running the Register Abstract Process

Access the Register Abstract page (Excise and Sales Tax/VAT IND, Register Abstract).

Excise Quantity Register Abstract	Select to extract item quantities from the tax registers.
Excise PLA Register Abstract	Select to extract data from the PLA register.
Excise CENVAT Register Abstract	Select to extract data from the CENVAT Value - Raw Material and CENVAT Value - Capital Goods registers.
Tax Location Code	Identify the manufacturer's location of excisable goods. The selection is limited to the tax location codes defined for the organization code entered on this page
From Date and To Date	Enter a time period to extract data from the registers. The To Date cannot be greater than the current date.

Using Sales Tax and VAT Form Tracking

To use sales tax and VAT form tracking, you must first use the Form Name component (STX_FORM_NAME) and the Form Code component (STX_FORM_CODE) to identify and group the necessary declaration forms.

This section provides an overview of sales tax form tracking and discusses how to:

• Maintain sales tax and VAT forms by transaction.

• Audit cancelled forms.

• Extract and store transactions' data needed for tracking forms.

Understanding Sales Tax and VAT Form Tracking

There are three types of taxes recorded for India, central sales tax (CST), local sales tax (LST), and Value Added Tax (VAT). The central sales tax is levied on interstate sales or purchases and the local sales tax or VAT is levied on intrastate sales or purchases, depending on the tax regime followed by the state. PeopleSoft records all three types of taxes.

The PeopleSoft form tracking feature marks your transactions with the appropriate sales tax or VAT declaration form and populates the Tax Form Register with these transactions. Form tracking is required for:

• Sales, at a concessional rate, when you receive tax declaration forms from a customer.

• Purchases at a concessional rate, when you issue tax declaration forms to a vendor.

• Stock transfers from one Inventory business unit to another, which are otherwise exempt from tax.

• Transactions involving local export or local import in India.

To set up tax form tracking:

1. Identify each tax declaration form for your organization using the Form Name page.

2. Group the form names into form codes.

   A transaction can be subject to different types of tax forms. Use the Form Code page to group several declaration forms together for tracking purposes.

3. Attach the form codes to the appropriate tax codes using the Tax Calculation Code page.

   Attach the InterUnit form codes to the appropriate tax authority using the Tax Authority page.

Tax declaration forms are tracked through the business process as follows:

1. When you create a transaction where Indian sales tax or VAT is applicable, the tax determination and tax calculation processes will determine the tax form codes for the transactions.

2. Run the Forms Tracking Extract process to retrieve tax form tracking data from the source transactions and copy it into the Tax Form Register (STX_FORM_REGSTR) record.

3. Use the Form Maintenance page to update or cancel information (such as a form number and form date) in the Tax Form Register table.

   You can also use the Form Maintenance page to delete tax forms or transactions.

4. Use the Form Audit page to review previously cancelled forms.

Two tables store the tracking information for tax forms receivable and issuable:

• The Tax Form Register table (STX_FORM_REGSTR) stores all the information required for tracking the forms.

  Data is loaded into the table only through Tax Form Tracking Extract process from various transaction tables.

• The Tax Form Audit table (STX_FORM_AUDIT) stores all the information required for tracking cancelled forms.

See Also

Setting Up the Sales Tax and VAT Structure

Tax Calculation Code Default Hierarchy

Pages Used for Tax Form Tracking

Using the Form Maintenance Page

Access the Form Maintenance page (Excise and Sales Tax/VAT IND, Form Maintenance).

Use this page to maintain the tax forms and transactions included in the Tax Form Register table. This page can:

• Attach multiple transactions to a tax declaration form number.

• Delete transactions when no tax declaration form is needed.

• Review transactions with any status (open, closed, or deleted) in display-only mode.

• Cancel a previous attachment of a transaction to a form number.

Form Maintenance Transaction - Transaction Information Tab

Form Maintenance Transaction - Additional Information Tab

See Also

Setting Up the Sales Tax and VAT Structure

Using the Form Audit page

Access the Form Audit page (Excise and Sales Tax IND/VAT, Form Audit).

Use this page to review previously entered information (for example, form number and form date) for transactions whose attachment to a form got cancelled.

Using the Tax Forms Tracking Extract Process

Access the Forms Tracking page (Excise and Sales Tax/VAT IND, Form Tracking Extract).

This process updates the Tax Form Register (STX_FORM_REGSTR) with the information from transactions required for tracking tax forms. Only transactions with a tax form code are copied to the Tax Form Register. The tax form code is applied to the transaction by the tax determination and tax calculation processes.

See Also

Generating Invoices

Integrating with PeopleSoft Receivables, General Ledger, and Accounts Payable

Setting Up the Sales Tax and VAT Structure

Running Voucher and Payment Posting

Preparing Putaway Plans

Running the Deplete On Hand Qty Process