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22-May-2008

Ramkishore/Balaranjith, Yahoo! India R&D


India OAUG Webinar Series 1
• As a result of this session you will be able to:
– Create non PO based AP invoices with service
tax.
– Import AR invoices with service tax using
Autoinvoice from external systems.

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• Ram Kishore is a Business Analyst Manager with Corporate
Applications Group, Yahoo! India.

• Balaranjith is a Solution Architect with Corporate


Applications Group, Yahoo! India.

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• Brief overview of Yahoo
• Service Tax in AP(P2P)
• Service Tax in AR
• Settlement Process
• How we did it?
• Conclusion
• Q&A

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• Yahoo! (Nasdaq : YHOO) provides Internet services


to users, advertisers, publishers, and developers
worldwide.
• Yahoo! uses Oracle Applications for their financial
processes and reporting.
• Yahoo! has implemented Financial modules in
11.5.9 and HRMS modules in 11.5.10.
• India implementation went live with Financial
modules (GL, AR, AP, PO, FA & CM) and self
service module (iProcurement & iExpenses) in Feb-
08.
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• Yahoo! Has two Legal Entities. They are:


– Yahoo! Web Services India Pvt Ltd.
– Yahoo! Software Development Center.
• Web Services caters to the India Business. It uses
AR extensively for invoicing customers. It also uses
P2P, but not on the same scale as AR.
• Software Development caters to Development
centers in Bangalore. It predominantly uses P2P
and iExpenses.

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Background:
• Indirect tax imposed on specified services is called "taxable
services”.
• Objective is to gradually increase the list of taxable services
until most services fall within the scope of service tax.
• From 2006-2007, service tax has been increased from 10%
to 12%
• Services sector contributes to more than 50% of GDP.
• When Yahoo! invoices its customers based in India, the
amount is inclusive of service tax.
• Vendors of Yahoo! India also include service tax in their
invoices to Yahoo!.
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Benefits of India Localizations:
• India Localization is completely integrated
with base applications
• Localizations has Tax solution that is critical
to the success of Oracle applications
implementation

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Benefits of India Localizations:


• Helps in estimating the service tax on purchase of
services when the Order is placed with the supplier
• Automatic offset of purchase tax against sales tax
• Easy transfer from interim recovery to Recovery
account up on payment
• Inbuilt settlement process
• Report to list the service tax recovered
– Eg: India Service Tax Credit register
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Business challenges:
• Not all invoices originate from Purchase Order.
• Service tax needs to be calculated even on
requisitions created from iProcurement.
• Service tax needs to be calculated even on certain
AP invoices without a PO/Receipt matching.
• Some suppliers even provide service tax only
invoice (invoice amount zero) at a later date for an
earlier invoice.
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Limitations of India Localizations:


• 11.5.9 version cannot calculate service tax on
requisitions created from iProcurement module
• All invoices which needs service tax has to have
matching with a PO/Receipt.
• Service tax amount is always calculated on invoice
amount and it would be zero if invoice amount is
zero.

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Custom solutions:
• Making iProcurement requisition compatible
– DFF in Categories to control Service Tax computation
– Modified the Requisition approval workflow to populate
India Local PO service tax tables with service tax details
once the Requisition gets approved.
– Once converted to PO, it follows the normal Service tax
computation process.

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• Creation of Service Tax invoice without PO/Receipt


Matching
– Enabled VAT Tax computation in India Org.
– Defined a VAT Tax Code like Service Tax 12.36%.
– User creates Invoice lines in regular way with the tax
code Service Tax 12.36% and clicks on Compute Tax
button.
– Oracle calculates tax on the line amount and inserts a
new line with Line Type ‘Tax’ with the tax amount of
12.36%.

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• Creation of Service Tax invoice without PO/Receipt


Matching (Contd…)
– Once the Invoice is validated, run a custom request
‘Custom India AP service tax update’, which would insert
the tax details into India Local service tax tables (without
PO information).
– The custom program would also change the Line Type of
tax line from ‘Tax’ to ‘Miscellaneous’.
– ‘India – Service Tax Processing’ request was slightly
modified to populate Service tax settlement tables the
above invoices.
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• Yahoo! India uses Oracle AR for billing all


customers for the following services
– Search customers
– Media customers (advertise on properties)
– Mobile customers (Mobile sms queries like cricket scores)
• 90% customer based in India and require service
tax computation on AR Invoice.
• Invoice creation is done through data file upload
using Auto invoice interface.

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Benefits of India Localizations:


• Helps in capturing the service tax on sale of
services when the invoice is created against the
customer
• Automatic offset of purchase tax against sales tax
• Easy transfer from interim liability to Liability
account up on receipt
• Inbuilt settlement process
• Report to list the service tax payment
– Eg: India Service Tax Register
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Limitations of India Localizations:


- Auto invoice doesn’t support service tax on
invoices other than those generated from
Order Management.
- Service tax cannot be computed on advance
collected from customers

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Custom solution:
• Populate service tax lines also in auto invoice
interface tables.
• Interim liability account is populated in distribution
lines interface for the tax lines.
• Auto invoice creates the invoices in Oracle base
tables without data in India localization tables.
• A post processing custom request is run after each
auto invoice run to populate the service tax data in
India localization tables.
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• India – Service Tax processing request


– AP Processing looks for data from Purchase
order for fetching Location details.
– AR Processing looks for source as ‘Order Entry’ if
the invoice is created through Auto invoice
interface

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• Created transactions in AP and AR manually


following normal service tax cycle.
• Decoded what all localization tables are getting
populated with service tax details.
• Using post processing custom request populated
the localization tables with service tax details.
• For settlement process, decoded what “India –
Service Tax processing” request does.
• Where ever required we modified the code to
process our transactions also.
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• Settlement process is stable and unaffected by all


our changes.
• Easier processes for finance business users
• Easier maintenance of custom code as it is based
on seeded Oracle code.
• Solution can be easily ported to other OUs
(Operating Units).

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• Email :
– ranjithb@yahoo-inc.com
– rjakkara@yahoo-inc.com

• Phone : +91 – 80 - 30774444

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