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<p>G/L Account for CENVAT Offset Records the excise duty calculated at the time of invoice verification. The values in this account and the CENVAT clearing account are balanced if there is no difference in the excise amounts at goods receipt and inovice verification. Use The values in this account and the CENVAT clearing account are compared after invoice verification. Examples Comparison of CENVAT clearing and offset accounts and the resultant postings: If there is no difference in the amounts compared (say 100) Dr. CENVAT clearing acct Cr. CENVAT offset acct 100 100</p> <p>If amount at invoice receipt (say 110) &gt; amount at GR (say 100) Dr. CENVAT plant acct Cr. CENVAT clearing acct Cr. CENVAT offset acct 10 100 110</p> <p>If amount at invoice receipt (say 90) &lt; amount at GR (say 100) 100 10 90</p> <p>Dr. CENVAT clearing acct Cr. CENVAT plant acct Cr. CENVAT offset acct --0--------------------------G/L account for Modvat Clearing</p> <p>The G/L Account for Modvat Clearing is used to post the Excise amount (in case of material for which Modvat can be availed) at the time of Goods Receipt(GR). Use The values in the Modvat Clearing Account and the Modvat Offset Account are compared after Invoice verification. Examples</p> <p>At GR, the Modvat amount is posted as follows : Modvat Plant A/c. Dr. To Modvat Clearing A/c. G/L Account for CENVAT On Hold Records any CENVAT that is temporarily not available - and therefore "on hold" - until certain conditions are met. Examples Countervailing duty paid on imports is not available for utilization until receipt of the goods. On receipt of goods, the relevant duty is to be transferred to the appropriate CENVAT account of the plant. G/L Account for CENVAT Suspense Records excise duty from sales documents. The excise duty is subsequently paid from the CENVAT RG 23A, RG 23 C, or personal ledger accounts. G/L account for PLA On Hold General Ledger Account for PLA Suspense Use Cheques deposited, into the PLA Account maintained with the bank, are posted to this general ledger account initially, pending realisation. The balance in this account is not available for payment of excise duty on despatches until the intimation of realisation of cheque is received from the bank. Subsequently, the realised amounts are transferred to the general ledger account for PLA maintained for the plant. CIN-Register RG 23A and 23C updated Oct 7, 2008 6:18 am | 12,527 views Introduction CIN means Country Version India comes with functions for calculating, posting, remitting, and reporting excise duty, and for handling incoming and outgoing excise invoices. Country Version India offers two ways of calculating excise duty:</p> <p>(1) Condition-based calculation procedures (TAXINN)- TAXINN is only supports conditionbased excise determination</p> <p>(2) Formula-based calculation procedures (TAXINJ) - TAXINJ supports condition-basedexcise determination and formula-based excise determination</p> <p>As per Indian Law, the excise authorities require you to maintain the following registers relating to excise duty. Register RG 1 Register RG 23A, Parts I and II (for raw materials) Register RG 23C, Parts I and II (for Capital goods) Register RG 23D (applicable only to Ist or IInd stage dealers) Personal Ledger Account (PLA)</p> <p>Besides, ER-3 (formerly RT-12) returns have to be filed monthly (or quarterly for SSIs) . Register RT-12 Register RG 23A and 23C When the ordered materials arrive, you post the goods receipt and the excise invoice. The R/3 system posts the excise duty to the appropriate accounts for deductible input taxes when you enter the excise invoice. A record of all receipts and issues related to excisable materials is being kept in excise register in RG 23A (Raw Material) and RG 23C (Capital goods) by manufacturing plants. The register consists of two parts: Part I shows the quantities of the materials. Part II shows the amounts of excise duty on the materials, and how much you have transferred to the CENVAT accounts.</p> <p>Part I Entries When you enter a goods receipt for excisable materials, the system automatically asks you if you want to create the Part I entry in Register RG 23A or RG 23C. If so, the system generates a Part I entry. If not, it does not, but you can generate all missing Part I entries later. In the following two cases, the system does not automatically generate Part I entries for goods issues of excisable materials; A goods issue for vendor returns A goods issue for stock transport orders for plants (in case of Goods Movements transaction only)</p> <p>Part II Entries The system automatically creates an entry in Part II of the appropriate register in case of posting of an incoming excise invoice, or an outgoing excise invoice. All Part II entries are serially numbered. An accounting document for each posting is created by the system to transfer the various types of excise duty to the appropriate CENVAT account. CENVAT Document</p> <p>A CENVAT document is an accounting document that the system automatically creates when it generates a Part II entry. The following accounting entry passed in case of Part II entry generation For an incoming excise invoice; Account Debit Credit Basic Excise Duty 1500.00 CENVAT Clearing Account 1500.00 The excise duty is cleared from the clearing account on entering of vendor invoice. For an outgoing excise invoice; Account Debit Credit CENVAT Suspense Account 1700 Basic Excise Duty 1500 PLA 200</p> <p>Cenvat, or the Central Value Added Tax, is a component of the tax structure employed by many countries in the western section of Europe. The inspiration for Cenvat is derived from a tax system that is generally referred to as VAT, or a Value Added Tax. Both Cenvat and VAT are designed with the express purpose of minimizing a cascading effect when it comes to taxes on income, goods and services, and other forms of tax revenue. The aim of Cenvat is to aid in maintaining a tax structure that is considered equitable for both the citizens incurring the tax and the government that is collecting the tax revenue.</p> <p>One notable example of Cenvat can be found in India. Originally designated as a modified value added tax, this approach placed some limits on the type of taxation that could occur on goods used in the manufacturing process of finished consumer products. Modvat was later designated as Cenvat, and continued to function as a means of promoting industry within the country while still receiving some form of tax revenue from the effort. It is helpful to think of Cenvat as an incentive that encourages the production of goods within the country, rather than outsourcing the production to countries where the economic and tax climate is more favorable. By providing a credit on the taxes associated with materials used in the creation of finished goods, the government makes it more attractive for manufacturers to maintain operations within the country. This of course leads to the creation of more jobs for the citizens within the community and provides income for the purchase of products within the country. By reducing the tax burden for</p> <p>the end user of the materials, Cenvat opens the door to a more stable economy within the country, and a better standard of living for its citizens.</p> <p>What is CENVAT (Central Value-added Tax) and how it is configured? Anil Before I am going to explain what is cenvat, you have to under stand the Indian tax Central Excise Duty (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. K. SUNDAR Good Explanation. In addition to this. The CENVAT means, Tax on Value Addition on the goods manufactured according to Central Excise &amp; 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 Taxation of inputs, like raw materials, components and other intermediaries had a number of limitations. In production process, raw material passes through various processes stages till a final product emerges. Thus, output of the first manufacturer becomes input</p> <p>for second manufacturer and so on. When the inputs are used in the manufacture of product `A', the cost of the final product increases not only on account of the cost of the inputs, but also on account of the duty paid on such inputs. As the duty on the final product is on ad valorem basis and the final cost of product `A' includes the cost of inputs, inclusive of the duty paid, duty charged on product `A' meant doubly taxing raw materials. In other words, the tax burden goes on increasing as raw material and final product passes from one stage to other because, each subsequent purchaser has to pay tax again and again on the material which has already suffered tax. This is called cascading effect or double taxation. This very often distorted the production structure and did not allow the correct assessment of the tax incidence. Therefore, the Government tried to remove these defects of the Central Excise System by progressively relieving inputs from excise and countervailing duties. An ideal system to realize this objective would have been to adopt value added taxation (VAT). However, on account of some practical difficulties it was not possible to fully adopt the value added taxation. Hence, Government evolved a new scheme, `MODVAT' (Modified Value Added Tax). MODVAT Scheme which essentially follows VAT Scheme of taxation. i.e. if a manufacturer A purchases certain components(raw materials) from another manufacturer B for use in its product. B would have paid excise duty on components manufactured by it and would have recovered that excise duty in its sales price from A. Now, A has to pay excise duty on product manufactured by it as well as bear the excise duty paid by the supplier of raw material B. Under the MODVAT scheme, a manufacturer can take credit of excise duty paid on raw materials and components used by him in his manufacture. It amounts to excise duty only on additions in value by each manufacturer at each stage. The modvat scheme is regulated by Rules 57A to 57U of the Central Excise Rules and the notifications issued there under (The Central Excise Rules, 2002 (Section 143 of the Finance Act, 2002). Modvat Scheme ensures the revenue of the same order and at same time the price of the final product could be lower. Apart from reducing the costs through elimination of cascade effect, and bringing in greater rationalization in tax structure and also bringing in certainty in the amount of tax leviable on the final product, this scheme will help the consumer to understand precisely the impact of taxation on the cost of any product and will, therefore, enable consumer resistance to unethical attempts on the part of manufacturers to raise prices of final products, attributing the same to higher taxes. Subsequently, MODVAT scheme was restructured into CENVAT( Central Value Added Tax) scheme. A new set of rules 57AA to 57AK , under The Cenvat Credit Rules, 2004, were framed and whatever restrictions restrictions were there in MODVAT Scheme were put to an end and comparatively, a free hand was given to the assesses. Under the Cenvat Scheme, a manufacturer of final product or provider of taxable service shall be allowed to take credit of duty of excise as well as of service tax paid on any input received in the factory or any input service received by manufacturer of final product.</p> <p>The term "Input" means: All goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production All goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service; Explanation 1 : The light diesel oil, high-speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2 : Inputs include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer;" The term "Input service" means any service: Used by a provider of taxable service for providing an output service; or Used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from th What is the difference between VAT and CENVAT Well......VAT - Value Added Tax While CENVAT - Central Value Added Tax VAT- Value Added Tax VAT is a sales tax collected by the government (of the state in which the final consumer is located) which is the government of destination state on consumer expenditure. Over 120 countries worldwide have introduced VAT over the past three decades and India is amongst the last few to introduce it. India already has a system of sales tax collection wherein the tax is collected at one point (first/last) from the transactions involving the sale of goods. VAT would, however, be collected in stages (instalments) from one stage to another. The mechanism of VAT is such that, for goods that are imported and consumed in a particular state, the first seller pays the first point tax, and the next seller pays tax only on the value-addition done leading to a total tax burden exactly equal to the last point tax. CENVAT - Central Value Added Tax</p> <p>CENVAT is the new name for MODVAT. Basically they are the sam...</p>