Microsoft Dynamics AX 4.0 SP2 new India localization feature (Customs duty)

Transcription

1 Microsoft Dynamics TM AX Microsoft Dynamics AX 4.0 SP2 new India localization feature (Customs duty) White Paper Date: November 2007

2 Table of Contents Introduction... 4 Customs duty... 4 Basic setup for this feature... 5 Activate the customs parameter... 6 Create ledger accounts for customs... 6 Set up the customs authority... 6 Set up customs settlement periods and attach customs authority... 6 Set up Importer Exporter Code (IEC) for your company, vendors, and customers... 7 Attach an IEC number to company address... 7 Set up tax components for customs... 7 Create tax ledger posting groups for customs tax type... 8 Define the customs tariff codes for imports and exports... 9 Attach import and export customs tariff codes to items... 9 Create tax codes for customs Create a tax group for customs and attach it with tax codes Attach tax codes to item tax groups for customs and define a formula to calculate customs Define the exchange rate for customs Attach an IEC number to a vendor address Attach an IEC number a customer address Set up split based on delivery information and landing charges setup in Accounts payable Set up shipping bill voucher reference in Accounts receivable Create an importer invoice number for import orders Create a bill of entry number for import orders Create a shipping bill number for an export order Set up automatically allocated miscellaneous charges for customs Factors affecting customs calculation in transactions Formula designer Customs exchange rates defined for transactions Load of inventory percentage defined for tax codes Calculation of customs for preferential vendors or customer using preferential rates Abatement percentage defined for the tax codes Apply Split invoice functionality in Accounts payable or Accounts receivable Customs duty on credit notes or returned item invoices Calculate customs duty using purchase orders Create a purchase order Set up assessable value for customs Post the purchase order Create a combination of import invoice number and purchase order Post the bill of entry Post the packing slip, receipt list, and invoice for the purchase order or import order Transactions for customs using a purchase order with miscellaneous charges defined Transaction for customs duty using a purchase order with excise duty transactions FEATURE FOR INDIA 2

3 Transaction for customs duty using a purchase order with additional customs duty (CVD) and (ADC VAT) Calculate customs duty using journals for purchase transactions Create tax journal for customs Transactions using General journal Transactions for customs in the invoice pool excluding posting Transactions for customs in the invoice journal Transactions for customs in the invoice register Transactions for customs in the invoice approval journal Transactions for customs using the purchase journal and a blanket order Account combinations available for transactions Calculate customs duty using sales orders Create a sales order Set up miscellaneous charges for the sales order Set up assessable value for customs Post the sales order Create an export order for a sales invoice Post the shipping bill Multiple taxes and charges Customs inquiry Posted sales tax inquiry for Customs tax type Bill of entry inquiry for an import order Shipping bill inquiry Generate an indirect tax inquiry Forms for this feature Forms that are modified for this feature FEATURE FOR INDIA

4 Introduction This information provides setup instructions and an overview of the Customs duty feature for Microsoft Dynamics AX that is specific to users in India. It includes a description of the feature, a list of forms and fields used and added for this feature, and procedural information to use the feature. This feature is available only if the configuration key for India is selected. Customs duty Customs duty is levied on the import and export of goods in accordance with the Indian Customs Act. The rate of duties applied on goods is defined under the Customs Tariff Act of India. There are several types of duties levied on imports and methods are prescribed for the calculation of duties. The amount of customs duty payable on import of goods is determined by the following process: Tariff classification of goods: Good are classified into heading and subheadings categories in accordance with the schedules of Customs Tariff Act, A specific rate of duty is prescribed for each subheading. Calculation of various customs duties: The following kinds of customs duties are calculated on goods: Basic customs duty: This duty is specified for each heading or subheading in the First Schedule of the Customs Tariff Act Surcharge: A surcharge at the rate of 10 percent of the Basic customs duty is levied on imported goods under Section 90 of the Finance Act, Additional duty of customs equal to excise duty or CVD (Countervailing duty): Additional duty of customs that is equal to excise duty is levied on goods that are similar to goods manufactured in India. Additional duty of customs equal to VAT, sales tax, local tax or (ADC VAT): Additional duty levied under section 3 under subsection (5) of Customs Tariff Act, 1975, equivalent to value-added tax, sales tax, or local tax on similar products that are sold, purchased, or transported in India. Special additional duty: A special additional duty of customs is levied at a rate specified in Section 3A of the Customs Tariff Act, Calculation of additional levies under different statues Exemptions and concessions available for items: Exemptions and concessions on customs duty are available in the following situations: Exemption by Notification: The central government may publish certain exemptions and concessions by publication in the Official Gazette. Preferential Rates: A preferential rate of customs duty is applied to imports from certain countries. You can apply the Central Value Added Tax (CENVAT) credit to the following customs duty: The additional duty (CVD) that is levied under Section 3 of the Customs Tariff Act equivalent to the duty of Excise. The additional duty (ADC VAT) that is levied under Section 3 (5) of the Customs Tariff Act equivalent to the VAT, sales tax, or local tax. FEATURE FOR INDIA 4

5 The calculation of customs duty on the import and export of goods is based on the customs exchange rate declared by customs authorities at the beginning of each month. The calculation of customs duty on imported goods is calculated, based on the assessable value calculated under Section 14 of the Customs Act. The assessable value of goods is the total of cost, which includes insurance, freight, landing charges, and other charges for valuation purpose. The export duty that is levied on the export of goods restricts the export of certain goods. Currently, few articles are subject to export duty. The importers and exporters of goods must be registered with the customs authorities and obtain a registration number namely, Importer Exporter Code (IEC). You can create IEC numbers for your company, vendors, and customers and attach them to the addresses of the company, vendors, and customers. You must set up tax components, customs tariff codes, tax codes, tax ledger posting groups, tax groups, and item tax groups for customs tax type. You can calculate customs duty on purchase orders for import transactions and sales orders for export transactions. You also can generate a list of the posted customs transactions by using an inquiry. For more information, refer to the following topics: Basic setup for this feature Factors affecting customs calculation in transactions Calculate customs duty using purchase orders Calculate customs duty using journals for purchase transactions Calculate customs duty using sales orders Customs inquiries Forms for this feature Forms that are modified for this feature Basic setup for this feature Refer to the following topics to set up customs: Activate the customs parameter Create ledger accounts for customs Set up the customs authority Set up customs settlement periods and attach customs authority Set up Importer Exporter Code (IEC) for your company, vendors and customers Attach an IEC number to company address Set up tax components for customs Create tax ledger posting group for customs tax type Define customs tariff codes for imports and exports Attach import and export customs tariff codes to items Create tax codes for customs Create a tax groups for customs and attach it with tax codes Attach tax codes to item tax groups for customs and define a formula to calculate customs Define exchange rate for customs Attach an IEC number to a vendor address Attach an IEC number to a customer address 5 FEATURE FOR INDIA

6 Set up split based on delivery information and landing charges setup in Accounts payable parameters Set up shipping bill voucher reference in Accounts receivable Create an importer invoice number for import orders Create a bill of entry number for import orders Create a shipping bill number for export orders Set up automatically allocated miscellaneous charges for customs Activate the customs parameter 1. Click General ledger > Setup > Parameters > Sales tax tab. 2. Select the Customs check box to activate the new forms and fields that are added to use customs duties. 3. Press CTRL+S or close the form to save the settings. Note: The functionality that is activated if the Amount incl. sales tax check box and Conditional tax check box are selected, and fields under the Customer cash discount field group and the Vendor cash discount field group on the Sales tax tab will not be applied for the customs functionality. Create ledger accounts for customs You must create customs import duty accounts and export duty accounts for each tax component and IEC number. 1. Click General ledger > Chart of accounts. 2. Press CTRL+N to create the following ledger accounts for each customs tax component: Import duty expense account Import duty payable account Export duty expense account Export duty payable account 3. Enter the required details. 4. Click the Setup tab. Select the Customs option in the Posting type field. 5. Press CTRL+S or close the form to save the settings. Set up the customs authority The customs duty that is calculated during the sales and purchase transactions is paid to the customs authority. Set up the customs duty authority by attaching the tax authority-vendor account. 1. Click General ledger > Setup > Sales tax > Sales tax authorities. 2. Enter the identification for the customs authority in the Authority field. 3. Select the vendor account number for the customs authority in the Vendor account field. 4. Press CTRL+S or close the form to save the settings. Set up customs settlement periods and attach customs authority 1. Click General ledger > Setup > Sales tax > Sales tax settlement periods. 2. Enter the identification for the customs settlement period in the Settlement period field. FEATURE FOR INDIA 6

7 3. Select the customs authority for the settlement period in the Authority field. 4. Click the Periods tab and create periods for the customs settlement period. 5. Press CTRL+S or close the form to save the settings. Set up Importer Exporter Code (IEC) for your company, vendors, and customers 1. Click General ledger > Setup > Sales tax > India > Tax registration numbers. 2. Select the registration number type in the Registration number type field. The options are: Company Create the Importer-Exporter code for the company. Customers Create the Importer-Exporter code for customers. Vendors Create the Importer-Exporter code for vendors. 3. Select the Customs option in the Tax type field. 4. Enter a unique 10-digit numeric IEC number for the registration number type in the Registration number field. This number is given by the customs authority. 5. Enter a description of IEC number in the Description field. 6. Press CTRL+S or close the form to save the settings. Note: The Claim Status button and the Deferment schedule button are not available for customs tax type. Attach an IEC number to company address 1. Click Basic > Setup > Company information > Tax information tab. 2. Under the Customs field group, select the Importer Exporter Code number in the IEC number field. 3. Click the Alt. address button to open the Alt. address form and enter the required details. 4. Click the Tax information tab. 5. Under the Customs field group, select the Importer Exporter Code number in the IEC number field for the alternate address of the company. 6. Press CTRL+S or close the form to save the settings. Set up tax components for customs You can set up tax components for customs and define a claim percentage for a tax component in the Claim percentage form. You can create and update tax setoff rule to define the setoff components to set off the tax liability for a specific customs tax component. You can offset the amounts of the various components of the customs duty in the excise payable account with the amounts in the recoverable accounts of the tax components of excise as well as other tax components. 1. Click General ledger > Setup > Sales tax > India > Tax components. 2. Select the Customs option in the Tax type field. 3. Press CTRL+N to create a new line. 4. Enter a unique identification for the customs tax component in the Tax components field. 5. Enter a description for the customs tax component in the Description field. 7 FEATURE FOR INDIA

8 6. Select the Apply excise check box to update the transactions posted for the tax component in excise registers. When you select this check box, the transactions posted for the tax component will be updated in the RG23 registers, based on the excise record type that is selected at the transaction-level. Note: The Apply excise check box is selected for the components for which Additional duty of customs equal to excise duty (CVD) and Additional duty of customs equal to VAT, sales tax and local tax (ADC VAT) is applied. 7. Click the Claim percentage button to set up the claim percentage in the Claim percentage form. Note: This button is activated only if you select the Apply excise check box. 8. Press CTRL+N to create a new line on the Overview tab. 9. Enter the starting and ending dates of validity for the excise claim percentage in the From date and the To date fields. 10. Select the RG register to define the claim percentage for in the RG Register field. The options are: RG23A RG register for non-capital purchases RG23C RG register for capital purchases 11. Enter the recoverable percentage for the RG register in the Percentage field. 12. Close the Claim percentage form to return to the Tax components form. 13. Click the Tax setoff rule button to open the Tax setoff rule form to define the setoff components to set off the tax liability for a specific customs tax component. 14. Press CTRL+N to create a new line on the Overview tab. 15. Select the tax component that the original customs tax component is set off against in the Setoff component field. The original customs tax component that the setoff components are defined for is displayed in the Tax component field on the General tab. 16. Click the Up button or the Down button to change the priority order of setoff components that are defined to set off the tax amount for the customs tax component. The priority is displayed in the Column field. 17..Press CTRL+S or close the form to save the settings. Create tax ledger posting groups for customs tax type Create ledger-posting groups for customs tax types and define ledger accounts for customs tax components for a specific IEC number for all IEC numbers. You can attach the tax ledger posting groups that are set up for customs tax types to customs tax codes. The customs duty calculated in transactions are posted to the ledger accounts defined in the tax ledger posting group. 1. Click General ledger > Setup > Sales tax > India > Tax ledger posting groups. 2. Press CTRL+N to create a new line on the Overview tab. 3. Enter a unique name for the ledger-posting group in the Ledger posting group field. 4. Enter a description for the ledger posting group in the Description field. 5. Select the Customs option in the Tax type field. 6. Click the Setup tab. Select the account code in the Account code field. The options are: FEATURE FOR INDIA 8

9 Table Define the ledger accounts for a specific IEC number that is selected in the Registration number field. All Define the ledger accounts for all IEC numbers that are set up for Customs tax type and Company registration number type. 7. Select the IEC number of the company in the Registration number field if you have selected the Table option in the Account code field. Note: The IEC numbers set up for the Customs tax type and the Company registration number type are available in this field. 8. Enter a description for the IEC number in the Description field. 9. Click the Ledger accounts tab. Under the Select field group, select the type of account to attach the ledger account to the custom duty components for all the predefined accounts from the following options: Import duty expense account Import duty payable account Export duty expense account Export duty payable account 10. Click on the right pane and press CTRL+N to create a new record. 11. Select the customs tax component in the Tax component field. 12. Select the ledger account number to post the customs duty to in the Ledger account field. 13. Press CTRL+S or close the form to save the settings. Define the customs tariff codes for imports and exports You can define the custom tariff code for imports and exports and attach it to purchase orders and sales orders and to journals during transactions. You also can attach tariff codes to items or bills of materials (BOM) in the Items form. The attached tariff code will be displayed at the transaction level, based on the item that is selected. 1. Click General ledger > Setup > Sales tax > India > Customs tariff codes. 2. Press CTRL+N to create a new line on the Overview tab. 3. Enter the customs tariff code in the Tariff code field. 4. Enter a description for the tariff code in the Description field. 5. Select the direction of the movement of goods in the Direction field. The options are: Import Create the tariff code for imports. Export Create the tariff code for exports. 6. Press CTRL+S or close the form to save the settings. Attach import and export customs tariff codes to items 1. Click Inventory management > Items. 2. Press CTRL+N to create a new item on the Overview tab and enter the required details. 3. Click the References tab. Select the import tariff code for the item in the Import tariff code field. 9 FEATURE FOR INDIA

10 4. Select the export tariff code for the item in the Export tariff code field. 5. Press CTRL+S or close the form to save the settings. Note: You cannot attach customs tariff codes to the Service type of items. Create tax codes for customs Create tax codes for customs duties and define the percentage to calculate customs in transactions. Note: The setup selections in the Purchase duty field and Payment sales tax code field on the General tab will not be applied for customs tax type. 1. Click General ledger > Setup > Sales tax > Sales tax codes. 2. Press CTRL+N to create a new line on the Overview tab. 3. Enter a code to identify the customs tax code in the Tax code field. 4. Enter a name for the customs tax code in the Name field. 5. Select the Customs option in the Tax type field. 6. Select the customs duty settlement period for the customs tax code in the Settlement period field. 7. Select the customs tax ledger posting group for the customs tax code in the Tax ledger posting group field. 8. Select a method of calculation in the Origin field to calculate the customs duty. The method of calculation is applied to the base amount. You can select the Amount per unit option to define the custom duty amount per unit of item for the tax code. You can define the amount per unit only when you post transactions using a purchase order, sales order, export order and General journal. Note: You can select only the percentage of net amount method of calculations and the amount per unit method of calculations for Indian taxes. 9. Click the General tab. Select the customs duty component for the customs tax code, in the Tax component field. 10. Click the Values button to open the Values form, where you can attach customs tariff codes to the customs tax code and define the percentage to calculate customs. 11. Select the customs tariff code to define the customs duty percentage for in the Tariff code field. The type of direction defined for the tariff code is displayed in the Direction field. 12. Enter the starting date and the ending date of validity for the customs duty percentage in the From date and the To date fields. 13. Enter the percentage to calculate customs duty for the tax code and tariff code combination in the Value field. 14. Enter the preferential value for the customs tax code in the Preferential value field. The preferential rate is used for goods imported from specific countries based on agreements with such countries. Note: Customs duty is calculated, based on the preferential rate defined in the Preferential field instead of value defined in the Value field, if the vendor or customer is set as preferential. 15. Enter the other required details. FEATURE FOR INDIA 10

11 16. Press CTRL+S or close the form to save the settings. Create a tax group for customs and attach it with tax codes 1. Click General ledger > Setup > Sales tax > Sales tax groups. 2. Enter a unique identification for the customs tax group in the Sales tax group field. 3. Enter a name for the customs tax group in the Description field. 4. Enter the other required fields on the Overview tab. 5. Click the Setup tab. Select the customs tax code to be attached to the customs tax group in the Sales tax code field. 6. The percentage defined for the tax code is displayed in the Percentage/amount field and the preferential value defined for the tax code is displayed in the Preferential value field. Note: When you enter more than one record in the Values form for the tax code, zero will be displayed in the Percentage/amount field. 7. Press CTRL+S or close the form to save the settings. Attach tax codes to item tax groups for customs and define a formula to calculate customs Create item tax groups for customs and attach customs tax codes. You must define the formula to calculate the customs duty for the item sales tax group. The formula for customs tax codes can be defined using tax codes and miscellaneous charge codes. 1. Click General ledger > Setup > Sales tax > Item sales tax groups. 2. Enter a code to identify the item tax group in the Item sales tax group field. 3. Enter a description for the item tax group in the Description field. 4. Click the Setup tab. Select the customs tax code in the Tax code field. 5. The percentage defined for the tax code is displayed in the Percentage/amount field and the preferential value defined for the tax code is displayed in the Preferential value field. Note: When you enter more than one record in the Values form for the tax code, zero will be displayed in the Percentage/amount field. 6. Enter the percentage of abatement in the Abatement % field. The tax amount is calculated after deducting the percentage of abatement from the base amount. 7. Select the Load on inventory check box to define the percentage of tax amount to be added to the inventory cost. 8. Enter the percentage of tax amount that is added to the inventory cost in the Load on inventory % field. 9. Click the Formula designer button to open the Formula designer form, where you can define the formula to calculate customs for the item tax group. The tax codes attached to the item tax group are displayed on the Taxes tab. The miscellaneous charges codes set up in the Misc. charges codes form (Accounts payable/accounts receivable > Setup > Misc. charges > Misc. charges codes) are displayed on the Misc. charges tab. 10. Press CTRL+N on the Calculation tab to define the calculation expression for a specific custom tax code. The automatically generated priority ID for customs duty calculation is displayed in the ID field. 11 FEATURE FOR INDIA

12 11. Select the tax code to define the formula for in the Tax code field. Note: You cannot define a formula when you calculate customs duty using amount per unit. 12. Select the basis to calculate tax from the following options in the Taxable basis field: Line amount Customs duty is calculated on the transaction line amount using the calculation expression defined for the customs tax code. Excl. line amount Customs duty is calculated using the calculation expression defined for the customs tax code. Max. retail price Customs duty is calculated on the maximum retail price of the item line using the calculation expression defined for the customs tax code. Assessable value Customs duty is calculated on the assessable value calculated for an item. 13. Select the Price incl. tax check box if the taxable basis includes the tax amount. Note: This check box is selected automatically for custom tax codes with the maximum retail price as the taxable basis.you must select the Price incl. tax check box for the tax codes that have a taxable basis as excluding the line amount, and their customs duty calculation is dependent on the other tax codes with maximum retail price as taxable basis. 14. Click the + button, - button, * button, or / button to insert the calculation expression for the customs tax code in the Calculation expression field. Note: When the Price incl. tax check box is selected for a record, the calculation of tax that is based on the calculation expression should be in the reverse order. 15. Use one of the following methods to add a custom tax code or a miscellaneous charge code to the Calculation expression field: Click the Taxes tab or the Misc. charges code tab, right-click, and select the Add tax code option or Add misc. charges code option. Double-click a code on the Taxes tab or Misc. charges code tab. Drag and drop a code from the Taxes tab or Misc. charges code tab. Note: You must insert a calculation expression before each custom tax code. 16. You can click the Clear button to clear the calculation expression that is defined for a customs tax code in the Calculation expression field. 17. You can click the Delete button to delete a record on the Calculation tab. You must first clear the tax code for which the custom duty calculation is dependent on the other tax codes before you delete a record on the Calculation tab. 18. Press CTRL+S or close the form to save the settings. Define the exchange rate for customs 1. Click General ledger > Setup > Exchange rates > Overview tab. 2. Enter a currency code in the Currency field. Enter the other required details. 3. Click the Customs exchange rate tab. 4. Enter the starting date of validity of the customs exchange rate in the Start date field. 5. Enter the customs exchange rate for number of units in the Customs exchange rate field. FEATURE FOR INDIA 12

13 Note: You can set up the number of units for the exchange rate in the Express exchange rate field on the Ledger tab in the General ledger parameters form. 6. Press CTRL+S or close the form to save the settings. Attach an IEC number to a vendor address 1. Click Accounts payable > Vendors. 2. Press CTRL+N to create a new vendor on the Overview tab and enter the required details. 3. Click the Setup tab. Select the default sales tax group for the vendor in the Sales tax group field. 4. Click the Tax information tab under the Customs field group, and then select the IEC number for the address of the vendor in the IEC Number field. 5. Select the Foreign vendor check box to categorize the vendor as a foreign vendor. Note: The Preferential vendor check box is available only if you select the Foreign vendor check box. If you create purchase order for a foreign vendor, the Import order check box in the Create purchase order form is selected automatically. 6. Click Setup > Alt address to define alternate addresses for the vendor and enter the required details. 7. Click the Tax information tab. Select the IEC number for the alternate address of the vendor in the IEC Number field. 8. Press CTRL+S or close the form to save the settings. Attach an IEC number a customer address 1. Click Account receivable > Customers. 2. Press CTRL+N to create a new customer on the Overview tab and enter the required details. 3. Click the Setup tab. Select the default sales tax group for the customer in the Sales tax group field. 4. Click the Tax information tab. 5. Select the IEC number in the IEC number field under the Customs field group for the address of the customer. 6. Select the Foreign customer check box to categorize the customer as a foreign customer under the General field group. Note: The Preferential customer check box is available only if you select the Foreign customer check box. If Foreign customer is selected in the Create Sales order form, the Export order check box in the Create sales order form is selected automatically. 7. Click the Setup button and select the Alt address option. 8. Enter the details of the alternate address of the customer on the Overview tab in the Alt. address form. 13 FEATURE FOR INDIA

14 9. Click the Tax information tab and select the IEC number in the IEC Number field for the alternate address of the customer. 10. Press CTRL+S or close the form to save the settings. Set up split based on delivery information and landing charges setup in Accounts payable Note: The selections in the Sales tax on prepayment check box and the Posting profile with prepayment field on the Ledger and sales tax tab will not be applied for the customs functionality. 1. Click Accounts payable > Setup > Parameters > Ledger and sales tax tab. 2. Click the Summary update tab. Select the Packing slip check box and the Invoice check box to post and split the packing slip or invoice with different delivery addresses and IEC numbers in the Purchase order form. 3. Under the Customs field group, enter the percentage of landing charges in the Landing charges pct. field. Landing charges are charges that are added to the assessable value of an item before calculation of customs duty. Note: Landing charges is a notional value and no financial entries are generated for landing charges. 4. Click the Prices tab. Select the Find main misc. charges and Find misc. charges for line check boxes to view the automatically allocated miscellaneous charges in the Misc. charges transactions form in the purchase order. 5. Press CTRL+S or close the form to save the settings. Set up shipping bill voucher reference in Accounts receivable Note: The selections in the Sales tax on prepayment check box and the Posting profile with prepayment field on the Ledger and sales tax tab will not be applied to the customs tax type. 1. Click Accounts receivable > Setup > Parameters > Number sequence tab. 2. For the Shipping bill voucher reference type in the Reference field, select the number sequence code in the Number sequence code field. The number sequence code is used to generate the shipping bill voucher numbers. 3. Click the Prices tab. Select the Find main misc. charges and Find misc. charges for line check box to view the automatically allocated miscellaneous charges in the Misc. charges transactions form in the sales order. 4. Press CTRL+S or close the form to save the settings. Create an importer invoice number for import orders An import invoice number is provided by the importer. You must set up the importer invoice number and attach it to the Invoice registration form when you post the purchase order for imports. 1. Click Accounts payable > Setup > Customs > Importer invoice number. 2. Click the Overview tab. Select the date of the importer invoice number in the Date field. 3. Enter the importer invoice number in the Importer invoice number field. 4. Enter the description for the importer invoice number in the Description field. 5. Select the Close check box if the importer invoice number should not be displayed in the Invoice registration form and the Bill of entry form. FEATURE FOR INDIA 14

15 6. Press CTRL+S or close the form to save the settings. Create a bill of entry number for import orders A bill of entry number is provided by the customs authority and you must set up the bill of entry number and attach it to the Bill of entry form when you post the purchase order for import. 1. Click Accounts payable > Setup > Customs > Bill of entry number. 2. Enter the date of the bill of entry number in the Date field. 3. Enter the bill of entry number in the Bill of entry number field. 4. Enter the description in the Description field. 5. Select the Close check box if the bill of entry number should not be displayed in the Bill of entry form. 6. Click the General tab to view the bill of entry number and the description. 7. Press CTRL+S or close the form to save the settings. Create a shipping bill number for an export order You must set up a shipping bill number and attach it to the Shipping bill form when you post an export order. 1. Click Accounts receivable > Setup > Customs > Shipping bill number. 2. Select the date for the shipping bill number in the Date field. 3. Select the shipping bill number in the Shipping bill field. 4. Enter the description for the shipping bill number in the Description field. 5. Select the Close check box if the shipping bill number should not be displayed in the Shipping bill form. 6. View the shipping bill number and the description on the General tab. 7. Press CTRL+S or close the form to save the settings. Set up automatically allocated miscellaneous charges for customs 1. Click Accounts receivable > Setup > Misc. charges > Auto misc. charges > Overview tab or Accounts payable > Setup > Misc. charges > Auto-misc. charges > Overview tab. 2. Select the level in the Level field. The options are Main and Line level. 3. Select the vendor account or customer account in the Vendor relation or Customer relation field. 4. Enter the other required details. 5. Select the miscellaneous charges code and category in the Misc. charges code and Category field. 6. Enter the miscellaneous charges value in the Misc. charges value field. 7. Enter the other required details and select the Line level in the Level field. 8. Select the required details on the Overview tab and click the Lines tab. 15 FEATURE FOR INDIA

16 9. Select the miscellaneous charges code and category in the Misc. charges code and Category field. 10. Enter the miscellaneous charges value in the Misc. charges value field. 11. Select the Notional check box to include miscellaneous charges in the assessable value for the calculation of custom duty for import order. 12. Select the Assessable value check box to include miscellaneous charges in the assessable value for the calculation of custom duty for export order. 13. Press CTRL+S or close the form to save the settings. Note: For more information, refer to the Charges white paper. Factors affecting customs calculation in transactions The following factors affect the calculation of customs duty in transactions: Formula designer Customs exchange rate defined for transactions Load of inventory percentage defined for tax codes Calculation of custom duty for preferential vendors or customers using preferential rates Abatement percentage defined for the tax codes Apply Split invoice functionality in Accounts payable or Accounts receivable Customs duty on credit note or returned item invoices Formula designer Customs duty is calculated, based on the formula defined for the item tax groups that are created for customs tax codes. You must select the taxable basis for the calculation of customs duty for each tax code. Example Suppose that you create a purchase order for the items with a maximum retail price as The taxable basis for the calculation of basic custom duty is maximum retail price. The percentage of tax for each tax component is shown in the following table. The Price incl. tax check box is selected for all tax codes that are BCD, ACD, SUR, E-CESS, and SHE-CESS in the formula designer. Maximum retail price = 6000 FEATURE FOR INDIA 16

17 Tax code Tax component Percentage Taxable basis Calculation expression Customs duty BCD BCD 10 Max retail price ACD ACD 10 Max retail price SUR SUR 5 Max retail price E-CESS E-CESS 1 Excl. line amount ( *10%) ( *10%) +[BCD+ ACD] ( = ) ( *5%=285.45) +[SUR] 2.85 (285.45*1%) SHE- CESS SHE-CESS 1 Excl. line amount +[SUR] 2.85 (285.45*1%) If the basis is max retail price, customs duty is calculated automatically using the following formula: 6000=Basic +BCD +ACD +SUR +E-CESS +SHE-CESS Basis =X 6000=X +0.10X +0.10X +0.06X X X 6000= X X=6000/ Price excluding tax= E-CESS and SHE-CESS is calculated on the basis of the surcharge amount and the line amount is not considered in calculation of custom duty. Customs exchange rates defined for transactions You can define a separate exchange rate for customs in the Exchange rates form that is used to calculate the customs duty. Customs duty accounts with the tax amount for each component are debited or credited using the customs exchange rate. The account type and offset account type are debited or credited using the normal exchange rate. Load of inventory percentage defined for tax codes When a percentage of the customs duty is loaded on inventory for customs tax codes attached to the item sales tax group used in transactions, the following takes place: The percentage of customs duty is added to the cost of the item, based on the load on inventory percentage that is defined for the customs tax code. The proportionate customs duty amount that is not loaded on inventory is posted to the ledger account defined for the customs tax component. Example 17 FEATURE FOR INDIA

18 You have acquired a fixed asset of 9000 and entered the transactions in the General journal on April 30, 2007 of. The customs exchange rate is 1 USD=50 INR. The normal exchange rate is 1 USD=45 INR. Assessable value is changed to 10,000. Load on inventory percentage is 50%. Tax percentage on BCD is 10%, and ACD is 2%. The account type is set as Vendor and the offset account type is Fixed asset and the amount is entered in the Credit field. Tax codes (tax components) in the tax group: BCD ACD Formula designer setup: Taxable basis to calculate BCD = Assessable value Taxable basis and calculation expression to calculate ACD = Excl. line amount +BCD BCD=10,000*10% = 1000 ACD=1000*2% = 20 Voucher entries are created as follows: Account Debit (USD) Credit (USD) Debit (INR) Credit (INR) Fixed asset ,30,500 ( ) BCD(Import duty expense account) ACD(Import duty expense account) , Vendor account ,5000 Import duty payable account ,000 Calculation of customs for preferential vendors or customer using preferential rates If you create an invoice for a preferential customer or vendor, preferential rates defined for the tax codes in the tax groups attached to the invoice are used to calculate customs duty. Example Create a purchase order for items with line amount as Preferential rate defined for tax code BCD is 5 % and for ACD is 2 %. The customs exchange rate and normal exchange rate is defined as follows: Customs exchange rate = 1USD = 50INR Normal exchange rate = 1USD = 45INR Formula designer setup: Taxable basis to calculate BCD = Line amount Taxable basis and calculation expression to calculate ACD = Excl. line amount +BCD FEATURE FOR INDIA 18

19 BCD= 10,000*5% = 500 ACD= 500*2% = 10 Voucher entries for the posting the journal are created as follows: Account Debit(USD) Credit (USD) Debit(INR) Credit (INR) Purchase /receipt 10,000 4,50,000 BCD (Import duty expense account) ACD (Import duty expense account) , Vendor account 10,000 4,50,000 Import duty payable account ,500 Abatement percentage defined for the tax codes If you have defined an abatement percentage for the tax codes attached to the tax groups used a in transaction, the customs duty is calculated after deducting the abatement amount from the line amount, assessable value, or maximum retail price. For example, if the invoice amount is and the item tax group attached to the transaction has a customs tax code with 10% as the percentage and 5% as the abatement, customs duty will be calculated on 47500, that is, 50000*5% = 2500 and = Apply Split invoice functionality in Accounts payable or Accounts receivable To use split invoice functionality in Accounts payable, you must select the Purchase order, Packing slip, or Invoice check boxes in the Parameters form (Accounts payable > Setup > Parameters > Summary update tab) to post and split a purchase order, packing slip, or invoice with different delivery addresses and Importer Exporter Code in the Purchase order form. The posted invoice is split per delivery address per IEC. To use the split invoice functionality in Accounts receivable, you must select the Quotation, Confirmation, Picking list, Packing slip, or Invoice check boxes in the Parameters form (Accounts receivable > Setup > Parameters > Summary update tab) to post and split a quotation, confirmation, picking list, packing slip, or invoice with different delivery addresses and Importer Exporter Code defined for different invoice lines in the Sales order form. The invoice is split per delivery address per IEC. Note: If the Split based on delivery information check box is not selected, the invoice is posted as a single invoice and there will be no split of invoice. The Packing slip check box must be selected in the Split based on delivery information parameter to post a packing slip with invoice lines having different delivery addresses and Importer Exporter Code. The Invoice check box must be selected in the Split based on delivery information parameter to post an invoice with invoice lines having different delivery addresses and Importer Exporter Code. 19 FEATURE FOR INDIA

20 An invoice with invoice lines having different delivery addresses but same Importer Exporter Code can be posted if the Invoice check box is selected in the Split based on delivery information parameter. The invoice will be split per delivery address. Example The Split based on delivery information parameter is selected for the Invoice option. A purchase invoice is posted with the following: Item line 1, Delivery address 1, IEC Item line 2, Delivery address 1, IEC Item line 3, Delivery address 2, IEC Item line 4, Delivery address 3, IEC Invoice 1 is posted for item line 1 and item line 2 because both have common delivery addresses and IEC. Invoice 2 is posted for item line 3 and Invoice 3 is posted for item line 4. Customs duty on credit notes or returned item invoices If you create a credit note or returned item invoice in the Purchase order or Sales order form, the customs duty amount that is calculated on the original invoice is also reversed. Calculate customs duty using purchase orders You can calculate customs duty for a purchase order or an import order created using a purchase order. You must pay additional duty of customs if excise duty must be paid on the items of import. You can create a purchase order for imports or without imports for which custom duty is calculated. For an order other than import order, the assessable value does not include landing charges in calculation. For more information, refer to the following topics: Create a purchase order Setup assessable value for customs Post the purchase order Create combinations of import invoice number and purchase order Post the bill of entry Post the packing slip, receipt list and invoice for the purchase order or import order Create a purchase order 1. Click Accounts payable > Purchase order. 2. Press CTRL+N on the Overview tab. The Create purchase order form opens. 3. Select the vendor account to create the purchase order for in the Vendor account field. 4. Select the type of purchase order in the Purchase order field. Select the Purchase order option for the Import orders. You also can post the Quotation, Subscription or Returned items type of purchase orders if it is not an import order. 5. Select the Import order check box to create an import order for the vendor. Note: You can select the Import order check box only when the Purchase order option is selected in the Purchase order field. FEATURE FOR INDIA 20

21 You can select other options in the Purchase order field if the Import order check box is not selected. If the vendor selected is a foreign vendor and the Purchase order option is selected in the Purchase order field, the Import order check box is selected automatically. 6. Enter the required details and click OK to create the import purchase order in the Purchase order form. 7. Press CTRL+N to create lines for the import items on the Lines tab. Enter the required details. 8. Click the Setup tab. The default sales tax group defined for the vendor is displayed in the Sales tax group field and can be changed. The default item sales tax group defined for the vendor is displayed in the Item sales tax group field and can be changed. 9. Click the Price /discount tab (line level). The maximum retail price defined for the item is displayed in the Max. retail price field. The maximum retail price in customs currency is displayed in the Max. retail price in customs currency field and can be changed. Note: If you modify the amount in the Max. retail price in customs currency field, the amount in the Max retail price field is updated automatically in transaction currency. 10. Click the Setup tab (line level). Select the tax code for the excise tax type for the selected Excise control code (ECC) number in the Apply excise field. Select this only if additional customs duty for excise must be paid on the imported items. Note: Note: If the Apply excise check box is selected for the customs duty component attached to the customs tax code in the tax groups used for an import order transaction, the customs duty is posted to the recoverable account defined in the tax ledger posting group for the tax code selected in the Apply excise field on the Setup tab of the Purchase order form. The RG23A (Part I and Part II) register or RG23C (Part I and Part II) register that is set up for the customs duty component is also updated. 11. Click the Tax information tab. The IEC number attached to the company address is displayed in the IEC number field. 12. Select the ECC number in the ECC number field and the excise record type in the Excise record type field. Additional customs duty for excise is paid only on the import orders. The customs tariff code defined for the item is displayed in the Customs tariff code field. 13. Click Functions > Misc. charges to attach or define miscellaneous charges for the transaction. Set up assessable value for customs 1. Click Setup > Assessable value to open the Assessable value form. This form is available only for the import orders. 2. Click the Overview tab. 3. View the purchase order number of import orders in the Purchase order field. 4. View the net amount for the purchase order line in the Net amount field. 5. Select the basis for the calculation of customs duty in the Basis field. The options are: FOB CIF 21 FEATURE FOR INDIA

22 Note: If you select the FOB option, the Misc. charges field is updated with the value set in the Misc. charges transactions form only if the Notional check box is selected in the Misc. charges transaction form. If you select the CIF option, the Misc. charges field is not updated with the values in the Misc. charges transactions form even if you select the Notional check box. 6. View the consolidated miscellaneous charge amount for the selected purchase order line in the Misc. charges field. Miscellaneous charges value in the Misc. charges transactions form is compared with the notional amount that is calculated by multiplying the notional percentage and the net amount in the Assessable value form where the option is set as FOB and the least of the two other than zero is updated in the Misc. charges field of the Assessable value form. 7. View the sum of net amount and miscellaneous charges amount in the CIF field. 8. View or modify the landing charges percentage in the Landing charges pct. field. 9. View the multiplication of landing charges percentage and CIF amount in the Landing charges field. 10. View the assessable value in the Assessable value field that is the addition of CIF amount and landing charges amount. Note: All the amounts on the Overview tab are in the transaction currency. 11. Click the General tab and view the following fields: Invoice currency field: The transaction currency. Customs currency field: The company s base currency. Default currency field: The default currency. The FOB, Misc. charges, CIF, landing charges pct., landing charges and assessable value in the invoice currency and customs currency. The exchange rate in customs currency and default currency and the base amount in default currency. 12. Select the Misc. charges button to view the Misc. charges transactions form. 13. Press CTRL+S or close the form to save the settings. Post the purchase order 1. Click Posting > Purchase order > Other tab. 2. Click the Other tab. 3. Under the Summary purchase field group, select the order type to create a summary update for in the Order field. The options are: Purchase order: Displays the purchase order on the Overview tab. Import order: Displays the import order on the Overview tab. 4. Click OK to post the purchase order. FEATURE FOR INDIA 22