Tuesday, 4 October 2016

India Localization Basic Tax Structure

Tax: Tax is basically of two types.
1.     Direct  Tax
2.     Indirect Tax
1. Direct Tax – We pay directly to the government. For e.g. Income Tax
2. Indirect Tax - We don’t pay directly to the government but we have to pay indirectly like Excise, VAT, TDS, WCT, and Service Tax, Cess, Shecess.
Indirect Tax is also divided into two parts:
1.     Claimable
2.     Non Claimable
Service Tax:
LST (Local Sale Tax) – Not Claimable
VAT (Value Added Tax) – Claimable
Claim Process – Paid/Receive
Capital Item – Not consume
The two types of Industries are:
1.     Goods Industry
a.     Manufacturing -- Excise
b.     Trading – VAT(Value Added Tax),LST(Local Sales Tax),CST(Central Sales Tax)
2.     Service industry
In oracle we maintain several excise registers:
RG 23 A
Part 1(Quantity)
                       Raw Material
Part 2  (Value) 
RG 23 C
Part 1(Quantity)
                   Capital Items
Part 2  (Value) 
RG 1
    Quantity
                  Finish Goods
RG 23 D
             Only for Trading
PLA(Personal Ledger Account)
       Negative value is fill in PLA
Slab of Excise Duty
1.     Basic Excise   : -  10% (Total Value)
2.     Cess                :-    2% (On Basic Excise)
3.     Edu. Cess       :-    1% (On Basic Excise)
            Total               : - 10.30%
Suppose: Purchase or Sale of Rs. 100
Slab of Excise as follows:
Basic Excise Duty     = 10 (10% of Rs.100)
Cess                              =   2 (2% of Rs. 10)
Edu. Cess                    =   1 (1% of Rs. 10)

Total Tax                     = 10.30

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