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Contents
Introduction ................................................................................................................................................... 4
Scope for this Document.......................................................................................................................... 5
Purpose of this Document ....................................................................................................................... 5
Intended Audience .................................................................................................................................... 5
1. Overview ........................................................................................................................................ 6
1.1 Item Category Basis ...................................................................................................................... 6
1.2 Tax Rules Basis ............................................................................................................................. 6
2 – Setups ...................................................................................................................................................... 7
Master Setups ............................................................................................................................................ 7
2.2 Define Common Configuration Setup ............................................................................................... 8
2. Define Item Category Basis ........................................................................................................ 14
3. Define Rule basis Setup ............................................................................................................. 23
Additional Setups .................................................................................................................................... 24
Flow Chart for Tax Rule Basis ............................................................................................................... 44
3- Test Scenarios ........................................................................................................................................ 45
1. Tax Category default based on Item category setup. ............................................................. 45
2. Tax Category default based on Tax Rule setup. ...................................................................... 47
1. Based on Tax Determination Basis/Rule as Application......................................................... 47
2. Based on Tax Determination Basis/Rule as Customer reporting code(NA for P2P) ............ 47
3. Based on Tax Determination Basis/Rule as First Party Registration Number ...................... 48
4. Based on Tax Determination Basis/Rule as First Party Reporting Code .............................. 50
5. Based on Tax Determination Basis/Rule as Item Classification ............................................ 52
6. Based on Tax Determination Basis/Rule as Ship from Location ........................................... 51
7. Based on Tax Determination Basis/Rule as Ship To ............................................................... 52
8. Based on Supplier Reporting Code ........................................................................................... 54
9. Based on Tax Determination Basis/Rule as Third Party Registration Number ..................... 56
4 - Call to Action –........................................................................................................................................ 58
Tax Defaulting/Determination is a very important part of India Taxation. We are allowed to set up
tax powerful defaulting rules on the base of tax laws or organization special requirement.
The Tax Defaulting/Determination in GST (Goods and Services Tax) solution allows users to default tax on
various documents used in Procure to pay and Order to cash cycles based on the setup performed.
There are two methods by which the tax can be defaulted in GST Solution by Oracle.
Item Category Basis: Defaulting works on the same logic with existing solution
Tax Rules Basis: Defaulting works on tax rules defined in the application setup.
Tax Defaulting/Determination
Note: The current content has been compiled in reference to the frozen scope of the Phase-I
deliverables (Ref: GST Phase -1 Deliverables.docx)
Intended Audience
Audience for this document is user groups, consultants and support team .
Item Category
Tax Rules
Tax Determination Basis / Rule
Application
Item Classification
Ship to Location
Supplier Reporting Code
Global(Enterprise)
TAX
The environment in which the company operates will dictate which level the Organization will own the Tax
Setups.
Let’s say a company runs within one State, so one setup will be applicable for both the Operating Units and
for the Inventory Organizations serving those Operating Units.
In that case if the whole state is having the same Tax setup that is being owned by the Global Enterprise
which is called Common Configuration.
In this case all Operating Units and Inventory Organizations will share the same Tax Setup.
First Step to setup tax defaulting rule is to indicate the defaulting basis for each operating unit. Users have to
define the common configuration, in which they can select one of the two defaulting methods, Item category
basis or Tax rule basis.
(N) Oracle Financials for India Tax Configuration Define Common Configuration
1. Inventory Organization
2. Operating Unit
User can select organization type as Inventory Organization or Operating Unit.
Note: If User tries to enter any duplicate record for Inventory organization / location which
already exists in the application then “Duplicate header information” Note appears and doesn’t
allow user to proceed.
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Operating Unit
When Operating Unit is chosen as Organization Type, System will enable Organization Name
(Mandatory) and disable Location field on the form.
User can setup the tax configuration at Operating Unit level by selecting the Operating Unit name
from the list of values
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Operating Unit configuration with rule basis
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Note Duplicate header information
Note: If User tries to enter any duplicate record for operating unit which already exists in the
application then “Duplicate header information” Note appears and doesn’t allow user to proceed.
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Define common configuration for Transaction Tax
For Transaction taxes, customer can have one of two options for each operating unit.
Item category basis: Which is the same tax defaulting rule in earlier solution
Rule Basis: the new tax defaulting approach will be applicable to the operating unit. The tax
category will be determined against tax rule setup.
When user defines the tax rule is selected as Item Category Basis, system will use the same logic with
existing solution. I.e. Tax will be defaulted on the Item category setup. When rule basis is selected
then the tax will be defaulted based on the tax rule business configuration defined. (See common
configuration setup for details)
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Define Item Category Basis
When user defines the Default Basis as Item Category Basis in Common Configuration Setup, system
will use the same logic with existing solution. I.e. Tax will be defaulted on the Item category setup. The
Setup can be performed at Operation unit/Inventory Organization- Location level.
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Tax Category Setup
As a prerequisite user has to define the Tax categories which will be populated based on the item
selected.
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Setup Item categories
To Setup Item category setup user has to follow the below navigation.
Item Category Setup will create a relationship between item and tax category.
(N) Oracle Financials for India Item Definition Define Item Category
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User has to enter the details of the item category name, description, Item name for tax default and
tax category name which will default on the document.
Note: If user try to define the same Item in the item category list with different Tax Category
Error message APP-JA-460033: “Item already exists” is displayed.
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Concept of attaching First Party to a Tax regime
Operating Unit
OR
Inventory Organization
TAX
Tax
Regime Parties
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Attach Item Category to third party registration
(N) Oracle Financials for India Party Registrations Define Third Party Registration
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Enter the operating unit and Party Type as Supplier
tax entries.
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Flow Chart for Item Category Setup Basis
Start
Check
Defaulting based on
Common Configuration Setup:
Item Category Basis
OR
Rule Basis
Default tax by
Rule Basis
Check if Item
Category Setup
is defined
STOP
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Define Rule basis Setup
When user defines the Default Basis as Rule Basis in Common Configuration Setup, system will Default
the tax based on tax rules defined in the tax rules setup.
The Setup can be performed at Operation unit/Inventory Organization- Location level. (See
common configuration setup for details)
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Tax Rule basis Setup
(N) Oracle Financial For India Tax Configuration Define Tax Rules
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Define the header Information
Field Name Description
Operating Unit Operating Unit for which the Tax Rule Setup has to be done.
Tax Rule Code User can provide any Tax Rule Code; It is a user defined field.
Tax Rule Name User can provide any Tax Rule Name; It is a user defined field.
Tax Category Tax category to be defaulted for particular tax rule. This field contains List of
values derived from tax categories defined.
Description Description of the tax category will be derived from the tax category setup.
Priority Based on the priority level user can setup the priority (0 and above), the system
will calculate the taxes. If there is more than one tax rule defined for the
transaction that has met the tax determinants then the tax rule with the highest
priority will be defaulted on the transaction. Lower number will have high priority.
Start date Start date of the Tax Rule Basis, Tax Rule will be applicable from the start date.
End date End date of the Tax Rule Basis, if user wants to end date the tax rule, user can
provide end date. Tax rule won’t be applicable after the end date.
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Define Line Information
1. Tax Determination Basis/Rule: User has to select the Tax determination basis based on which
application will default tax on the document. At present there are ten Tax determination rule/basis
values are available in the application (refer below image).
2. Tax Determination value: Based on the Tax Determination Basis/Rule selected user has
to provide Tax Determination value will be available in the Tax Determination list of values.
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Tax Determination values
3. Sub-Values: This Field will not be enabled in case of Tax Determination Basis/Rule as
“Application”
Sub-Values
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Additional Setups
Setup to default Tax Category based on First Party Registration Number
tax entries.
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User can define new First Party Registration by clicking on New or can
choose the fields to find the existing defined first party registration setup
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Define Tax Rules for First Party Registration Number
Tax Determination value: Select from list of values of the first party registration numbers
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Setup to default Tax Category based on First Party Reporting Code
Define First party reporting Code
(N) Oracle Financials for India Reporting Define Reporting Types
tax entries.
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Enter the details in the reporting code setup form. Choose the reporting usage as “Tax determination”
and Entity as “First Party”
(N) Oracle Financials for India Party Registrations Define First Party Registrations
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Navigation First Party Registrations
User has to enter the values and then click on New if they have to define new first party registration or
Find if they want to update existing first party registration
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Find First Party Registrations
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Define Tax Rules for Tax Determination Basis /Rule First Party Reporting code.
(N) Oracle Financials for India Tax Configuration Define Tax Rules
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Tax Rule Definition for First Party Registration Number
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Setup to default Tax Category based on Item Classification
(N) Oracle Financials for India Item Definition Define Item Classification
‘
/
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Enter Details in Find Item/Template/Assignment form
Operating Unit: Operating unit name for which the classification has to be done.
Item/Template: User can create or assign template or define specific item attribute for the item.
Organization: name of Organization for which the classification has to be done.
Item Name: Name of Item for which the classification has to be done.
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Define Tax Rules for Item Classification
(N) Oracle Financials for India Tax Configuration Define Tax Rules
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Setup to default Tax Category based on Ship from Location
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1. Search for vendor:
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2. Navigate to Address book
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Update the Address to Maharashtra
(N) Oracle Financials for India Tax Configuration Define Tax Rules
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Tax Rule for Tax Determination basis/Rule Ship From
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Setup to default Tax Category based on Ship to Location
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1. Define the location and assign the state in address
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3. Assign the Inventory Organization to the location in Other Details Tab
Define Tax Rules for Tax Determination Basis /Rule: Ship To Location
(N) India Local Purchasing Oracle Financials for India Tax Configuration->Define Tax Rules
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Tax Rule Definition for Ship
(N) India Local Purchasing Oracle Financials for India Party Registrations Define Third Party
Registration
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Enter the below details:
Operating Unit: Operating unit for which the Tax rule should be applied.
Party Type: Party Type can be “Customer” or “Supplier”.
Party Name: Choose the Party Name.
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Define Tax Rules for Tax Determination Basis / Rule: Third Party Registration
Number
(N) India Local Purchasing Oracle Financials for India Tax Configuration Define Tax Rules
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Flow Chart for Tax Rule Basis
Start
Check
the
Priority
STOP
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3- Test Scenarios
1. Tax Category default based on Item category setup.
Requirement:
User has a requirement to default tax category “Tax category priority 3” on Purchase order line, when
Item “OU2RMIN” is purchased from Supplier “Vendor for OU2”, Supplier Site “PUNE” for purchase
orders created in Operating Unit “Vision India - OU2”.
1. Common configuration for Item Category Setup at operating unit or inventory org/location.
2. Tax Category Setup
3. Item category Setup to map Item and tax category
4. Addition of Item Category to Third party registration
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Click on purchase order header and navigate to menu: Tools India Tax Details
Check that the tax category and tax gets defaulted on PO line number 1 based on setup
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2. Tax Category default based on Tax Rule setup.
Note: In the following examples below values would be used to show the test cases.
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3. Based on Tax Determination Basis/Rule as First Party Registration Number
User has a requirement to default tax category “Tax category priority 9”, when Operating Unit/
Inventory organization with First Party Registration Number as “AAA” is used
Pre Requisite:
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Purchase order for Third party registration
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4. Based on Tax Determination Basis/Rule as First Party Reporting Code
User has a requirement to default tax category “Rec GST Tax Category for OU2” When First Party
Reporting Code of Supplier is “TEST_CUST_RC”
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Tax category is Defaulted based on Third Party Registration Number
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5. Based on Tax Determination Basis/Rule as Item Classification
Requirement to default tax category “Tax Category for OU2” When Item to be procured has Item
classification as “Finished Goods Indigenous-IND”
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Tax category is Defaulted based on Item Classification
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6. Based on Tax Determination Basis/Rule as Ship from Location
Requirement to default tax category “Rec GST Tax Category for OU2” When Ship from Location i.e.
the location from where the goods will be shipped by the supplier is “Maharashtra”
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Tax category is defaulted based on the setup
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Purchase order for tax Default for Ship to
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8. Based on Supplier Reporting Code
User has a requirement to default tax category “Tax category priority 13” When “Purchasing”
application is used
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Third Party Registration Reporting Code Tab
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9. Based on Tax Determination Basis/Rule as Third Party Registration Number
User has a requirement to default tax category “Tax Category for OU2” When First Party
Registration Number of Supplier is “OU200000”
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Purchase Order for Third Party Registration
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4- 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:
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