excise, tax

[Former Member]

Dear gurus

what is the difference between excise and tax pls explain the process how it will apply there is any link between excise and tax.

[Former Member]

REFER BELOW

What is Central Value-added Tax and how it is configured?

What is CENVAT (Central Value-added Tax) and how it is configured?

Before I am going to explain what is cenvat, you have to under stand the Indian tax C<b>entral Excise Duty </b>(BED). It is called as basic excise duty. Every manufacturer is liable to pay the excise duty in various kinds namely Basic Excise Duty, Special Excise Duty, Additional Excise Duty etc.,

Just think over a product which is reached to a end user, how many manufacturing activities are done. So to reduce the tax burden of the end user, the Govt. of India introduce the MODVAT scheme which is now called CENVAT scheme.

Based on this, if any manufacturer purchased a material, which is duty paid, and if it is used for his further manufacturing activity, he can avail this as credit in his book based on the Central Excise Invoice. At the time of selling his manufactured goods, he is liable to pay the excise duty. He can adjust the credit which he has taken into his book and pay the rest. For example:

CENVAT availed at the time purchased various goods Rs.20,000 (EXcise duty alone)

CENVAT payable for his product at the time sales Rs.25,000

He will pay only Rs.5000 through cash deposit in PLA.

This customizing are in SAP CIN Module. If you are having the CIN CD, go through.

. In addition to this. The CENVAT means, Tax on Value Addition on the goods manufactured according to Central Excise & Customs Act Difinition. Here the value addition means the Additional Services/Activities etc. which converts the Input in to Output, and the output is newly recognised as per the this act as Exciseble goods. Like this the discussion

is goes on for definition.

In 4.7 SAP version, there is no CIN version seperately, it is available with Standard SAP it self.

<a href="http://help.sap.com/bestpractices/BBLibrary/html/G65_ExciseDuty_EN_DE.htm">EXCISE DUTY</a>

Taxation Explain with an example

I'm assuming that, the country is India and based on its requirement:

Sales tax is a state government revenue. There are two types of sales taxes, Local sales tax & central sales tax. Local sales tax is intra state whereas CST is inter state.

Example of LST : Point of sale i.e. delivering plant & ship to party are within the same state. The rates are defined by the respective state governments.

Example of CST : The Delivering plant & Ship to party geographic locations are 2 different states. At the point of sales from one state, the ST goes to that state govt. & consignment is despatched to the Ship to party. Once that consignment is received at the ship to party state, sales tax will be levied once the sales is registered there. For this case, the LST that is applicable by the Ship to party further will not be applicable in all probability to be captured in SAP.

Stock transfer : This does not attract any sales tax. The consignment is transferred from one D plant to another D plant irrespective of inter/intra state sales. The invoice that is accompanied with the consignment thus shall not have any final value. It's a zero value invoice, but the basic prices needed to be mentioned.

The selling organisations normally needs to register with the sales tax authority of the respective state to have a warehouse or D plant to avoid the double taxation for their dealers/distributors.

Now, the pricing procedure that is there in 4.7 is Factory sale with formula-JFACT, in which the CST condition type is JIN1 & the LST is probably JIN2. There may be surcharge cond types as well which will calculate the amount on either JIN1 or JIN2.

For config :

1.SPRO > S&D > Basic fn. > Pricing > Pricing control > Define & assign Pric. procedure > Maintain Pric proc.

2. The tax rates are normally driven from the Tax classification of Customer & Material access. To do this config, S&D >Basic fn. > Taxes. You need to include the condition type for country IN in 'Define tax determin rule'.

3. Same path : But go to Tax relevancy of master records where you configure the condition type & options of rates that will flow to these masters. One needs to understand here properly as u need to have unique combinations for picking the sales tax rates. I will try to demonstrate the smallest example. Let's say, the LST rates are 2%,4% & 0%. I will have two options for material master here. 1 for taxable & 2 for not taxable.

For customer master, I will have 1-LST 2%, 2-LST4% & 3-LST0%. When I create master records for LST thru VK11 for JIN2, I will chose the access where the combinations of customer & material tax classifications are available. If this access does not exist create it under an access sequence. But normally this is standard. The condition records will look like,

Cust-Tax classi. Material tax claasi. Rate Tax code

1 1 2% A1

2 1 4% A1

3 1 0% A1

Remember, rates are flown from the tax codes. Tax codes can be created thru T code FTXP. This is normally a FI job.

[Former Member]

Excise duty is levied on a number of products – for example, various alcoholic drinks and tobacco products – over and above VAT. A sample tax code (IC) is delivered (15% VAT + 40% excise duty).

excise duty is levied by central goverment on all products

Taxes on sales and purchases are levied on every sales transaction in accordance with the principles of VAT. This applies to input and output tax, for example.

Input tax is calculated using the net invoice amount and is charged by the vendor.

Output tax is calculated using the net price of products and is charged to the customer.

Companies can offset input tax against output tax, paying the balance to the tax authorities. Tax authorities can set a nondeductible portion for input tax which cannot then be claimed from the tax authorities.

Additional tax

Additional taxes are taxes that are posted in addition to tax on sales/purchases. They are usually country-specific, such as investment tax in Norway, or sales equalization tax in Belgium.

Sales tax

An example of sales tax is the sales and use tax that exists in the USA. Sales transactions that are taxed must be kept strictly separate from sales transactions that are not taxed.

In general, goods that are intended for production or for resale to a third party are procured untaxed; that is, the vendor does not calculate tax on the sale of these goods (sales tax). Procurement transactions for individual consumption, on the other hand, are taxable (use tax).

[Former Member]

Excise Duty:

A tax in India paid on the manufacture of goods, payable by the manufacturers when goods leave their premises.

Different goods are subjected to different sorts of excise duty as follows:

Basic Excise Duty

Special Excise Duty

Additional Excise Duty

Cess

Sales Tax: This is a tax levied on the sale of a product. It is applied on the gross price of goods, inclusive of excise duty.

In addition to the IMG settings for taxes on sales and purchases, we must also maintain the tax registration numbers of the vendors, customers and the plants. If there is possibility of offsetting of input local sales tax against output LST, it must also be defined.

There are 2 types of sales tax:

1.Interstate Sales Tax: This tax is subjected to Central sales Tax (CST). The tax rate is same through out the country.

2.Intrastate Sales Tax: The tax is subjected to Local sales Tax (LST). The tax rate differs from state to state.

regards

AK