SAP Country India Version (CIN) Overview Training Presentation

In this presentation, you will find well noted instructions related to India localization, which is knowns as CIN, in SAP. After reading this document, you will get fair knowledge about:

  • India Legal Requirements Overview: CENVAT (Excise), VAT (Central Sales Tax), Service Tax, Cenvat Credit

Lets start Step by step 

India Localization

◘ India Legal Requirements overview

  • CENVAT (Excise)
  •  VAT  / LST  / CST
  •  Service Tax
  •  Cenvat Credit

☼ Cenvat (Central Value Added Tax):

What  is Cenvat?

  •   Tax on manufacturing or production of goods in India
  •   Goods having 4M Characteristics are covered under this

– Movable (No duty on Immovable Goods)

– Marketable (Bought and Sold)

– Manufactured (Come up out of a process)

– Mentioned (Central Excise Tariff)

  •  Every legal entity that manufactures or produces excisable goods shall  pay the duty leviable on such goods
  • Materials are  classified under various tariff headings (Chapter Ids).This will be subject to change in every financial budget.
  • Goods consumed in-house also liable for payment of duty.

What  is the basis of charge?

  •   Tax Rates Provided by GOI and are subject to change after eachyear based on the budget
  •   Exemption to pay duty on intermediate products in thefollowing cases 

                  – used for manufacturing capital goods

                  -used for manufacturing final goods which are eligible forCenvat credit 

  •    Duty shall be paid when the goods are removed from the place of production or place of storage
  •   Excise duty not payable on goods manufactured forexports or deemed exports
  • Goods manufactured in factory for use within the factoryfor repairs of machinery installed within the factory are exempt from excise.

Types of Excise Duty

  ◘  Basic Excise Duty (BED)

  ◘  Additional Excise Duty (AED)

  ◘  Special Excise Duty (SED)

  ◘  Education Cess on Excise

  ◘  Secondary and Higher education Cess 

Duty Calculation

  •  Specific duty – It is calculated on the basis of  certain unit, length, weight etc. Eg. cigarette
  • Ad valorem duty – It is based on the value of the goods
  • Duty based on tariff value – The Govt. may fix tariff value from time to time. The duty will be calculated as percentage of tariff value fixed by the Govt. and not on assessable value.

Duty Calculation Considerations

  •  Transaction value is the price actually paid or payable for the goods and includes any other amount that the buyer is liable to pay in connection with such sale
  •  Any additional consideration flowing directly or indirectly tothe seller from the buyer should be added to the transaction value.
  •  Cost of production is not relevant for the purpose of determining assessable value.
  •  Assessable value may be lower than the cost price of the goods.
  • Goods should be assessed in the form in which they areremoved.


  Duty to be paid by 5th of the following month.

☼ Duty deposited in bank using TR 6 challan and credited to PLA.

☼ Duty is paid by debiting PLA.

 Excise Registers:

Statutory Excise Reporting 

                •  Excise Registers(RG23A & C Part I & Part II,RG1, PLA, RG23D) 

                •  Excise Monthly Returns 

                •  Bond Registers 

                •  License Registers 

                •  Running Bond Registers////////////////////////////////////////////////////////////


◘ India Legal Requirements overview

  • CENVAT (Excise)
  •  VAT  / LST  / CST
  •  Service Tax
  •  Cenvat Credit

☼  VAT / LST / CST

How is Sales tax treated in India ?

  •  This is a tax on sale
  •  VAT / LST is charged on sales within the state
  •  Central Sales Tax (CST) is charged on inter-state sales
  •  Any sale would be charged to either VAT or CST but only to one of them
  •  Every person carrying on any business is required to charge  VAT / CST, on all sales made by him, and pay it to the Government
  • VAT / CST shall be charged at the rate in force as on the date of sale

Tax Impact under VAT System

  I– Manufacturer  II – Wholesaler III – Retailer
Selling price (excl. tax) 100.00 Cost price 100.00 Cost price 120.00
VAT @ 14% 14.00 Overheads & profit @ 20% 20.00 Overheads & profit @ 20% 24.00
Sale price 114.00 Sale price(excl. tax) 120.00 Sale price(excl. tax) 144.00
Tax paid 14.00 VAT @ 14% 16.80 VAT @ 14% 20.16
Sale price(incl. Tax) 136.80 Sale price(incl. Tax) 164.16
Tax paid(16.80-14.00) 2.80 Tax paid(20-16.14) 6.16


Cenvat VAT
Central – Value Added Tax State – Value Added Tax
Revenue to Central Government Revenue to State Government
Tax on Manufactured Goods Tax on Sale of goods
Single point tax  – paid at the first point of goods movement Multi Point Tax – payable at each stage of value chain
Credit can be availed Credit can be availed except in case of LST
General CENVAT rate @ 10% with exceptions General VAT rate @ 5% or 14% with exceptions
Centrally administered –Cenvat Chain cannot be broken on interstate boundaries State administered – Chain broken on interstate transactions
Cenvat credit can be availed on Services Cenvat credit cannot be availed on Services


◘ India Legal Requirements overview

  • CENVAT (Excise)
  • VAT / LST / CST
  • Service Tax
  • Cenvat Credit

☼ Service Tax

  • Tax on services rendered
  •  Applicable only on those services which have been notified by the Government
  •  Service Tax is payable @ 12 % plus education cess @0.24% & Higher and  Secondary education cess @ 0.12%
  •  Exemptions to persons rendering taxable service below 10Lakhs INR
  •  Tax to be paid by 5th of the next month
  •  Service tax is payable on advances
  • Half Yearly return for form ST-3 : April to Sep – Oct 25th, Oct to Mar- Apr25th
  • Revision of Form ST-3: ST-3 form can be revised and submitted again within 90days from the date of filling original return

Service Tax Considerations

  •  Service tax is payable on value of services
  •  Value of service is the gross amount charged by the service    provider for the taxable service provided
  •  Any discount/rebate given to customer before accepting the payment would be deducted from the gross amount
  •  In most of the cases person providing the taxable service is liable to pay tax
  •  Reimbursement of expenses incurred on behalf of customer is not taxable
  •   No tax on services which are exported or  used for providing services which are  being exported

Export of Service

  •  Should be at least partly performed outside India
  •  It is delivered outside India and used outside India
  •  Payment for such services is received in foreign exchange
  • No tax on services which are exported

Import of Service

  •  Should be provided from outside India to a person in India
  •  Service provider does not have a place of business in India
  •  Person receiving such service has a place of business in India
  •  Person receiving such services is liable to pay service tax
  •  Cenvat credit can be utilized for tax payment
  •  Tax paid can be used for availing credit

CENVAT Credit on Input Services

  •  Service provider is entitled to take credit of service tax paid on input services
  •  Credit can be taken only when full payment has been made for the   service
  •  Credit may be taken for service tax and also for education Cess ,   Secondary and Higher Education Cess paid
  •  In case the service provider is engaged in exporting services, he shall  be granted refund of CENVAT on input services
  •  In many cases, various input services will be consumed in theheadquarters/administrative offices of manufacturers and OSPs. In such cases, the invoices indicating the payment of service tax will be in the name of such headquarters/ administrative offices. Provision can be made for availing credit of such service tax, in the premises where manufacturing activity is undertaken or the premises where the output services are rendered.


  • Half yearly return in form ST-3 to be filed within 25 days from the end of the half year
  • Return needs to be accompanied by TR -6 challan evidencing duty payment