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Pre-Release Document

Oracle Financials for India (OFI)


Goods and Services Tax (GST)
O2C Tax Defaulting

Author: Subbarao Nemani


Creation Date: 21-Mar-2016
Last Updated: 05-Oct-2016
Document Ref:
Version: 1A

Organization: Oracle India Private Limited.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 1


Document Control

Change Record

Date Author Versio Change Reference


n

21-Mar-16 Subbaorao 1A Initial document


Nemani
30-Sep-16 Subbaorao 1.0 Phase-I frozen document
Nemani

Reviewers

Name Position

Rajnish Kumar Director, Financial Localizations


Development
V S Baburaj Director, Product Strategy

Audience

Name Position
12.2 Implementation team
12.2 Customers

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 2


Contents

Document Control..........................................................................................................................2

1- Introduction....................................................................................................................................5

1.1 Overview of GST..........................................................................................................................5

1.2 Order to CashTax Defaulting:....................................................................................................5

2 - User Configurable Tax Setup.....................................................................................................6

3 - Setups For Tax Defaulting..........................................................................................................6

4 - Setups For Tax Rule Basis.........................................................................................................7

5 - Tax Defaulting with Item Category Setup...............................................................................29

6 - Flow Chart for Tax Defaulting..................................................................................................32

7 - Test Case Scenarios..................................................................................................................34

8- Call to Action................................................................................................................................55

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 3


Scope for this Document
This document provides the Functional design for Oracle Financials for India (OFI) product on defining
user configurable item classification, assigning of item attributes to various items and regimes along
with Tax Determination & Defaulting.

Note: The current content has been compiled in reference to the frozen scope of the EBS GST
Infrastructure deliverables (Ref: GST Phase -1 Deliverables.docx)

Purpose of this Document


This document is aimed at helping the users to configure tax default setup for OFI product.

Intended Audience
Audience for this document is user groups, consultants and support team.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 4


1- Introduction
1.1 Overview of GST
The Goods and Services Tax Bill or GST Bill, officially known as The Constitution (One Hundred and
Twenty-Second Amendment) Bill, 2014, proposes a national Value added Tax to be implemented in India.
"Goods and Services Tax" would be a comprehensive indirect tax on manufacture, sale and consumption
of goods and services throughout India, to replace taxes levied by the Central and State governments.

1.2 Order to Cash Tax Defaulting:


In this document, we have covered the setups required for Tax Defaulting on Order to Cash (O2C)
transactions / cycle, along with few of the same Test cases used for defaulting logic. In addition, we would
only be covering the required setups, fields, attributes which are relevant in this O2C Transactions Tax
Defaulting. Complete GST setups are not covered in this document.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 5


2 - User Configurable Tax Setup
Before, we proceed any further we need to know how this Tax Setup is configured as. Owing to changes
in the Tax Structure of India, the newly created GST Taxes are the replacement for the Indirect Taxes.
Here, we will like to mention the Tax Setup in broad classification as below:

Transition Taxes

Withholding Taxes ( TDS )

GST Taxes will be mapped under Transition Taxes which is nothing but the Indirect Taxes.

Withholding Taxes are for the Direct Taxes. Tax Deducted at Source can be mapped here.

3 - Setups for Tax Defaulting


In this section, we have mentioned the required setups which assist in defaulting Taxes on Sales order /
AR Invoice level.

1. Define Common Configuration

2. Define Regime

3. Define Tax Type

4. Define Tax Rate

5. Define Item Class

6. Define Tax Rules

7. Define Third Party Registration

8. Define Customer Reporting Code

9. Define First Party Registration Number

10. Define First Party Reporting Code

11. Define Item Reporting Code

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 6


4 - Setups for Tax Rule Basis
4.1 Define Common Configuration

This is the Mandatory setup which decides on how the Tax defaulting mechanism should happen. It can
be defined at either the Inventory Organization Level or at the Operating Unit level.

Tax defaulting mechanism is of two types:

Item Category Basis

Rule Basis

Below is the brief overview of the Tax Defaulting Mechanism.

a. Item Category Basis:

This is identical to the existing Oracle Financials for India Tax Defaulting engine where Taxes are
defaulted on the Sales Order or AR Invoice basing on the information shared at the Customer
Additional Information Screen.

Precisely, on choosing this, system checks for the relevant item category setup which is assigned to
the item along with the Third Party registration.

It can also be referred to as Traditional Way of Determining Taxes basing on Item Category. This
Setup is done at the Organization level.

b. Rule Basis:

This determines set of Rules for the Tax Category Defaulting. This gives us an approach to create a
Tax Determination model basing on the business requirement and pick the relevant tax category
among the defined Tax Categories.

This form can be accessed via the below navigation:

(N) Oracle Financials for India Tax Configuration Define Common Configuration

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 7


Defined at OU Level

End Date is optional, to


specify the effective till
date

Showing that Rule Basis is


active and defined for Tax
Defaulting
Start Date is mandatory,
which says the effective
from date

We can change the Defaulting Mechanism by end-dating the current active Determination Basis and
entering the new value. These details can be entered in the form under Transaction Tax tab.

Below is the screen shot of form, on selecting Withholding Tax tab.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 8


This setup here will be used only when Withholding Tax Registration number is not available. Here we
specify the Tax Category which will be defaulted on which Regime. This is necessary only for setting up
defaulting for Direct Taxes.

4.2 Define Regime

Here, we will define the respective Tax Regime used. This Regime name entered is a user-configurable
field and we can enter a value for the Regime Name.

Navigation for this form is

(N) Oracle Financials for India Tax Configuration Define Regime

Field Description

Regime Code User Enterable value for Regime Code

Regime Name User Enterable value for Regime Name

Start Date Effective From

End Date Effective until

Regime Type Need to choose from Transaction Tax, Withholding


Tax. Since we are using GST taxes which are in
place for all Indirect taxes, we select as Transaction
Tax.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 9


Tax Authority Enter the relevant Tax Authority

Tax Calendar Need to pick value as TDS Calendar

Under the Tab Rounding we can define Rounding Basis as below:-

Tax Amount: GST will be considered for tax amount.

Taxable Amount: This is on which the tax gets computed.

Quantity: created in view of clean energy cess.

4.3 Define Reporting Type


The purpose of Reporting Type is used to capture Additional Information or User defined specific
attributes. In the Context of Tax Defaulting we define this.

This can be used for setting up Reporting Code for below

First Party

Item

Third Party

In the below example , we have shown for Entity as Item with Reporting Usage as Tax Determination
which means that if Tax Rules are defined for Item Reporting Code with a value , on matching on this
entry , Tax Category defined in the Rule will be defaulted for these transactions.

(N) Oracle Financials for India Reporting Define Reporting Types.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 10


Sl.no. Field Functional Description Validation

1. Reporting Type User Enterable Reporting Code --


Code

2. Reporting Type Name for this Setup --


Name

3. Reporting Usage For the Tax Determination we LOV containing values


select as Tax Determination as

Legal Reporting
Reporting
Tax
Determination
Transaction
Attribute
For the tax defaulting ,
only Value Tax
Determination from the
LOV is useful

4. Entity Item for Item


Reporting Type
First Party For
Reporting Type at first
party
Third Party

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 11


5. Data Type Can pick a value from
below
Alpha
Alpha Numeric
Date
Numeric
6. User Configurable Can this be modified by
User after setup at
transaction level
7. Start Date Specify Effective From
Date
8. End Date Effective until date

Under the Reporting Code Details, we will enter Reporting Code value, its valid description along with the
Effective dates.

4.4 Define Tax Type

Taxes in GST are broadly classified as Central Goods and Service Tax (CGST), Integrated Goods and
Service Tax (IGST), State Goods and Service Tax (SGST).

In this form, we are going to specify the required Tax Type.

Navigation for this form is

(N) Oracle Financials for India Tax Configuration Define Tax Type

On selecting Accounting Tab, below is the screen shot.

Here we specify all the necessary accounts for the tax.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 12


4.5 Define Tax Rate

Here, we specify the rate of tax which is supposed to be calculated on the transaction. As per our
requirement, if the tax is Recoverable or inclusive in nature.

Navigation for this form is:

(N) Oracle Financials for India Tax Configuration Define Tax Rule

Screen shot of the form where we have defined the tax as 100% Recoverable.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 13


Below is the information about the form field details at the Header level.

Sl.no. Field Functional Description Validation

1. Operating Unit User will select the Respective Lists down the
Operating Unit, from the LOV Operating Units.

2. Tax Regime Code User will have to select the Lists down the Regime
Regime defined. defined under the OU.

3. Tax Regime Name Displays the Tax Regime Regime Name auto
name populates.

4. Tax Type Code User will select the Tax Types Lists down the define
defined Tax types for that OU
and regime.

5. Tax Type Displays the Tax Type name Tax Type name auto
populates.

6. Tax Rate Type LOV where we chose how the List of values are:
tax rate should be calculated
as Adhoc Amount
Percentage
UOM
UOM Adhoc

7. Tax Status LOV specifies the nature of List of values are :

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 14


Tax Status

Exempted
Higher
Lower
Reduced
Standard
Zero

8. Recovery Rate User Enterable Recovery Rate To define the % of Tax


Recovery i.e. 100%
recoverable or 50%
recoverable or Non
recoverable tax

9. Inclusive Tax To know if the defined tax is On checking the tax


inclusive in nature turns as Inclusive in
nature.

Under Rate Details Tab, we specify the required Tax Rate percentage. This comes with a Start and End
date. So, if required to define a new rate, we can end-date the existing rate and enter the new date.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 15


Under the Account tab, we specify its relevant Account details.

4.6 Define Item Classification

This setup is required for both Defaulting Basis specified at the Common Configuration Screen. If the
defaulting Basis is Tax Determination Basis basing on the value of Item Classification at the Tax
Rules form the value gets defaulted. Else, if the defaulting Basis is Item Category basis, this setup is
required for the Tax category defaulting on the transaction basing on the item setup.

Navigation for this form:

(N) Oracle Financials for India Item Definition Item Classification

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 16


We are supposed to enter the Operating Unit, Organization and Item Name. As observed we have
defined for Item name: JAIRMIN.

On clicking Find, if the setup already exists, below form opens up.

Specifying the
item Assignment to the
classification regime

Specifying Item attributes as


applicable along with their values

If the setup doesnt exist, we are supposed to define a new setup, by entering Organization name, Item,
Item Classification at the header level.

Under Item Attributes Tab, we specify to which Tax Regime is this setup applicable.

On selecting Reporting Codes tab, below is the screen shot.

Reporting Code Tab

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 17


Reporting Codes are useful for Tax category Determination on the Transaction basing on the Tax Rules
provided.

Tax Determination can also be carried out on the basing of Item Reporting Code. This is done by
defining attribute Item Reporting Code under a Tax Rule.

Below are the details under Reporting Code .

Sl.no. Field Functional Description Validation

1. Reporting Usage User can select the LOV containing values


determination value. For Tax as
Defaulting ,we need to select
TD Tax Determination Legal Reporting
Reporting
Tax
Determination
Transaction
Attribute
For the tax defaulting,
only Value Tax
Determination from the
LOV is useful.

2 Regime Name Pick the Regime which is Need to select the


applicable Regime defined.

3. Reporting Type Name LOV lists out the reporting type It contains the defined
Reporting Types where
usage is defined as
Tax Determination
only.

5. Reporting Code Populates the reporting code Displays the value


value

6. Description Description --

7. Start Date Specifies the with Effective --


from Date

8. End Date Can end date the setup for --


reporting Code

4.7 Define Tax Type

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 18


The Nature of the tax is defined here. We can specify the Recoverable or Non Recoverable Tax in this
setup.

(N) Oracle Financials for India Tax Configuration Define Tax Type

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 19


Under Accounting tab, it lists down the OU, Organization and its location where the respective
accounts being assigned to

4.8 Define Third Party Registration

Customers are referred to as Third Parties . So, when transacting in Order to Cash cycle, defining
Customers is necessary for the Tax Defaulting.

(N) Oracle Financials for India Party Registration Define Third Party

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 20


Need to select as
Customer

Below are the details under the Registration tab.

Sl.no. Field Functional Description Validation

1. Regime Code Pick the Regime LOV lists the


Available Regimes

2. Primary Registration Contains the Registration LOV contains below


Name Type
ECC
Number
GST
Registration
Num
PAN
Number
Service Tax
Registration
Number
TAN
Number
TIX Number
3. Primary Registration User entered registration User entered
Number Number number

4. Secondary Registration -- --
Name

5. Secondary Registration -- --
Number

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 21


4.9 Define Third Party Reporting Code

If Tax Determination Basis is Tax Rules and defaulting attribute is Customer Reporting Code, then we
need to define this Reporting Code in the Third Party Registration form.

User Entered Reporting Code Effective dates of the reporting


Value, used for tax defaulting code

4.10 Define First Party Registration

In order to default the tax category on the transaction basing on the Inventory Organization we need to
specify this setup.

(N) Oracle Financials for India Party Registrations Define First Party Registration

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 22


Select the Organization

Select the applicable


organization type

As observed from the above screen shot, we have assigned the regime GST_Tax_D_O2C with the
respective registration name and its number.

4.11 Define First Party Reporting Code

To default Tax Category basing on the Reporting code at the Organization level, we need this setup to be
performed.

In the same First Party Reporting Code form, select the Tab Reporting Code .

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 23


4.12 Define Item Reporting Code

For Tax defaulting on the transaction basing on the Item Reporting code such that all items with these
reporting codes ,the respective tax category will be defaulted, we need define this setup.

(N) Oracle Financials for India Item Definition Define Item Classification

Select Reporting
Code Tab

4.13 Define Tax Categories

As mentioned from the inception of this document, Tax Category will be defaulted on the transaction
basing on the respective setups. Now, we will define the Tax Category itself.

(N) Oracle Financials for India Tax Configuration Define Tax Categories

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 24


User entered Tax Category
Name

Assign the defined Tax


Rates

4.14 Define Third Party Registration Number

To default taxes basing on the Registration Number of the Customer we select the Third Party
Registration Number in the tax rules.

(N) Oracle Financials for India Party Registration Define Third Party Registration

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 25


4.15 Define Tax Rules

For defaulting Tax Category on a transaction basing on a set of Rules as per business requirement, we
define this setup. If at the Common Configuration screen under Tax Determination basis it is Tax Rules
then, as per the rules defined in this setup are defaulted on to the transaction.

(N) Oracle Financials for India Tax Configuration Define Tax Rules

For the sake of understanding we are splitting the form as header and line section where lines determines
information under Tax Determination Rules basis and header is above it.

Header Details

Sl.no. Field Functional Description Validation

1. Operating Unit User to select the OU --

2. Tax Rule code User Enterable Value --

3. Tax Rule Name User Enterable Value Description

4. Tax Category LOV to pick the defined tax


categories

5. Start Date Date Effective From --

6. End Date Date Effective To --

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 26


At the line level, we can specify the Tax rules using the below attributes / values.

Tax Determination Basis / Rule contains below Value as shown in the screen shot.

Sl.no. Field Functional Description Validation

1. Application Select the application from Values are


the LOV
General Ledger
Payables
Purchasing
Receivables
Projects
Inventory
Order
Management
2. Customer Reporting Code Reporting Code defined at
Third Party Registration

3. First Party Registration Registration number --


Number specified in First Party
Registration

4. First Party Reporting Code Reporting Code defined at --


First Party Registration

5. Item Classification Value fetched after Defining --


Item Classification setup

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 27


6. Item Reporting code Reporting Code defined at
item Classification

7. Ship From In O2C transaction ,its Base --


application Warehouse
location value

8. Ship to Value of ship to location --

9. Supplier Reporting Code NA --

10 Third Party Registration Registration number of third --


Number party defined in Third Party
registration form

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 28


5 - Tax Defaulting with Item Category Setup
5.1 Define Common Configuration

The Common Configuration setup has to be defined for Item Category.

Below is the screen shot of the form, showing that Item Category setup is active.

Item Category Setup is


Active.

5.2 Define Item Categories

Here, we are going to create Item Category List where this is assigned to a specific Item along with the
respective Tax Category.

(N) Oracle Financials for India Item Definition Define Item Categories

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 29


Sl.no. Field Functional Description Validation

1. Name Enter the Name for the Item --


Category

2. Description User description --

3. Item Pick the relevant item on LOV lists down all the
which the tax category items.
should be defaulted

4. Tax Category Select the Tax Category


which should get defaulted at
the item

5.3 Define Third Party Registration

After creation of Item Category, we now need to add this setup at the Third Party Registration or for the
respective Customer.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 30


Select the Defined
Item Category

As observed, the Description of the Created Tax Category gets shown in the LOV, where the respective
Item Category Setup will be checked.

On saving, now the Item Category basis method of Tax Defaulting works and on creating an Order taxes
will be defaulted basing on this setup.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 31


6 - Flow Chart for Tax Defaulting
This section contains the flow chat representation of how the Tax defaulting works. Tax defaulting can be
done with the new approach of Defining Tax Rules or similar the existing approach of defaulting via the
Item Category, refer the below flow.

6.1 Item Category Basis


Start
Start

Tax Rules Check for Value


of Check for Value
Common
of Common
Configuration
Configuration

Is Item No
Is Item
Category
Category
Defined?
Defined?

Yes

Check if Item No
Check if Item
Category No Tax
Category
Assigned at Third Category
Assigned at Third
Party
Party
Registrations
Registrations
Yes

Default Tax on Sales


order via the assigned
Item Category

Taxes defaulted
basing on Tax
Rules setup End
End

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 32


6.2 Tax Defaulting Basing on Tax Rules

Start
Start

Item Category
Check for Value
of Check for Value
Common
of Common
Configuration
Configuration

Tax Rules No

Is Tax Rule No Tax


Is Tax Rule
Defined? Category
Defined? Defaulted and

Yes

Check for Matching


Attributes in all Tax Rules

If Attributes are
If Attributes No
Matching fromare Pick Rule of
Two or Morefrom
Matching Lower Priority
Two or More
Rules Value
Rules

Yes

Pick Tax Rule which is


matching all attributes

Default Tax Category


from the Tax Rule

Taxes defaulted
basing on Tax Tax Category
Rules setup End
End Defaulted

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 33


7 - Test Case Scenarios
7.1 Example:
How to default Taxes on Sales order basing on Tax Rules setup if chosen the Tax Determination
Basis/Rule as: Application where Tax Category GST_TC_D_O2C should be defaulted on the Sales
order upon saving.

Approach:

Step 1: Define Tax Rule as below

Tax Rule Name Tax Category Priority

GST_TR_D GST_TC_D_O2C 2

Step 2: Define Tax Attributes as below

Sl.no. Tax Determination Rule Basis / Rule Tax Determination Values Sub
Values

1. Application Order Management --

Below is the Screen shot of the Define Tax Rule.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 34


Step 3: Create a Sales Order. Here, Sales order Number 47 is created.

Step 4: Go Back to Order Header Information. Click on Tools India Tax Details Form.

Order header

(N) Via Tools India Tax


Details Form.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 35


Step 5: Taxes are defaulted as per the defined Tax Rule setup.

Tax Category
Defaulted.

Taxes on the
Order Line
level

Taxes which are defined as per the Tax Category are defaulted on Saving the order, as per the created
Tax Rule setup.

7.2 Example:

To Determine Tax Defaulting Basing on Item Classification and Third Party Registration of the customer
so that when an order is created for this customer, Taxes should populate automatically.

Approach:

Step1: Define Item Classification

Refer section: Define Item Classification, for setup details.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 36


Step 2: Define Third Party Registration Number

Refer section: Define Third Party Registration, for setup details.

Step 3: Define Tax Rule as Below

Tax Rule Name Tax Category Priority

GST_TR_D GST_TC_D_O2C 2

Step 4: Tax Rule is defined as below

Sl.no. Tax Determination Rule Tax Determination Values Sub Values


Basis / Rule

1. Item Classification Raw Material Indigenous-IND --

2. Third Party Registration Number ECC12345678910 --

Screen shot of the Tax Rule.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 37


Step 5: Sales order for Customer IL Customer02 where the Third Party Registration setup is defined for.

Step 6: (N) to Tools India Tax Details

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 38


Tax Category
Defaulted.

Sales Order
Number

The relevant Taxes defined for the tax category are defaulted on to the order where item is defined as
RMIN and for customer where the Third Party registration setup is defined for.

7.3 Example:

To determine tax defaulting basing Customer Reporting Code Setup along with Item Classification setup.

Approach:

Step 1: Define Item Classification

Refer section Define Item Classification, for setup details.

Step 2: Define Customer Reporting Code

Define Third Party Reporting Code, for setup details.

Step 3: Define Tax Rule as Below

Tax Rule Name Tax Category Priority

GST_TR_D GST_TC_D_O2C 2

Step 4: Tax Rule is defined as below

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 39


Sl.no. Tax Determination Rule Basis / Tax Determination Sub Values
Rule Values

1. Item Classification Raw Material --


Indigenous-IND

2. Customer Reporting Code 12345 --

Screen shot of the defined Tax Rule setup.

Step 5: Create Sales order for customer IL Customer02, for which this Third Party Reporting Code and
Item setup are defined.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 40


Step 6: At Order Header level, (N) Tools India Tax Details screen.

Taxes are getting defaulted on to the order basing on the defined setup.

7.4 Example:

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 41


How to default taxes on to the order basing on Item Reporting Code along with previous setups of Item
Classification and Third party registration ( in Continuation to Example 3)

Approach:

Step 1: Define Item Classification

Refer section Define Item Classification, for setup details.

Step 2: Define Customer Reporting Code

Refer section Define Third Party Reporting Code, for setup details.

Step 3: Define Item Reporting Code

Refer section Define Reporting Type, under which check for the setup with Reporting Usage as Tax
Determination and Entity as Item.

Step 4: Define Tax Rules

Define Tax Rule as Below

Tax Rule Name Tax Category Priority

GST_TR_D GST_TC_D_O2C 2

Step 5: Tax Rule is defined as below

Sl.no. Tax Determination Rule Basis / Rule Tax Determination Values Sub Values

1. Item Classification Raw Material Indigenous-IND --

2. Customer Reporting Code 12345 --

3. Item Reporting Code 1234 --

Screen shot of the defined Tax Rule Form

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 42


Step 6: Create Order.

Step 7: Screen shot of the Tools India Tax Details form, where the taxes are defaulted on to the Order.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 43


7.5 Example:

To Determine taxes on to the Order basing on the First Party Reporting Code Setup , First Party
Registration Number along with previous setups.

Approach

Step 1: Step 1: Define Item Classification

Refer section Define Item Classification, for setup details.

Step 2: Define Customer Reporting Code

Refer section Define Third Party Reporting Code, for setup details.

Step 3: Define Item Reporting Code

Refer section Define Reporting Type, under which check for the setup with Reporting Usage as Tax
Determination and Entity as Item.

Step 4: Define First Party Reporting Code

Refer section Define First Party Reporting Code.

Step 5: Define First Party Registration Number

Refer Section Define First Party Registration

Step 6: Define Tax Rules

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 44


Define Tax Rule as Below

Tax Rule Name Tax Category Priority

GST_TR_D GST_TC_D_O2C 2

Step 7: Tax Rule is defined as below

Sl.no. Tax Determination Rule Basis / Rule Tax Determination Sub Values
Values

1. Item Classification Raw Material Indigenous- --


IND

2. Customer Reporting Code 12345 --

3. Item Reporting Code 1234 --

4. First Party Reporting Code INDIVIDUAL --

5. First Party Registration Number GSTD1245 --

Screen shot of the Tax Rules form.

Step 8: Create Sales order.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 45


Step 9: Observed that Tax category is defaulted on to the order.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 46


7.6 Example:

If there are two Tax Determination Rules defined in the system, which Tax Category is picked up for
Defaulting Taxes on the order?

Approach:

Step1: Tax Rules defined in this system are as below:-

Sl.No Tax Rule Code Tax Rule Name Priority Tax Category Defaulted

1 O2C_1 O2C_1 1 O2C

2 GST_TR_D GST_TR_D 2 GST_TC_D_O2C

Step 2: Tax Determination is defined as below:-

Tax Rule Name Tax Rule Code Priority Tax Rule Tax Determination Value

O2C_1 O2C 1 Item Classification Raw Material Indigenous-IND

GST_TR_D GST_TC_D_O2C 2 Item Classification Raw Material Indigenous-IND

Here, both taxes rules are defined with Tax Determination value as Item Classification.

For Setup relating to Item Classification, refer Define Item Classification.

Since, Both are having the same number of attributes and Tax rules being the same, lets see which tax
Category will be the system pick for Tax defaulting .Ideally, as per the design, if the Attributes are of same
number and matching across two different tax rules, then system will take lower number as priority for
precedence over the larger number.

Step 3: Create Sales order.

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 47


Step 4: Screen shot of the Tools- India Tax Details

Subbarao Nemani OFI-GST O2C Tax Defaulting-Phase-1 48


As observed, Tax Category O2C is defaulted on to the order.

7.7 Example:

Which Tax Rule will the system pick , the scenario where Two Tax Rules are defined in the system where
both one has more number of matched attributes than the other but with there is a Priority difference.

Tax rules are defined below:

Step 1 Tax Rule: O2C_1

Tax Rule Code Tax Rule Name Tax Category Priority Start Date End Date

O2C_1 O2C_1 O2C 1 19-Aug-2016 --

Step 2: Tax Determination attributes are defined as

Tax Determination Rule Tax Determination Value Sub- Values , if applicable

Item Classification Raw Material Indigenous-IND --

Step 3: Tax Rule GST_TR_D

Tax rule code Tax rule Name Tax Category Priority Start Date End Date

GST_TR_D GST_TR_D GST_TC_D_O2C 2 23-MAR-2016 --

Step 4: Tax Determination attributes defined as

Tax Determination Rule Tax Determination Value Sub- Values , if applicable

Item Classification Raw Material Indigenous-IND --

Third Party Registration Number ECC12345678910

First Party Registration Number GSTD12345

First Party Reporting Code INDIVIDUAL

Step 5: Sales order is created.

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Step 6: Below are the details about this order where the following setups are defined.

Item Classification

Third Party Registration Number

First Party Registration Number

First Party Reporting Code

Step 7: On saving the order, Tax Category GST_TC_D_O2C is defaulted which means Tax Rule "
GST_TC_D_O2C is picked though this is having priority as 2. (1 means highest)

Step 8: It means that, it checks for the number of matching attributes where for Tax rule O2C_1, only the
item Classification setup is matching. Whereas in this Order, there are other attributes which are matching
with another tax rule.

Hence system picks the rule where all the attributes in Tax Determination Rule are matching.

7.8 Example:

Wanted to know on how to default Tax Category on the Order where Sales order is created with two
different Items?

Approach:

Sales order containing two items.

a. JAITRAD

b. JAIRMIN

Step 1: Create Item Classification setup for item: JAITRAD

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Step 2: Create Item Classification setup for item: JAIRMIN

Step 3: Create Tax Rules as below

a. Tax rule 1 for item JAITRAD

Tax Determination Rules

Sl.no. Tax Determination Rule Tax Determination Value Tax Category

1. Item Classification Raw Material Trading O2C

b. Tax Rule 2 for item JAIRMIN

Tax Determination Rules

Sl.no. Tax Determination Rule Tax Determination Value Tax Category

1. Item Classification Raw Material Indigenous-IND GST_TC_D_O2C

Since there are two different rules created for two different items where for both only 1 attribute (item
classification) is matching, we are not mentioning about priority.

Step 4: Create Sales order with these two items.

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Step 5: Tax defaulting on the Order basing on the each item respective defined Tax rules.

a. Screen shot of tax category defaulting O2C for line number 1. You may check for the Taxes section

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b. Screen shot of Tax Category GST_TC_D_O2C defaulting along with respective taxes on to the order
line number 2.

7.9 Example:

How to default tax category on the order with Item Classification setup defined.

Approach

Step1: Define Common Configuration

At the common configuration setup, ensue that Item Category Basis is active.

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Step 2: Define Item Category

Refer Define Item Categories

Step 3: Assign Item Category Created in Step 2 in Third Party Registration form for the Customer.

Item
Classification
setup
attached

Step 4: Create Sales Order.

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Step 5: Tools- India Tax Details

Taxes are defaulted basing on the Item Category setup basis.

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8- Call to Action
This is not the final document and further changes shall be incorporated as and when there are any
further updates from Product Management / Development teams in regards to the changed
features/functionality or pending product clarifications, if any.

For further reference, you can also refer the below Pre-Release documents released as a part of the
EBS GST Infrastructure Scope:

OFI-GST-Functional Tax Computation for P2P Phase1

OFI-GST Configuration Phase1

OFI-GST-Functional P2P flow Phase1

OFI-GST-Functional O2C flow Phase1

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