Pre-Release Document

Oracle Financials for India (OFI)

Goods and Services Tax (GST) -
Outside Processing (OSP)

Author: Chandra Shekhar

Creation Date: 14-Feb-2017
Last Updated: 02-Mar-2017
Document Ref:
Version: 1A

Organization: Oracle India Private Limited.

OFI-GST OSP Functional Flow 1

Document Control

Change Record
2
1

Date Author Versio Change Reference

n

02-Mar-17 Chandra Shekhar 1A Initial document

Reviewers

Name Position

Rajnish Kumar Director, Tax Development

V S Baburaj Director, Product Strategy

Audience

Name Position
12.1 & 12.2 Implementation team
12.1 & 12.2 Customers

OFI-GST OSP Functional Flow 2

Table of Contents

Goods and Services Tax (GST) - ............................................................................................................ 1

Outside Processing (OSP) ........................................................................................................................ 1

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

1. Introduction.......................................................................................................................................... 4

2. Scope ................................................................................................................................................... 4

3. Definitions ............................................................................................................................................ 5

4. Overview .............................................................................................................................................. 6

5. Setups .................................................................................................................................................. 6

6. Outside Processing Transactions .................................................................................................... 8

7. Call to Action: .................................................................................................................................... 21

OFI-GST OSP Functional Flow 3

1. Introduction
GST is the most significant indirect tax reform in the history of India.

The "Constitution (122nd Amendment) Bill, 2014" was introduced in the Lok Sabha (House of People) by
Finance Minister Arun Jaitley on 19-Dec-2014, and passed by the House on 6-May-2015. In the Raja
Sabha (Council of States), the bill was referred to a Select Committee on 14-May-2015. The Select
Committee of the Rajya Sabha submitted its report on the bill on 22-Jul-2015. The bill was passed by the
Rajya Sabha on 3-Aug-2016, and the amended bill was passed by the Lok Sabha on 8-Aug-2016.

The bill needs to get ratified at least by 15 state assemblies, which is a mandatory pre-requisite for rolling
out the GST regime in India.

The main objective of GST implementation is to transform India into a uniform market by breaking the
current fiscal barrier between states and facilitate a uniform tax levied on goods and services across the
country.

2. Scope
This paper is intended for an audience familiar with Oracle Financials for India and seeking an insight
into how the functionality of Outside Processing is built to cover the statutory requirement in India as
per GST Law

Note : The current content has been compiled in reference to the frozen scope of the Phase-2
deliverables (Ref: OFI-GST Phase-2 Deliverables.docx).

The scope of this paper is limited to the basic set up and Transaction flow

OFI-GST OSP Functional Flow 4

GST Structure

GST

CGST SGST IGST

(Intrastate (Intrastate (Interstate, Imports &

transactions) Transactions) Exports)

3. Definitions

1. JOB Work :;The term Job work is defined in section 2(62) of Model GST law as undertaking
any treatment or process by a person on goods belonging to another registered taxable person
and the expression Job Worker shall be constructed accordingly

Job work is understood as the processing or working on goods supplier by the principal so as to
complete a part or whole of the process. The work may be the initial process, intermediate
process ,assembly ,packing or any other completion process. The goods sent for job work maybe
raw material, components parts , semi finished goods and even finished goods. The resultant
goods could also be a variation of the same or the complete product .Example of common job
works are slitting, machining, welding, painting, electroplating, power coating etc.

2. OSP: Outside Processing (OSP) is subcontracting process where certain operations in process
routing are performed by the sub-contractor and process as an integral part of the manufacturing
process. The outside processing feature of Financial For India provided the functionality of
tracking the goods send to sub-contractor for Job Work.

OFI-GST OSP Functional Flow 5

4. Overview
The main objective of this document is to help understand the procedure to be followed so to map the
Customer requirements in reference to the Goods and Services tax (GST) Job Work as per section
2(62) of Model GST law

In GST , the taxable event would only be supply of goods and supply of service. The goods supplied by
principal supplier to job worker would be supply of goods chargeable of CGST/SGST in case of intra state
job work and IGST , in case of inter-state job work

There would be a requirement of document evidence for claiming a credit of GST

4.1 Major Features :

Followings are major features would be provided in GST

1. OSP challan can be created based on only Purchase Order

2. Manual OSP chalan can be generated in the case of staggered dispatch ,this will be generated
against a primary challan

3. You have a option of cancelling OSP challan to overcome user errors, however system will allow
to cancelling the challan if the material is not yet received

4. You can generate Original, Duplicate Challan in case where the challan is lost

5. System allow sending excess material for outside process and tracking the return

5. Setups
5.1 For Outside processing transaction ,following setup are required in GST
to complete OSP

Define Tax Calendar

Define the Regime and attach the Tax Calendar

Define Tax Type

Define Tax Rate

Define Tax Category

Item Classification

First Party Registration

Third Party Registration

OFI-GST OSP Functional Flow 6

5.1.1 Define Common Configuration :

Once the above setups are completed .it is required to configure Common Configuration

(N) Oracle Financial Of India > Tax Configuration > Common Configuration

i)Based on flag Allow dispatch quantity to exceed original quantity enable in this form
,system allow to dispatch more than original quantity while creating the primary challan

ii)OSP Return Days helps in setting threshold for tracking the material ,if the goods are not
received within 365 days .

OFI-GST OSP Functional Flow 7

 5.1.2 Define Document Sequencing :

This setup is required to generate the Form Challan Number while creating the challan
based on Purchase Order and Manual Challan

(N) Oracle Financial Of India > Tax Configuration > Document Sequencing

6. Outside Processing Transactions

6.1 Core Application Functional flow :

Standard Oracle Application support Outside Procession Operation in Oracle

Work in Process (WIP) module ,You will be able to monitor the movement of
goods to the sub-contractor in Oracle Financial Of India Module

Bill of Material needs to be created for the assembly in BOM module and a Job
should be created for the Assembly on Oracle Work in Process (WIP) module.

When the Job is released and component is moved to queue of OSP

operation, a requisition gets created in Purchasing module. Submit Requisition
import to create the Requisition . Using requisition you can create a Purchase
Order using auto create and approve the PO. When you receive material it is
directly update in WIP Operations.

OFI-GST OSP Functional Flow 8

 Please note: There are multiple way to creating a Purchasing document based
on sourcing rule

6.2 Outside Processing Transaction flow in GST

Under Oracle Financial of India following additional steps or process are involved

1. You need to navigate to Outside Processing Screen and verify the details populated ,
update the quantity you wish to dispatch and approve the dispatch. Form (Challan)
number will be generated

2. OSP Dispatch forms are crated on the basis of BOM component defined for the item being
subcontracted. In case the issue of material to the sub-contractor is in a staggered manner
(item or quantity ).Manaul Challan can be used for the subsequent dispatches. Each
dispatch in manual challan generates a new challan number

3. Receive the item against the Purchase Order or Release ; Return quantity in OSP Challan
will get updated .

6.2.1 Outside Processing Dispatch

Using this form the user can find out the dispatch form for a Purchase Order (PO) and the
same can be approved.

Dispatch approved in this form is Primary form for a particular OSP PO. System creates the
challan form comprising the entire WIP component required for the specific WIP operations
attached to OSP PO in Outside Processing Details. If the WIP operation is the first
Operations, only the components are to be dispatched to the Sub Contractor

If the WIP operation is the second or higher, the intermediate assembly of earlier
operations only with the components required for current operation need to be dispatched
to the Sub Contractor. Hence additional item line with the PO OSP item is created in OSP
dispatch form for such OSP Purchase Orders.

The PO OSP item description could be provided in such way to identify with intermediate
Assembly. This is specific workaround to meet the GST requirement. Its not a mandatory
to dispatch all the component or their full quantities in the Primary form itself. If the
dispatches are done in a staggered manner, the first batch could be dispatched through the
Primary form. Subsequent dispatches could be done through the Manual OSP Dispatch

(N) Oracle Financial Of India > Transactions > Outside Processing

OFI-GST OSP Functional Flow 9

This form is used to create the challan based on PO number and you can query this form
using PO number or Vendor name or From Number and From Date

Field Description Type Action Description

PO Number Optional EDIT HELP PICK Select PO Number

from LOV to find and
review or approve
dispatch/receipt

Vendor Name Optional EDIT HELP PICK Select the vendor

name from LOV to
find and review the
dispatch for that
vendor

From Date Optional EDIT HELP PICK Select From Date

from LOV to find and
Review the dispatch

OFI-GST OSP Functional Flow 10

This screen is challan details form where you can validate the component item details that
will be use for outside processing.

Field Description Type Action Description

Organization Defaulted Enter Organization name

will be defaulted as
PO Number

Location Defaulted Enter Location will be also

defaulted form PO

Form Number Display only System generated

form number will be
displayed after the
completion and
approval of dispatch

From Date Display Only By default this will be

current date

Supplier Name Defaulted Enter PO supplier name

will be defaulted

Max Day Permitted Display only Display only This filed will have
default value from
Common
Configuration setup

Receive upto Display only This will be the cutoff

date for receiving

OFI-GST OSP Functional Flow 11

 back the OSP
material from the
delivery date from
the vendor

Line Level

Job Name Defaulted Enter Job name associated

with PO gets default
here

Assembly Display only Assembly attached to

Job will be displayed
here

Description Display only Description of

Assembly attached to
job

Item Required Enter Component item gets

default as per
released Job

Description Display only Description of BOM

item will display here

Unit of Measure Unit of Measure of

the item being
dispatched . Primary
UOM of the item shall
be defaulted
.However other UOM
could be used if the
UOM conversion is
defined for item

HSN CODE Display Only

SAC CODE Display only

Original Quantity Display Only This is required

quantity of BOM
component

Dispatched Quantity Display Only This is total dispatch

quantity for this
challan

Form Dispatch Qty Required Enter Item quantity which

you want to dispatch
for outside

OFI-GST OSP Functional Flow 12

 processing

Item Rate Display only List price in item

definition will be
defaulted in this field.
This can be updated
as per the valuation
of OSP item

Dispatch Value Display only Dispatch value=

Dispatch quantity *
item rate

Processing Nature Display only This will default from

Operation description
of OSP operation
from the related Job
and this can be
edited if required.

Return Qty Display only Return quantity filed

gets updated once
the receipt is done of
OSP item

Return Value Display only Return Value =

Return quantity *item
rate

After entering data on primary challan click on View Taxes to validate the tax details on
challan form gets default as per tax attached to PO

OFI-GST OSP Functional Flow 13

Now, click on Approve Dispatch button to approve the challan then form number will be
generated automatically for future reference

6.2.2 Enter Manual Outside Processing Dispatch

This form can be used to create a manual challan for sending a material for Outside
processing .Manual challan can be created based on an OSP PO.

When the Manual challan is being created based on OSP PO, the system checks for the
dispatched quantity in the Primary Form .An entry is allowed in the Manual challan form
only if the full quantity is not dispatched through the Primary form. System does not allow
dispatching any additional material against the PO in excess of the materials required for
the discrete job linked to OSP PO item line.

(N) Oracle Financial Of India > Transactions > Outside Processing

Manual button gets enable only for those PO against that Primary challan is dispatched for
partial quantity.

OFI-GST OSP Functional Flow 14

Field Description Type Action Description

PO Number Required Pick Select PO number

form LOV, if the
primary challan is
already created
against the PO then
only system will allow
to create manual
challan

Vendor Name Optional Select the Vendor

name for whom the
challan is going to be
created

After pressing the Manual button the following challan form will be opened and user can
enter the data as per their requirement of challan

The screen layout and it feature are described for ready reference

Filed Description Type Action Description

Organization Defaulted Enter Organization will be

defaulted from

OFI-GST OSP Functional Flow 15

 Purchase Order

Location Defaulted Enter Location will be

defaulted from
Purchase Order

Form Number Display Only System generated

Form Number will be
displayed after the
completion and
approval of
transactions

Form Date Display Only By default this will be

current date

Supplier Name Defaulted PO supplier name

will be defaulted here

Max Days Permitted Display Only This filed will have

default value from
Common
Configuration setup

Receive upto Display only This will be the cutoff

date for receiving
back the OSP
material from the
delivery date from
the vendor

Primary Form Display Form number of

Number Primary dispatch
created against the
PO

Line level

Job Name Enter Job name associated

with PO will be
defaulted here, user
will have an option to
select the Job name

Assembly Display only Assembly for the

above Job name will
be displayed here

Description Display only Description of

assembly item will be

OFI-GST OSP Functional Flow 16

 displayed here

Item Required ENTER The user needs to

select the BOM
component item from
LOV

Description Display Only Description of item

will be displayed here

UOM Display Only Unit of Measure for

the item being
dispatched. Primary
UOM of the item
shall be defaulted
,However other
UOMs could be used
if UOM conversion is
define for the item

HSN CODE Display only

SAC CODE Display only

Original Quantity Display only This is required

quantity of BOM
component

Dispatched Quantity Display only This is total

dispatched quantity
of item till date

Form Dispatch Qty Enter Item quantity which

you want to dispatch
for outside
processing.

Item Rate Display only List price in item

definition will be
defaulted in this field.
This can be updated
as per the valuation
of OSP item

Dispatch Value Display only Dispatch value=

Dispatch quantity *
item rate

Processing Nature Display only This will default from

Operation description
of OSP operation

OFI-GST OSP Functional Flow 17

 from the related Job
and this can be
edited if required.

Return Qty Display only Return quantity filed

gets updated once
the receipt is done of
OSP item

Return Value Display only Return Value =

Return quantity *item
rate

6.2.3 Print Control Challan

This feature enables you to control printing of challan, it would restrict repeated print of a
challan. Control over printing of Duplicated would be controlled and Duplicate challan would
be marked as such. In case where the print could not be generated due to Printer errors,
authorized user can generate an original print

Records in challan form would be populated on Approval of a Purchase Order (PO) with
line Type as Outside Processing. The user would check the accuracy of the records and
approve the dispatch and not the Form Number . On approval a record would be populated
on Print Control Challan form .the Original in this form would be set to Yes and the value
in the Duplicate filed would be set to No

After approval, you would navigate to India Local Purchasing >Oracle Purchasing >
Report> Run, Submit India Outside Processing challan report. The Form Numbers From
and From Numbers To fields would display only the unprinted Challans i.e challans with
either the Original or Duplicate status set to Yes .On Printing the Challan ,the value in
the Original field would be set to No. At this stage, both Original and Duplicate fields
can be updated.

(N) Oracle Financial Of India > Transactions > OSP Print Challan

OFI-GST OSP Functional Flow 18

Organization Name:

You can select the Organizations. The List of Values (LOV) for all other fields would be
based on value selected in this filed and this is mandatory filed

Location:

You can select the Location, that is attached to Organization

Fin Year:

The LOV of this filed would list the Fin Year ( Fin year would be determine based on tax
calendar pass at Regime level )

Vendor Name:

The LOV for this parameter would display the Suppliers with OSP Transactions

PO Number:

The LOV of this filed would display the Purchase Order with OSP items created for the
selected Organization, Location and Fin Year. This would be restricted based on the value
selected in the Vendor Name filed

Form Number:

The LOV for this filed would display the Form Number created for the selected
Organization, Location, Fin Year.

After clicking find button .Challan Print Control lines form will be opened and you can enter
the data as per the notes given below.

OFI-GST OSP Functional Flow 19

PO Number:

This filed would display the Purchase Order based on which the Form Number has been
generated.

Form Number:

This filed would display the Challan Form Number

Vendor Name:

This field would display the Supplier Name for which the Form has been generated

Original:

The Check box would be enabled when the Challan is dispatched. Once the challan is
printed the check would be removed .However, you can check this to Print as Original
Challan , This cannot be checked if the Duplicate field is checked .

Duplicate:

You can check Duplicate check box to print duplicate challans, once the challan is printed
the check would be removed .However, you can check this to Print to Duplicatechallan.
This field cannot be checked if the Original filed is checked.

OFI-GST OSP Functional Flow 20

7 - Summary:
The above document will provide the following benefits to the user:

Required setup to achieve Outside Processing Functionality in GST

Challan crated based on Purchase Order

Manual Chalan Creation

Print the Challan details

7. Call to Action:

Please do the OSP setup according to the above documentation and perform the outside processing

This is not the final document and we will incorporate further changed in this document according to your
queries and Business requirement

You can also refer the document in GST Info Center (Documentation Tab) released as part of Phase 1
and Phase 2 deliverables

E-Business Suite Release 12: India Goods and Service Tax (GST) Info Center (Doc ID 2176820.2)

OFI-GST OSP Functional Flow 21