SAP Financial Accounting (FI) Taxes (FI-AP/AR) Excise Duty

Use

The SAP system automatically calculates excise duties in Materials Management (MM) and in Sales and Distribution (SD), and posts them in Financial Accounting (FI).

The system covers all types of excise duty, all of which need to be calculated and reported separately:

· Basic excise duty (BED)

· Special excise duty (SED)

· Additional excise duty (AED)

· National calamity contingency duty (NCCD)

· Cess

· Education cess

· Countervailing duty

· Additional duty of customs

Features

The system of excise duties is complex, and differs from the generic functions for taxes on sales and purchases in a number of ways:

· The rate of duty on a single material can vary according to which chapter ID it is listed under.

· You cannot offset all excise duty on inputs against outputs.

Depots cannot offset any input duties at all. Manufacturing plants can only offset input duties if they can show that the input materials are used to produce output materials.

· You have to record all excise duty (inputs and outputs) in excise registers.

· Your company may only be entitled to offset a portion of the duty on inputs against duty on outputs.

· Companies that qualify as small-scale industries can levy excise duty on outputs at reduced rates, so if you purchase materials from these companies, you must calculate a different rate of excise duty.

Excise Determination

MM comes with two ways of determining excise duties (and sales taxes) on input materials: formula-based excise determination and condition-based excise determination. The system calculates excise duties using a tax procedure.

SD also supports formula-based and condition-based excise determination, but in SD, the system calculates the taxes using a pricing procedure, not the tax procedure (see Pricing).

Reporting

You have to remit the excise duty that you have collected to the central excise authorities. The law requires you to remit excise duty twice monthly: for the first half of any given month (1–15 inclusive) and from 16 to month-end. In each case, you are allowed five days to remit the excise duty. Country Version India offers a report to help you do just that (see Remittance of Excise Duty Fortnightly).

A small number of transactions have to be remitted on the same day (see Other Outward Movements).

In addition, the system allows you to prepare printouts of the various excise registers for the tax authorities.