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ORACLE APPLICATIONS

WHITE PAPER Financials for India Works Contract Tax

Prepared by Author: Parag Baid –India Localization Support Creation Date: 03-Oct-2009 Last Updated: Control Number: 1 Version: 1 Copyright (C) 2008 Oracle Corporation All Rights Reserved Product Design and Architecture

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Scope and Introduction Any activity which is undertaken under a contract for working upon any goods, might be liable to Works Contract Tax (WCT) under the Works Contract Act of the respective states in India.Oracle Financials for India provides a feature which help to deduct the WCT on the Payable Invoices and gives a framework which helps to generate the Certificate to be issued to such Vendors from whom the WCT was deducted. The document provide detailed information on the Set ups required for usage of the WCT Functionality, Transaction Cycle and Framework available for Certificate Generation under Oracle Financials for India Works Contract Tax Functioanlity in Release 11i.

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Index 1. Setups

Purchasing Lookups………………………………………………………………….. 3 WCT Authority………………………………………………………………………….4 WCT Tax Code………………………………………………………………………….5 Transaction

Attach WCT Tax Id……………………………………………………………..6 Invoice Validation………………………………………………………………………7 Payment of WCT Authority Invoice…………………………………………………..9 Certificate Generation

India Process TDS Payments…………………………………………………………10 India Generate TDS Certificate………………………………………………………11

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SET UPS Purchasing Lookups India Localization Patch populates the Purchasing Look up with Type as JAI_AP_TDS_SECTION_TYPES.The look up is being used for TDS, WCT and ESI Sections.

Navigation – Oracle Purchasing: Set up: Purchasing: Look up Codes To use the India Localization WCT Functionality user need to create a look up with type as WCT_SECTION as below. The look up is being used for defining WCT Section Codes.

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WCT Authority The WCT deducted from the Payable Invoices needs to be deposited with the WCT Authority as defined in the Works Contract Act.A supplier with Classification Type as TDS Authorities – IND needs to be created in Oracle Payables.

Navigation – Oracle Payables: Supplier: Entry A Site with Payment terms also needs to be created for such Supplier.

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WCT Tax Code Further a WCT Tax Code need to be created in the India Localization Tax Definition window. The following points need to be noted while defining the WCT Tax Code:-

1. The Tax type should be “Tax Deduction at Source” 2. The Vendor Name in the India Localization Tax Definition form shows the

vendors defined in Oracle Payable Responsibility with classification as TDS Authorities – IND.

3. Vendor Site is the site created for the vendor in Oracle Payable Responsibility. 4. The Section Type should be WCT Sections. This gets the LOV from the

Purchasing Look up JAI_AP_TDS_SECTION_TYPES. 5. The Section Code gets the LOV from the Purchasing Lookup WCT_SECTION.

Navigation – India Local Payables: Set up: Tax: Taxes

The LOV for Section Type is derived from the Purchasing Look up JAI_AP_TDS_SECTION_TYPES

The LOV for Section Code is derived from the Purchasing Look up WCT_SECTION

The LOV for Vendor Name will show the Vendors classified as TDS-Authority-IND

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Transaction After the above set ups are in place, we can create transactions deducting WCT.

The WCT Tax Code defined in the India Localization Tax definition window is available in Attribute 2 of the Invoice Distribution DFF having context as India Distributions.

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On Validation of the Payable Invoice with WCT Tax Id, the India Localization trigger will populate the AP Interface and calls the Payable Open Interface.

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The Payable Open Interface gets fired which fetches data from AP Interface and populate the AP workbench with the WCT Invoices. The concurrent Program ‘Validation of TDS Invoices’ will fire if the ‘Create Prevalidated Invoice’ is checked at the Supplier Site level on the Supplier Additional Information.

This can be verified by re-querying the Payable Invoice as below.

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A WCT Credit Memo on the Payable Vendor and a Standard Invoice on the WCT Authority becomes available on the Payable Workbench.

The WCT Standard Invoice generated on the WCT Authority needs to be paid before generation of a certificate.

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Certificate Generation Following are the steps to generate WCT Certificate: - 1. Run the Concurrent India Process TDS Payments by specifying the parameters

The Concurrent India Process TDS Payments populates data. This concurrent will insert data into jai_ap_tds_payments. The Log file shows the WCT Invoice being selected and processed.

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2. Run the Concurrent India Generate TDS Certificate by specifying the parameters

This will generate a Certificate Number. The certificate number can be verified from the Log file.

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India Generate TDS Certificate concurrent Program shall update the Certificate number, Fin Year and Form16_HDR_ID for each of the transaction data in jai_ap_tds_payments. Certificates are unique for a Vendor, TAN Number and Fin Year Combination. The transaction data in jai_ap_tds_payments for each of the above combination is marked under a certificate. The table jai_ap_tds_cert_nums contains the maximum certificate number for an Org Tan Num, Fin Year combination

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Oracle Financials for India does not provide any format for printing the WCT Certificate However, the above framework can be used to design a report as per state specific requirement.