r12.2.4 india localization setup

Krithivasan [email protected] P a g e | 1

INDIA LOCALIZATION SETUP – R12.2.4

These setups have been done in E Business Suite – R 12.2.4.

Organization Chart:

This organization is being setup as part of Vision India Group. Vision India Ledger is

used. Two Legal Entities NK Company Ltd., and NK JV Company Ltd. are created as

part of Vising India Group. Vision India Ledger is used. NK Company Ltd., has two

Operating Units, one at Bangalore and another at Chennai. NK JV Company has one

operating Unit at Mumbai. Each Operating Unit is a profit centre, represented by

Balancing Segment Values, 11, 12 and 21 respectively.

CMI – Chennai Manufacturing Inventory, CTI - Chennai Trading Inventory,

BMI – Bangalore Manufacturing Inventory, MMI – Mumbai Manufacturing

Inventory

Vision India Group

NK Company Ltd.

Chennai OU

BSV 11

CMI CTI

Bangalore OU

BSV 12

BMI

NK JV Company Ltd

Mumbai OU

BSV 21

MMI

Vision India Ledger


Before we start, let us understand the pre-requisite for India Localization:

PART A: Pre-requisite for India Localization set in R12.2.4 E Business Suite:

1. Ensure India Localization is Licensed: Singapore

Refer Metalink Note: Doc ID 2051883.1

2. Disable India Global Flexfield:

Following are the details of the Global Descriptive Flexfield: Application: Regional Localizations Title: JG_AP_INVOICE_DISTRIBUTIONS Context Field Values: Code: JA.IN.APXINWKB.DISTRIBUTIONS Name: Invoice Distributions Description: Asia/Pacific Invoice Distributions Information

There is no use to India Distributions GDF in 12.2.4, it can be disabled. This GDF are used to capture TDS, WCT and Income Tax details in the earlier release and in R12.2.4, TDS has been moved to Menu in Payable Invoice Work bench.

Refer Metalink Note: Doc ID 2051883.1

3. Set Profile Options for Responsibility:


How to Enter Tax id in Invoice Distribution for TDS deduction in R12 (Doc ID 464904.1)

The system profile options needs to set to the following values at the responsibility level with no conflicting values at other levels JG: Application:: Regional Localizations JG: Product : Asia Pacific Localization JG: Territory : India

4. Ensure AD Event is set and India Localisation Triggers are Enabled:

(SPECFIC TO R12.2.4. There is no separate India Localisation patch and is

included in the base patch) - Doc ID 1959695.1

Though no patch is required, AD Event should be set to “JA” and India

Localization Triggers are to be enabled.

The file jai_enable_trg.sql has an AD Event check for the event 'JAI_EXISTENCE_OF_TABLES' and if AD API Is_Event_Done returns TRUE, only then the code to enable the JAI triggers is executed.

The sql for setting AD Event and enabling India Localization triggers are available in the following directory. They should be run as apps user:

$JA_TOP/12.0.0/patch/115/sql

1. jai_set_ad_event.sql with ‘JA’ as parameter and 2. jai_enable_trg.sql

5. E-BUSINESS TAX realted set up are required, which has to be done after setting up Legal Entity and Operating Units.

Dummy E-Business Tax Regime to Rate setup needs to be performed in order to use

India Localisation features in Order Management and Receivables. E-Business tax

replaces 11i Receivable Tax engine.

For Procure to Pay, there is no requirement / interaction with E-business tax. Definition

of IL taxes would suffice.

PART B: BASE APPLICATION REATED SETUPS

1. Create Responsibilities required:

Seeded India Menus are available. Necessary Responsibilities should be created and profile option for JG, GL, GL: Ledger Name, HR User, HR Business Group should be setup. Multi-Org Access need to be created for accessing all the OUs from the same responsibilities.

2. Setup Accounting Fledfield:


Since Vision India Ledger is used, value 11, 12 and 21 are added to the company segment values:

General Ledger, Vision India > Setup > Flexfields > Key > Values

Name: India_Company (B) Find

Insert 3 values, 11, 12 and 21

3. Setup Legal Entities:


General Ledger > Accounting Setup Manager > Accounting Setup

Query: Vision India Ledger

Choose Update Accounting Options:

(T) Legal Entities:

(B) Create Legal Entity:

Territory: choose “India”


NK JV Company Ltd:

ADD Legal Entity to Ledger:

Assign Balancing Segments for Legal Entity: (P) Update Balancing Segment Value

Setup GL: GL Data Access Set and GL: Ledger Name profile options for your

Responsibilities. Setting GL: Ledger Name Profile option must be setup for providing

access to various India Localization setup from the Responsibilities. Refer: Operating

Unit/Inventory Organization not appearing in the Regime Registration Form (Doc ID

1382226.1)


4. Setup Operating Units

From a setup perspective, the HR location attached to the Operating Unit address should definitely contain the Country as India.

Bangalore Operating Unit:

(B) Others

Chennai Operating Unit Setup:


Mumbai Operating Unit:

Submit “Replicate Seed Data” Concurrent Program for the Operating Units:

Responsibility: System Administrator


Submit the Replicate Seed Data for Bangalore Operating Unit and Mumbai Operating Units also.

5. Setup Multi Org Access Control

MOAC setup is required to access all the Operating Units from the same responsibility. Create a Global Security Profile from HRMS responsibility and setup MO: Security Profile for all Responsibilities. Optionally, setup MO: Default Operating Unit profile. Ensure that MO: Operating Unit profile is null at Responsibility level.

India HRMS > Security > Global Profile

Run Security List Maintenance Concurrent Program for the profile created

Set Profile Options at Responsibility Level:


MO: Security Profile MO: Default Operating Unit

This profile to be setup for other Responsibilities which needs Operating Unit access like Purchasing, Receivables, Order Management, Assets, Cash Management, Tax Manager also.

6. Setup E-Business Tax:

Dummy E-Business Tax Regime to Rate setup needs to be performed in order to use

India Localisation features in Order Management and Receivables. E-Business tax

replaces 11i Receivable Tax engine.

For Procure to Pay, there is no requirement / interaction with E-business tax. Definition

of IL taxes would suffice.

India Local Taxes are defined under India Local Responsibilities > Setup > Taxes

Refer: 10-44 Oracle Financials for India Implementation Guide Question No.162

India Localization uptake of E-Business Tax in R12 and the relevance of 'Localization' tax

code [ID 472055.1]

6.1 Define "Party Tax Profiles" Responsibility: Tax Manager (Ensure MO: Security Profile or MO: Operating Unit Profile is set for this responsibility to have access to the Operating Unit(s) Navigation: Tax Manager > Parties > Party Tax Profiles

Party Type Operating Unit owning Tax Content

Party Name Your OU name

Click on "GO” button.


(B) Create Tax Profile

Important: Do not check “Use subscription of Legal Entity” check box (B) Apply

6.2 Define “Regime” Following regime should be defined with exact values as given:

Tax Regime Code IN-SALES_TAX

Name IN-SALES_TAX

Regime Level Country

Country Name India

Effective Date Current date

Allow Tax Recovery Checked


(B) Continue (B) Add Row

Party Name Your Legal Entity

Configuration for Taxes and Rules Common Configuration with Party Overrides

Party Name Your Operating Unit

Configuration for Taxes and Rules Common Configuration with Party Overrides

The configuration should be done for each of the Legal Entity and Operating Unit for which India Localization setup is being done.

(B) Finish Ensure that configuration saved message is displayed

6.3 Create Tax Tax Manager –> Tax Configuration Tab > Taxes Create a Tax with following values:

Tax Regime Code IN-SALES_TAX

Configuration Owner Global Configuration Owner and Operating Unit

Tax Source Create a new tax

Tax LOCALIZATION

Tax Name LOCALIZATION

Effective Date Current Date

Tax Currency INR

Rounding Rule Down

Applied Amount Handling Recalculated

TAX RECOVERY CONTROLS

Allow Tax Recover Checked

Primary Recovery Type PREC1


Once the Global Configuration owner is created, use Copy and Overide option Button to create tax for each of the Legal Entity and Operating Unit NK Company Ltd

Chennai Operating Unit:


After completing for all LEs and OUs the Tax page:

6.4 Create Tax Status Tax Manager -> Tax Configuration > Tax Statuses Create Tax Status with following values:

Field Query

Tax Regime Code IN-Sales_Tax

Configuration Owner Global Configuration Owner

Tax LOCALIZATION

Enter These Values

Tax Status Code STANDARD

Name LOCALIZATION

Effective From current date


(B) Apply Query the Tax Status Created for Global Configuration Owner in the Tax Status search.

Copy and Override Configuration Owner for each of the Legal Entity and Operating Unit for which India Localization is to be used NK Company Ltd

Chennai Operating Unit


6.5 Create Tax Rate Create Tax Rate with following values:

Tax Regime IN-SALES_TAX (Choose)

Configuration Owner Global Configuration Owner (Choose)

Tax LOCALIZATION (Choose

Tax Status Code STANDARD (Choose)

Tax Rate Code LOCRATE (Enter)

Rate Type Percentage (Select from LOV)

Percentage Rate 0 (enter)

Effective From current date (defaults)

(B) Apply Copy and Override Configuration Owner for each of the Legal Entity and Operating Unit for which India Localization is to be used NK Company Ltd


Chennai Operating Unit

7. Setup Inventory Organizations:

From India Localization perspective some of the points should be borne in mind while setting up Inventory Organization.

a) Inventory Module should have Installed status.

Financials for India does not support when Inventory module is installed in

shared mode. Following modules are recommended to be installed:-

1. Bills of Material for calendar.

2. Inventory module for associating Inventory Organization with location.

3. Order Management for adding OE: Item Validation Organization

Refer Metalink Note: What is the impact on Financials for India when

Inventory module is installed in Shared mode? (Doc ID 885533.1)

b) Costing method for inventory organization should be either Standard or

Actual Costing.

In case other costing methods are used, Non Recoverable taxes like CST,

Customs Duty and Third party Taxes would not be considered correctly for


costing and will result in wrong inventory valuation, if the Oracle Financials

for India taxes are involved in the transaction cycle.

Costing Methods Supported By Financials For India (India Localization) (Doc

ID 793269.1 and 1280474.1)

7.1 Setup Locations (If already created at the time of Creation of LE, query and ensure Shipping Tab parameters are enabled) Navigation: Purchasing > Setup>Organizations>Locations

7.2 Setup Inventory Organization

Navigation: Purchasing > Setup > Organizations > Organizations


(B) Others > Accounting Information

(B) Others > Inventory Information

Inventory Parameters Tab


Costing Tab

Revision, Lot, Serial and LPN tab


ATP, Pick, Item Sourcing

Inter-Org Information


Other Accounts

(B) Others > Receiving Information


7.3 Link Inventory Organization to Location

Navigation: Purchasing > Setup > Organizations > Locations

Query Location and in the “Other Details” Tab, choose Inventory Organization

8. Setup Payables a) Accrue at Receipt

India Localization support only accrue on Receipt. Period End accrual is not

supported.

Does India Localization Support “Period End Accrual” functionality? (Doc ID

1981441.1)


b) Invoice Match Option:

Invoice match option should be set to “Receipt” in view of the setting of

Accrual on Receipt. PO matched Invoices would create Reconciliation

issues.

The PO matched invoice can only be created for service Tax. For any other

tax such as Excise, VAT, CST etc it is mandatory that the "Accrue at Receipt"

flag is checked and the invoice should be created matching to "Receipt"

only.

However even for service tax at the time of creating receipt there will not

be any accounting at the time of receipt when accrue at receipt flag is

unchecked. For Service tax accounting you need to create PO matched

invoice only.

Can PO Matched Invoice Created in India Localization Accrue On Receipt

(Doc ID 1347944.1)

8.1 System Option

It is a system wide setup and not reference to a particular operating Unit.

Payables > Setup > Options > Payable System Setup

8.2 Financial Options

Payables > Setup > Options > Financial Options

Should be set up for each Operating Unit.

Accounting Tab


Supplier – Purchasing Tab

Encumbrance Tab

Tax Tab (Not applicable) – Leave Blank

Human Resources Tab


8.3 Payable Option:

Payables > Setup > Options > Payable Options

Accounting Options Tab:

Currency Tab

Tax Reporting (Not Applicable) – Leave blank


Invoice Tab

Supplier Tab

9. Purchasing Setup

To be setup for Each Operating Unit.

Purchasing > Organizations > Purchasing Options


Complete other required setup for Purchasing and Payables

10. Receivables Setup

Ensure required AR System Profile Options are set using System Administrator Responsibility

10.1 Define Payment Terms (as required)

Receivables > Setup > Transactions > Payment Terms


10.2 Define Auto Accounting: - For each Operating Unit

Define Auto Accounting for Receivables, Auto Invoice clearing, etc.

10.3 Receivable System Options (For each Operating Unit

Receivables > Setup > System > Systems Option

Accounting Tab:


Trans and Customers:

Miscellaneous Tab

Note Default Country: India

10.4 Transaction Types: (For each Operating Unit)

Receivables > Setup > Transactions > Transaction Type

Credit Memo Transaction Type:


Invoice Transaction Type:

Inter Company Invoice:

Debit Memo:


10.5 Transaction Sources (For Each Operating Unit)

Receivables > Setup > Transactions > Sources


10.6 Define Collectors:

Receivables > Setup > Collections > Collectors

10.7 Define Approval Limits

Receivables > Transactions > Approval Limits

10.8 Define Remit to Address

Receivables > Setup > Print > Remit-to Addresses

10.9 Define Remittance Bank

Payables > Payments > Bank Accounts (Define Bank, Bank Branches & Bank Accounts, Assign to OU) - Create Grant for the user to access

10.10 Define Receivable Activities:

Receivables > Setup > Receipt > Receivable Activities


Setup Receivable Activities for Finance Charges, Charge Back Reversal, Earned Discount, Unearned Discount, Adjustments, Bad Debts.

10.11 Define Receipt Class:

Receivables > Setup > Receipts > Receipt Classes

(B) Bank Accounts


10.12 Receipt Source (To be setup for each Operating Unit)

Receivables > Setup > Receipts > Receipt Sources

10.13 Customer Profile Classes

Ensure Customer Profile Class is set with Profile Class Amounts : INR

Receivables > Customers > Profile Classes


10.14 Remit-to Addresses:

Receivables > Setup > Print < Remit-to Addresses

11. Order Management:

11.1 Setup Necessary Profile Options GL: Ledger Name, GL: Data Access Set, MO: Security Profile etc

11.2 Parameters:

System Parameters: (to be setup for Each OU). Setting Item Validation Organization is important.

Setup > System Parameters > Values

Parameter Value

Audit Trail Enable when Order is Booked

Call line DFF extension API in COPY Yes


Credit Memo Transaction Type CM_Chennai

Credit Salesperson for Freight on Sales No

Customer Relationships Related Customer

Default value for Action - Copy Complete Configuration

Yes

Enable Ship Method Yes

Item Validation Organization Chennai Manufacturing

Show Discount Details on Invoice Yes

Global Parameters:

Setup > Shipping > Global Parameters

Ensure “Raise Business Event” is checked. Necessary for IL Taxes to flow from Sales Order to AR (Doc ID 1631274.1)

Shipping Parameters:

Setup > Shipping > Shipping Parameters (for each Inventory Organization)

Ensure “Raise Business Event” is checked in the General Tab. Necessary for IL Taxes to flow from Sales Order to AR (Doc ID 1631274.1)


11.3 Define Transaction Types:

Ensure TAX_EVENT is NULL under the Finance Tab. Doc ID 1631274.1

Order Management > Setup > Transaction Types > Define ( To be defined for each Operating

Unit)


Standard Line Type for Chennai OU – Chennai Manufacturing Inventory

Main Tab

Shipping Tab:

Finance Tab:


Define Standard Order:

(B) Assign Line Flow:

Shipping Tab:

Finance Tab: (Ensure Tax Event is NULL)


Define Return Line Type:

Define Return Order:


(B) Assign Line Flow:

Shipping Tab:

Finance Tab:

Mixed Order


11.4 Define and Assign Document Sequence:


10.14.1 Define Sequence:

Order Management > Setup > Documents > Define

10.14.2 Assign Sequence

PART C: INDIA LOCALIZATION SETUPS

1. DEFINE TAX AUTHORITIES:

The liability arising from any tax has to be accounted and paid to the concerned tax authority within the time limit specified by the particular tax law. These Tax authorities have to be defined as a supplier and the necessary supplier sites are to be created. For example, Income Tax Deducted at Source, while making Supplier payments needs to be accounted against an Income Tax Authority. A Supplier and Site for this Authority to be created in the Base Application. In the Type field on the Classification tab, 'India TDS Authority’ should be chosen. Only then, when defining a 'Tax Deduction at Source' Type of Tax, the Tax Authority Name would be listed in the 'Vendor' field LOV on the Tax Definition screen. Sites as necessary should be created and OU assignment should be done. In Localization form, Additional Supplier Information should be created with a Null site and for each of the Sites for the authority.


The same Steps to be followed for each of the following Tax Authorities:

Tax Authority Lookup Value

Commissioner of Income Tax India TDS Authority

Commissioner of Sales Tax India VAT Authority

Commissioner of Service Tax India Service Tax Authority

Commissioner of Central Excise India Excise Authority

Commissioner of Customs India Customs Authority

Commissioner of IT India TCS Authority

Create Sites and Assign to OUs

Additional Supplier Info: Null Site

With Site:


2. SEEDED REGIMES and TAX TYPES

REGIMES:

Seeded Regime values are pre-defined in the Asia Pacific Localization Lookups.

Regime Registration of Organizations needs to be done wherever required.

Check whether seeded values are enabled.

TAX TYPES:

Seeded tax types are predefined in Asia Pacifica Localization Lookups – Check

whether enabled.


3. CENTRAL EXCISE / CENTRAL SALES TAX

For Excise, no Regime Registration is required. Accounting Information for Excise is

captured in Additional Organization Information Setup. Only Tax Codes needs to be

setup.

A seeded "Excise" regime (which is a dummy regime) only with the regime header is

available and no attributes are seeded to the dummy regime. No organizations can be

defined for this regime through the Regime Registration form. Defining a Regime

header is done to allow the Item Classification definition for Excise Regime. (Doc id 1938236.1)

3.1 ADDITIONAL ORGANIZATION INFORMATION:

Define the structure of Inventory organizations and locations, which would be

reporting to the Local Tax Authorities.

The information defined at this level would be the basis for Recording, Reporting

and accounting of the location taxes. Apart from this define the organization


registration details with Excise, Customs, Sales Tax and TDS authorities.

This information is available in additional organization information are the basic

data for all India Localization activities and accounting. The Organization and

Locations defined through Common Application would be available for setup. While

creating the additional organization information, it is mandatory to create two sets

of records, one at null location level and another with location.

If multiple organizations are defined within the same excise registered premises,

then you can define one organization and location combination as master

organization and the rest as child organizations having reference to the master

organization based on the ECC code. In such a setup, the master organization is

the organization where excise registers are generated only from the master

organization. The master child relationship is used only to generate consolidated

excise registers at master organization level. You need to run the India Master Org

RG request set to consolidate excise registers at the master organization.

Payable > Setup > Additional Organization Info

Additional Organization Information – Tax info Tab: (Null Location)

Additional Organization Information – Accounting Info Tab: (Null Location)


Additional Organization Information – Preference Tab: (Null Location)

NOTE:

Days allowed for 173L, Sales Tax Return days and Excise Returns days to be left

blank, due to change in Rules.

Additional Organization Information – Trading Info tab: (Null Location) – Applicable

only for Trading Organization

Define Tax Calendar:


Repeat the above with Location:


The above definitions should be done for each of the Inventory Organization.

Definition for Trading Organization: Enable Excise in 23D in Trading Info Tab


ADDITIONAL ORGANIZATION INFORMATION WITH LOCATION: Trading

Organization: Chennai Trading


3.2 DEFINE SUBINVENTORY LOCATIONS IN INDIA LOCALIZATION

Associate sub-inventories to a combination of Organization/ Location. Excise related

transactions and records would be updated only for those sub inventories that are

identified as bonded for manufacturing organizations and as traded for trading

organizations.

Inventory > India Localization > Setup > Subinventory Locations (query

Organization and Locations) > Query Subinventory – Enable Bonded Flag


For Chennai Manufacturing: (Note: Enable Bonded Flag)

For Trading Org: Chennai Trading: Note: Trading is checked by default

3.3 DEFINE BOND REGISTERS

The calculation of excise duty and updating of excise registers are based on the setup made in the define bond register. Pre-requisite setup: Definition of Order types and Transaction Sources in the base Application. Excise transactions are classified as:

• Domestic with Excise • Domestic without Excise • Export with Excise • Bond Register (Export under Bond)

• Same Order Type/Transaction source cannot be mapped to different Excise

related transactions. You need to map business requirements by considering the localization setup that needs to be carried out for mapping the Excise Related Transactions.

• Attachment of Order type to 'Domestic without Excise', or 'Trading without

Excise' would mean that Excise Invoice Number for such transaction is not required. This Setup was mandatory for Tracking ST Forms earlier and is no longer mandatory for form tracking.

• When Using Master Organization setup for generating Excise Invoice Numbers

at Master Organization level, It is mandatory to setup the Order Type at both Child Organization and at Master Organization for getting the Correct Excise Invoice Number.


Excise transactions need to be identified based on the Organization/Location combination and against each excise transaction multiple Order types and Transaction sources can be assigned. Order type need to be assigned to excise related transactions from Order Management Module and Transaction source need to be assigned for all excise related transactions through the Receivable module. If the Organization/location is of manufacturing type, excise related transactions for manufacturing set up need to be associated. Likewise, if the organization/location is ‘trading’ excise related transactions for trading need to be associated. By associating the Order Types to the excise transactions for an Inventory

Organization and Location, the related Excise Record entries will be passed based on

the nature of goods cleared.

SETUP FOR Chennai Manufacturing (Manufacturing)

SETUP FOR Chennai Trading (Trading)

3.4 DEFINE EXCISE INVOICE NUMBER GENERATION

It is not mandatory for the user to define Excise Invoice Generation Serial Number. If

the User does not define the Excise Invoice Generation Screen, then auto generated

system numbers will be allotted to the Excise Invoice as stipulated under Rule 52 A of


the Central Excise Rules (one sequence for domestic transactions and another for

exports). You can initialize the default values of GP1 & GP2 in the table

ja_in_excise_invoice_no to start from a different number.

However, in case of a business need to generate Excise Invoice number on any

different basis, Excise Generation feature can be used to automate the Excise Invoice

document sequence generation.

A document sequence for the combination of Transaction Type, Order/Invoice Type and Register Type can be setup.

Optionally, an alpha/numeric value which would be prefixed to the number series generated for each excise invoice can be defined. The setup would be restricted to the Order/Invoice Types for which it is created.

For all other Excise Invoices which are created using Order/Invoice Types for which setup has not been made, the system uses the default number series. This would be a numeric series, starting with 1, incremented by one. The sequence would be different for each Organization/location and the nature of clearance. Within the organization, the sequence would be different for the Domestic clearances and Export Clearances.

Before defining the user definable prefixes and excise invoice numbers, setup needs to be done in define Bond register where the user needs to associate an Order type for all transactions Order Management module and Transaction source for all transactions from Accounts Receivable module. The Order type and transaction source will be associated with different type of excise removals (like domestic with excise, Bond, Export with excise etc.). Only after associating an Order type/Transaction source with an excise related transaction type, user should define the user definable prefixes and excise invoice numbers in this region.

SETUP FOR Chennai Manufacturing

India Local Inventory > Setup > Additional Organization Info – Query Organization

and Location (B) Tax Calendar (B) Excise Generation

SETUP FOR Chennai Trading


3.5 TAX CODE SETUP – EXCISE AND CENTRAL SALES TAX

Tax codes will be the basis for all localization tax calculations. The Tax Codes to be

defined depends on the Business Needs. Tax codes cannot be updated once saved.

However, but can be disabled by entering the End Date.

India Local responsibility > Setup > Tax Setup > Taxes.

The taxes are relevant to a particular Operating Unit. Once Tax screen is selected,

Inventory Organization has to be chosen from the LOV. In case of Multi-Org, the taxes

set up relate to the Operating Unit corresponding to the Inventory Organization

chosen.

Setup for Chennai OU

Basic Excise Duty - Purchase

Ensure 100% Credit is defined.

Basic Excise Duty for Sales


Basic Excise Duty Sales for Trading Organization:

Note: As per the current functionality in Trading Organization one should not use

precedence based taxes. This is because when you perform match receipt at that time

taxes will calculated based on the receipt to which the order is matched. For correct

tax calculation you need to add Adhoc Excise of taxes (Excise, Education Cess, SHE

Cess) with amount as 0. Once you match it taxes will get calculated automatically

based on the receipt taxes.

CST 2% against Form C


CST without C Form – Normally Local VAT Rate:

3.6 SETUP INVOICE TOLERANCE:

As per Central Excise Act, the Excise duty will be rounded off to the nearest Rupee and in effect the AP Invoices, the Header Amount and the Distribution Amount will have minor difference. When there is a difference between header amount and distribution amount, a hold is created. To overcome the hold being created, a Tolerance in Percentages and in Amounts can be created in Localization. Wherever a hold is placed on Invoices due to difference in Distributions Total and the Invoice Header, then, the system would check for the tolerance limits setup for Organization. If the difference Amount falls within the specified limit, then this inserts an Additional Invoice Distribution line for the Difference Amount and the Invoice is approved. This line would have the line type as 'Miscellaneous' and the charge Account would be as specified in the Invoice Tolerance Setup for the Organization.


On Re-Approving the Invoices, the system would check for the existence of a Distribution line for Rounding Amount. If one exists, then the amount of this line would be updated with the revised difference. This setup to done for each Operating Unit. India Local Payables - India Localization - Setup - Others - Invoice Tolerance

Upper and lower limits are to be entered as positive values.

3.7 ITEM CLASSIFICATION - Excise:

Item Classification has to setup for each inventory organization. This is to classify the

item for the purpose of excise. For example, an item can be Excisable in one Inventory

Org but non-excisable in another. After creating an item and assigning it to

organization, Item Classification has to be created for the Item in the India

Localization.

Inventory > India Localization > Setup > Item Setup > VAT/EXCISE Item Classification


For Trading Item in the Trading Organization: Tradable Yes and Modvatable No


4. CUSTOMS REGISTRATION AND CUSTOMS TAX CODES

4.1 REGIME CREATION:

As part of BOE enhancement done in 12.2, now the BOE accounting – Paid / Payable accounts and Write Off account are fetched from regime setup of Customs and not from Additional Organization setup. Custom Regime Registration should be done in the Regime Registration form, where Registration / IEC details, Tax Types with Accounting Codes and DEPB Accounting Codes are to be provided in the respective tabs. India Local Payable > India Localization > India TCS/VAT/Service Tax > Setup > Regime Registration Registration Tab:

Need to define Registration number as Primary Registration Number IEC code represents Import Export Code. This is one of the attribute for regime registration

Tax Types Tab:

The following Tax Types are seeded.

Duty Non Recoverable Recoverable Customs Duty Customs Duty Additional

Customs – Education Cess CVD – Education Cess

Customs – SHE Cess CVD – SHE Cess

Additional Custom Duty Additional CVD

Surcharge

Any Other Customs Tax Type 1






For Each Tax Type a Paid / Payable Account and a Write Off Account to be defined.

Others Tab:

DEPB – Duty Entitlement Pass Book

In case DEPB Credit is available and want to utilize it for paying Customs Duty, in “Others” tab, DEPB Account should be specified. This account will be picked up in accounting of DEPB credit if provided during the BOE creation.

Sequence Tax Types Description

1 Customs Duty-IND Customs Duty

2 Customs Duty - Additional-IND Customs Duty - Additional

3 Customs - Education Cess Customs - Education Cess

4 Customs SH Education Cess Customs SH Education Cess

5 Additional CVD Additional CVD


4.2 REGIME REGISTRATION - CUSTOMS

Each Inventory Organization should be registered under the Customs Regime.

Select the Organization Type, Organization Name and Location and Save. On saving,

details setup during Regime registration defaults, which can be amended as required.

Tax Type Tab:

Others Tab:


4.3 TAX CODES FOR CUSTOMS:


4.4 ITEM CLASSIFICATION FOR CUSTOMS:

For Imports, certain item parameters (e.g. Tariff Headings and code etc) are required to be captured. Define custom item classification in VAT/EXCISE - Item Classification form. India Local Inventory > Setup > Item Setup > VAT/Excise – Item Classificaiton


4.5 DEFINE BOE AGENT:

Define BOE Agent before using Bill of Entry functionality as BOE Agent would be

listed in LOV of Agent Code field. Use this information for Bill of Entry report for

submitting to Customs Authorities.

India Local Payable > Setup > Others > BOE Agent

5. VAT REGISTRATION AND VAT TAX CODES:

5.1 REGIME REGISTRATION

VAT Regime would be used to define rules that would be applicable to all Taxes assigned to it. On a VAT Regime, you would define rules that would be applicable to all transactions created from the Organizations assigned to it. Information defined at Regime creation would default to organizations assigned to the Regime and the defaulted values can be modified to suit requirement. Value Added Tax Registration: Organizations have to register with the various Value Added Tax Authorities (specific to each state). The Registration would be the basis for all Recovering Credit on Input Tax, settling Tax Liability and Tax Reporting.

Assigning Tax Types: Value Added Tax Type have to be assigned to the Value Added Tax Regime. This is a logical grouping of all transactions to which these taxes are applicable. If the values assigned for a particular tax are different, these would prevail over those defined for the Regime.

Assigning Organizations: Regime has to be assigned to all Organizations to which it is applicable. Taxes defined under this Regime would default only for these Organizations.

Note: GL: Ledger Name profile should be set to the Ledger to which Inventory Organizations belong so that they will be available for Registration. If different Ledgers are used, separate Responsibilities to be setup. (1382226.1) Note: Account Details given in the Regime setup only will be considered for generating Accounting Entries. Account Details given in the Tax setup will be ignored.


5.1.1 Regime Registration:

India Local Inventory > India TCS/VAT/Service Tax/FBT > Setup > Regime

Registration

Main Tab:

Tax Types Tab:

5.1.2 Organization Assignment:


5.2 TAX CODES FOR VAT

5.3 DEFINE CLAIM TERMS


Defining claim term for VAT is an important setup in the P2P cycle. The claim term defined determines the VAT claim amount in the VAT- Claim Terms Definition form. Any number of instalments can be defined but the total claim should be equal to 100% Claim terms are defined for a unique combination of the following:

Regime

Item Class Regime Registration Number Organization (location)

India Local Inventory > India TCS/VAT/Service Tax/FBT > Setup > VAT - Claim Terms

Definition

VAT CLAIM FOR CAPITAL GOODS:

VAT CLAIM FOR INPUT:


5.4 DEFINE VAT ITEM CLASSIFICATION

Items are to be classified to define VAT Recovery terms. The Attributes that are to

be defined are:

o Applicable – Whether VAT is applicable for OM – AR Cycle

o Item Class - Raw Material, Capital Goods, Finished Goods or Others

o Recoverable: Yes or no – whether credit can be taken or not

India Local Inventory > Setup > Item Setup > VAT/EXCISE – Item Classification


5.5 DEFINE VAT INVOICE SEQUENCING:

Document Sequencing Setup window is used to define VAT Invoice Sequence Numbers. VAT Invoice sequence generation depends upon the setup made for the Value Added Tax Regime. Excise Invoice Number can be used as VAT Invoice Number by setting up attribute "Same Invoice No for Excise and VAT Regimes" in the VAT Regime Registration. However, setting up VAT Invoice sequence is a mandatory setup that needs to be performed irrespective of the value of "Same Invoice No for Excise and VAT Regimes" attribute. India Local Inventory > Setup > India TCS/ VAT/Service Tax/FBT > Document

Sequence


6. SERVICE TAX REGISTRATION AND SERVICE TAX CODES:

To configure Service Tax, Service Tax Regime should be setup first. Setups made for a regime would be applicable to all transactions created from the organizations assigned to it. Information defined at the Regime level will be the default, which can be modified at Organization Level, as needed. Regime Registration details should include assigning Tax Types, Tax Accounts and Point of Taxation. Service Tax Education Cess and Service Tax SH Education Cess have been merged with Service Tax effective 1st June 2015. Hence No need to define them. Reverse Charge Account also to be defined for interim accounting Reverse Charge. This account will be debited at the time of Accounting and credited at the time of settlement.

6.1 Service Tax Regime Registration:

India Local Inventory > India TCS/VAT/Service Tax/FBT > Setup > VAT - Claim Terms

Definition


Note: Effective Date for Service Tax POT should be either the POT patch application date or current system date and the format must be in DD-MON-YYYY. Reversal days for Payable can be in month or days.

6.2 ORGANIZATION ASSIGNMENT

Details will default from the First Organization defined at the time of creation of the Regime. Needs to be changed as required.


6.3 TAX CODES – SERVICE TAX

India Local Purchasing > Setup > Tax Setup > Taxes

Note: Doc ID 1538419.1

Service tax has to be defined as recoverable by giving credit percentage in Tax definition form as 100. In case if it is not 100% Service Tax functionality will not work as intended.

Even if the taxes are used in Order to cash cycle they need to be recoverable. Also for Reverse charge type of taxes they need to be define 100% Recoverable.

Service Tax Codes for Reverse Charge Service Tax:


7. TDS SETUP, REGISTRATION AND TDS TAX CODES:

TDS Localization in EBS has been enhanced and has undergone a structural

change from R12.2.2. Refer: 1222 Tax Deducted At Source (TDS)

Functionality Overview Document (Doc ID 1631223.1)

7.1 Define Accounting Calendar for TDS in the Base APPS

The period should start from 1-Apr and end to 31-Mar of next year. Period Type

should be Year. This calendar will be assigned to the Regime.

Purchasing > Setup > Financial > Accounting > Calendar


7.2 Define TDS Sections:

India Localization comes with pre-seeded, default TDS Sections in the database.

However, review these default sections and decide whether to change them to suit

business needs. To change them, query on the 'JAI_TDS_Sections' from the

Asia/Pacific Lookup Codes and add a new record, with the relevant descriptions and

the effective period.

India Local Purchasing > Asia Pacific Lookup

7.3 TDS Tax Codes

TDS Codes and TDS Category has to be defined before Regime creation. TDS Tax

Calculation is based on tax category in R12.2.x TDS Architecture. It is a Mandatory

setup required. PAN Not Available Category must be set up as it is required to be

given in the Regime Registration for TDS. The following are the changes:

a. For using TDS functionality defining Tax Category is mandatory.

b. Instead of user creating the same manually every time a tax code is defined,

“Auto Create” check box can be flagged at the time of Tax Code creation

and a tax category will be automatically created.

c. Section code not required at Tax Code level and will be disabled.

d. Invoice Section code info can be defaulted from Natural Account or Vendor

Site setup or can be overridden from TDS tax detail UI

e. TDS Education Cess, TDS Education SH Cess, TDS Surcharge fields are

disabled as they are now defined as tax types. Independent tax codes need

to be defined for these tax types.

India Local Purchasing > Setup > Tax Setup > Taxes


7.4 REGIME CREATIN

Points to be noted:

a. TDS financial year to be linked in the Regime Registration form. It

cannot be overridden at OU Level

b. Default TDS category for Pan Not available should be setup mandatory.

c. Contact details (email, landline, mobile phone) of the person deducting

should be provided

d. Use Vendor Default Section Code is optional (default N).

If set to Y, TDS defaultation package will firstly check natural

accounting mapping to default section code. If no value is

fetched by natural account mapping, then section code from

vendor site would be defaulted.

If set to N, defaultation package will only check natural account

mapping to default section code. No TDS tax will be deducted if

it has not fetched any value for this mapping.

For Prepayment invoice, it will always default from vendor site.

Also user can override from TDS Tax Detail UI manually.

e. Allow Manual Override can be opted as Yes or No. (Default is N). It

cannot be overridden at OU level.

The details required by eTDS return as per NSDL should be given.

Registration Type Registration Name Registration Value

Primary Registration Number TAN No AADCN1234K

Others Deductor Email Id [email protected]

Others Deductor STD-Phone No 044-29259009

Others Responsible Person Mobile No 9999912345

Others Name of Return Preparation Utility Oracle

Others TDS Financial Year 11062

Others Default Tax Category when PAN not Available 10065

Others Allow Manual Override Y

Others Use Vendor Default Section Code Y

Others PAN No CHNN12345K

Others Ward No 12343

Others TDS Invoice in Parent Batch N

Others Tax from OU of Order ? N


7.5 REGIME ASSIGNMENT

7.6 TDS ROUNDING FACTOR

It is mandatory to setup TDS Rounding Factor at Legal Entity Level.

India Local Payable > Setup > Others > TDS Rounding Setup


7.7 SECTION MAPPING

Section Mapping is used to generate TDS Invoice Number and eTDS output. Section

Code Revised column should contain only code provided for eTDS return by NSDL.

7.8 THRESHOLD SETUP:

When an AP Invoice is entered, TDS is calculated based on Threshold setups. The

Set up can be done for Single, Cumulative and Exception.

Threshold is defined for each section by TDS vendor type. Thresholds applicable to

specific vendors are defined as exception setups and vendors are assigned manually

to this setup.

There are two types of Thresholds

Single – Applicable to a Single transaction

Cumulative – In this case, TDS is applicable only when the cumulative purchases made

from the supplier in one financial year exceeds specified limit i.e, Cumulative threshold

amount.

Multiple thresholds with different tax rates may exist. For example, tax rate is 12

percent for the cumulative amount below 10L and tax rate of 12.24 percent for the

cumulative amount above 10L.

Before cumulative threshold is reached, single invoice amount greater than the

threshold limit for a single invoice attracts TDS at predefined rate

Threshold Amount = Total Invoice Amount – Total Invoice Cancelled Amount – Total

Invoice Apply Amount + Total Invoice Unapply Amount

Natural Account Mapping:

Natural account section mapping definition is necessary when one vendor

provides multiple services. A Threshold can have multiple rates and rates will

be picked up on the basis of Natural Accounts. If for an invoice, natural account

is not available in the mapping, than the default threshold will be picked up.

After defining natural account section mapping, the same can be assigned in

[Threshold Setup]/ [Assign Natural accounts] UI.


CUMULATIVE:


7.9 TDS CREDIT MEMO

For certain sales where Tax Deduction at Source is applicable, the customer would deduct amount of TDS from the Invoice value and pay the balance. The Customer would issue a TDS Deduction Certificate. The details of TDS Certificate needs to be captured and a credit memo to be issued to customer to square of the TDS amount outstanding against the Invoice. In India Localization, the details of the Certificate received and the deduction details can be captured. In addition, a Credit Memo can be created through Auto Invoice giving Invoice source as TDS Credit Memo. The following setups need to be done:

a. Customer Additional Information b. Transaction Type c. Source

The Transaction name has to be 'TDS Credit Memo'. The Name is case sensitive and should match exactly. Oracle Receivables > Setups > Transactions > Transaction Type


Oracle Receivables > Setups > Transactions > Sources Uncheck Automatic Batch Numbering & Automatic Transaction Numbering. Standard Transaction Type: Choose Credit Memo Type Defined for TDS

Auto Invoice Tab: Uncheck Allow Sales Credit and Create Clearing.


Customer Information: Sold to Customer and Ship to Customer should be “Value” others ID

Accounting Tab: Invoicing Rule and Accounting Rule should be “None”


Other Information : Transaction Type should be Value

Sales Credit Validation: All should be ID


8. TCS SETUP, REGISTRATION AND TDS TAX CODES:

Value Description

2490 TCS Liability

2491 TCS Interim Liability

2492 TCS Edu Cess Liability

2493 TCS Edu Cess Interim Liability

2494 TCS SHE Cess Liability

2495 TCS SHE Cess Interim Liability

8.1 Define Advance Receipt Class

Define a Receipt class to be used for collecting advance money for sale of items that attracts TCS. It has to be attached to the Regime Registration. The Receipt will collect TCS amount and generate a TCS Credit Memo. Receivable > Setup > Receipts > Receipt Class


8.2 Define TCS Debit Memo and TCS Credit Memo Transaction Type

Oracle Receivables -> Setup -> Transactions -> Transaction Types For better control, separate Debit Memo and credit Memo Transaction type for use in the TCS Transaction.

8.3 Define TCS Debit Memo and TCS Credit Memo Transaction Source

Oracle Receivables -> Setup -> Transactions -> Sources Type: Imported, Automatic Batch Numbering & Automatic Transaction Numbering to be unchecked. Standard Transaction Type: Credit Memo Transaction Type. TCS Credit Memo:


Auto Invoice Tab: Allow Sales Credit to be unchecked.

Customer Information TAB: Sold to Customer & Ship to Customer to be ID.


Accounting Information Tab: Invoicing Rule & Accounting Rule to be “None”

Other Information Tab: Transaction Type should be Value


Sales Credit Validation Tab: Sales Person & Sales Credit Type to be ID.

TCS Debit Memo Source:


BUG: Service Tax Type not available in Regime Registration form

VAT Tax Types Not Available In List Of Values (LOV) In VAT Regime Registration (Doc

ID 2062431.1)

9. THIRD PARTY TAXES, FREIGHT, INSURANCE & DISCOUNTS

Third Party Taxes:

In the Procure to Pay Cycle, the functionality of third Party taxes to account for charges that are incurred but not to be paid to the supplier or Tax Authorities. This can be setup by specifying the Vendor Name and Vendor Site for the Tax Code. After receipt, you have to run the Third party taxes concurrent to generate AP Invoices for all third part taxes included in the Receipt. While computing the cost of the item, these costs also will be considered. While creating an Third Party Tax (that can be used in Procure to Pay Cycle), a Supplier to whom the payment needs to be done on receipt of the goods, can be attached. For example: for a 'Freight' type of tax, you attach Prakash Roadways (should have defined this Vendor in the Supplier Master), and attach this tax to a PO. On receipt of the goods, system by considering the values at the time of receipt creates an invoice to Prakash Roadways automatically. At the same time, for costing purpose, the freight will be considered.


Freight, Insurance and Any Other Tax: Can be used for Accounting for any expense incidental to the Purchase transaction. Any tax (cost component) defined under these categories will be taken into consideration for the calculation item cost. However, it has to be ensured that no credit percentage is specified. Handling Discounts: 'Any other Tax' type of taxes with negative Percentage or Unit Rate can be used to handle discounts. Oracle Financials for India will also handle any other debit/credit that needs to be done for any transaction. Before creating Tax Codes, it is necessary to create Supplier for Freight, Insurance etc. Third Party Tax Code: Freight (ad hoc)

Insurance: 1%


Testing Null Vendor:

Update Vendor check box will enable changing of the vendor, when the Third party

tax codes is used.

10. TAX CATEGORIES:

A Tax Category is a grouping of Tax Codes with tax precedence and calculations as

applicable to a transactions of a particular nature. Defining Tax Category enables

users to choose a tax category instead of selecting individual taxes every time for a

routine transactions of a particular nature. It also enables defaulting of a tax category,

and the defaulted tax codes can be amended by the user, if necessary.

The Defaulting Logic for item based taxes works as follows:

Users can attach the tax category for an item in Item category form and that item

category has to be assigned in Supplier/Customer additional information form.

a) First level, system will check for item category attached at Supplier/Customer

+ Site level and tax category for that item category will get defaulted.


b) Second level, System will check for item category attached at

supplier/Customer + null site level and tax category for that item category will

get defaulted.

c) If both the above are not defined, then system will check for the item class

attached in the Tax category definition form and based on the item class, tax

category will get defaulted. For example, if tax category1 is defined for item

class raw materials, then for all the items falling under raw materials, this tax

category will be used.

Tax Precedence:

Tax Precedence defines how the taxable amount (Taxable basis) will be arrived at for

applying a particular tax rate.

The Tax Rate may be applied on the transaction base value or on another tax line or compounding them or combination of all. The base amount or material sale value is by default given a precedence value of '0'. The subsequent precedence are assigned to the Tax Names' respective Line Numbers. A maximum of five levels of precedence are permitted. A tax cannot be dependent on itself. However, interdependent taxes can be set up in precedence e.g. tax at line 1 can depend on tax at line 2. Similarly, tax on line 2 can depend on tax at line 1. If a tax name is defined as adhoc or as Amount Per Unit of measure then the Precedence has no Relevance in tax computation of such tax, however, calculation of other taxes can be based on this tax. The Taxes included in Tax Category would default on a transaction line. But, you would also have a provision to add new tax lines manually. Tax precedence for Additional CVD Tax Type should be set to the Tax on which it is calculated. TAX CATEGORY FOR ITEMS:

Local Purchase: Excise Duty+VAT (in this case, Excise will be calculated on material

value and VAT will be calculated on material value plus Excise duty)

Inter State Purchase against Form C


Local Sales VAT - Manufacturing

Local Sales VAT – Trading: Note Trading should not have precedence based Excise

Tax. It will default when match receipt is done at the time of shipping.

Interstate Sales: Form C - Manufacturing

Interstate Sales Form C - Trading

Inter State Sales – No Form

Inter State Sales – No Form Trading


Service Tax

Service Tax – Reverse Charge

Imports - Customs