Oracle Financials for India (OFI)

Goods and Services Tax (GST)- Fixed

Asset Integration

Author: Vaishali Karanth

Creation Date: 24-Feb-2017
Last Updated: 21-Nov-2017
Document Ref:
Version: 2

Organization: Oracle India Private Limited.

Document Control
OFI GST –Assets Integration 1
 Change Record

Date Author Versio Change Reference

n

24-Feb-17 Vaishali Karanth 1A Initial document

28-Feb-17 Vaishali Karanth 1.0 Phase-II frozen document

Reviewers

Name Position

Rajnish Kumar Director, Tax Development

V S Baburaj Product Strategy Director

Audience

Name Position

12.1 & 12.2 Implementation team

12.1 & 12.2 Customers

OFI GST –Assets Integration 2

Contents
1. Objective .............................................................................................................................................. 4

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

3. Fixed Assets functionality for Oracle Financials for India (OFI) - India Localization ................ 4

3.1 Setup Flow ........................................................................................................................................ 4

3.1.1 Base FA Setup .......................................................................................................................... 4

3.1.2 Localization FA Setup .............................................................................................................. 6

4. Transaction Flow ................................................................................................................................ 9

4.1 Asset Addition .................................................................................................................................. 9

4.2 India - Income Tax Act Fixed Asset Schedules Concurrent Program ................................... 11

4.3 India - Depreciation detail report ................................................................................................. 12

5. Simulation with Example ................................................................................................................. 13

5.1 Adding a new Asset during first half of the fiscal year ............................................................. 13

5.2 Addition during Second Half of the financial year. .................................................................... 13

5.3 Retirement ...................................................................................................................................... 16

6. Block of Asset Migration .................................................................................................................. 18

7. Procure To Pay (P2P) Cycle for Asset Items ............................................................................... 19

8. Summary ........................................................................................................................................... 19

OFI GST –Assets Integration 3

 1. Objective
This exclusive data model deliverable will help the users and the implementation partners to understand
in detail, the total Oracle Financials for India (OFI) – India Localization & Oracle Fixed Assets (FA)
integration functionality.

2. Scope
This document provides the details of Functional flow for ‘Oracle Financials for India’ (OFI) Fixed
asset integration cycle from GST point of view.

Note: The current content has been compiled in reference to the frozen scope specified in the
document: EBS GST Infrastructure Scope

3. Fixed Assets functionality for Oracle Financials for India (OFI) -

India Localization
Businesses in India, Under the Income Tax Act, have to compute depreciation using the “Written
Down Value” method. The depreciation percentage has to be applied on the Block Of Assets and no
depreciation can be claimed on individual assets.

3.1 Setup Flow

3.1.1 Base FA Setup

A. Define Asset Book:-

a. Enter details in Calendar Tab.

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 b. Enter Details in Natural Accounts Tab.

c. Save the details.

B. Assigning Asset Category to the Asset Book:-

a. Query the existing category with which you want to attach the asset book.

b. Once data is fetched, add new book to that category.

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 Click “Default Rules” Button and mandatory fields as below

d. Save the details.

3.1.2 Localization FA Setup

A. Define Block Name:-
a.Query by ‘JAI_BLOCK_OF_ASSETS’.

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 b. You will be able to find the list of block of assets which are currently present in the
lookup.

c. You can modify existing block of assets and you can add new block of assets which you
are going to use in transaction in future.

d. Once done, save the details.

B. Define Period Wise Depreciation Information:-

a. In this form, period wise depreciation rate is required to be defined. As per current statute, if
the date placed in service is in the first half of the financial year, then depreciation for an
asset block can be claimed up to 100% of the allowable depreciation; whereas if the date
placed in service is in the second half of the financial year, then depreciation for an asset
block can be claimed up to 50% of the allowable depreciation. This setup can be done in this
form.

b. Query for the required year start and year end date.

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 c. Data will be fetched if setup is already done. Otherwise, you can add new details.

nd
Here, applicable depreciation Rate for first half is 100% whereas 50% is for 2 half.

C. Attach the block of asset to the book and define Depreciation Rates:-
a. Mention Book in Book Name section for which you are going to do the setup.
Automatically, that will show you all the blocks attached and their depreciation rate.

b. OFI supports only CORPORATE BOOK and NOT TAX Book.

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 c. You can insert new row for new financial year. The existing records cannot be
modified. Once the opening balance for the block is entered for any financial
year, the user cannot change it. They cannot enter the previous year balances or
subsequent year balances also.
d. If the User wants to adjust Opening Written down value of a Block after an Income
tax assessment is finished for a Particular year. The adjustment amount can be
entered here in ‘Adjustments’ section and Opening WDV value will be adjusted
accordingly.

4. Transaction Flow
4.1 Asset Addition

a. Enter new asset details.

b. Click Continue in the above screen which will take you to below screen where you enter the
asset cost, Date placed in service and other mandatory information.

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 c. Click on ‘Continue’ and in the next screen enter the Expense account and Location Details
and click on ‘Done’ button.

Attach the asset to the Block of Assets

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 a. Select the Asset book to which you want to add the asset and click on ‘New’ button.

b. The assets which need to be assigned to the block will get listed in the below screen. It will
fetch ONLY those assets which belong to the date range defined in the above Block of
Assets form.

c. Select the block to which each of these assets needs to be linked and then save.

4.2 India - Income Tax Act Fixed Asset Schedules Concurrent Program

a. This report calculates closing WDV for each block at the end of
the period mentioned in the report parameter.

b. Although system allows the user to run the 'India - Income tax act fixed
assets schedule' program on day to day basis, it is strictly recommended to
run this program once towards the year end, as this would create the
opening WDV balance record of the Block of Assets for the next fin year.

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 c. For calculating closing WDV, following is the rule followed:-

Closing WDV= (Opening WDV + Additions during the year – Deduction

& Sale in the year**) – Depreciation

Depreciation Amount = (Opening WDV + Additions during the year – Deduction

& Sale in the year)*depreciation rate %

** Deduction & Sale in the year = Proceeds of sale - cost of removal. Cost
Retired will not be considered in “Deduction & Sale in the year” for calculating
closing WDV as per Bug 20075754. This change is in line with Section 43(6) of
Income tax Act.

4.3 India - Depreciation detail report

a. This report provides information on depreciation calculated for each asset.

b. In this report, depreciation will be calculated, but closing wdv will be mentioned as
per calculation happened in India - Income Tax Act Fixed Asset Schedules
Concurrent Program.

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 5. Simulation with Example
5.1 Adding a new Asset during first half of the fiscal year

5.2 Addition during Second Half of the financial year.

Like how an asset is added in the case 1.1, add an asset in the Base Fixed Asset with a
date placed in service as 2002-10-31.

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 Once the assets is assigned to the Block, Now the next step would be to run the below
two concurrent

India - Income Tax Act Fixed Asset Schedules

th
The TESTING 3 asset is added with a Date placed in service as 30 April 2002 and the cost of the
asset is 20000. The depreciation rates for the block TEST is 20%. So the depreciation amount for the
Asset TESTING 3 will be 20000 * 20% = 4000

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 st
The TESTING 4 asset is added with a Date placed in service of 31 Oct 2002 and the cost of the
asset is 40000. The depreciation rate for the block is 20%. Since the asset is added in the second half
of the fiscal year only 50% of the depreciation rate will be charged. So depreciation amount is =
(40000 * (20%/2)) = 4000.

The abstract of India - Income Tax Act Fixed Asset Schedules output

Next step would be to run the India - Depreciation detail report

The report abstract will be as follows

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Now, we can see that in the Block assignment screen, closing balance is updated for the current fiscal
year and a row is inserted for the next fiscal year with the opening balance as the closing balance of
last financial year

Whenever business incurs any additional expense for asset, that expense amount can be added to the
asset cost and in base FA this is called ‘cost adjustment’. When a cost adjustment transaction is
performed in base FA, the same cost will get reflected even in OFI forms as well as Reports.

For e.g initially asset was created with a cost of 20000. So the ‘India - Income Tax Act Fixed Asset
Schedules’ report will show 20000 as cost. Later an additional cost adjustment of 10000 was done on
the same asset. So now the report will show the cost as 30000 and even depreciation will be calculated
on this cost. Same will be the case with ‘India - Depreciation detail report’.

5.3 Retirement
To retire the asset the navigation is Oracle Fixed Assets > Assets > Asset work bench > Retirement.

Enter the values in retirement date, cost retired, pro and cost to be retired, proceeds of sale etc. and
save the transaction

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 Then run the calculate gain and loss program.

The next step would be to run the

India - Income Tax Act Fixed Asset Schedules: - The abstract of report will be as follows

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 Opening WDV for the block Car is = 95000

Deduction & sale = 500 which is entered as proceeds of sale while retiring the asset

Total is = Opening WDV - Deduction & sale i.e. 95000-500 = 94500

Depreciation During the year = (Opening WDV - Deduction & sale)*10%=9450

Closing WDV = Opening WDV- Deduction & sale – Depreciation = 95000-(500+9450) = 85050

1.1 India - Depreciation detail report:- The abstract of report will be as follows

Opening WDV for the block Car is = 95000

Deduction & sale = 10000 which is entered as cost of retired while retiring the asset. The
amount which is entered as proceeds of sale during retirement i.e. 500 will also appear
under Deduction & sale column. However it will not be considered in total

Total is = Opening WDV - Deduction & sale i.e. 95000-10000 = 85000

Depreciation During the year = (Opening WDV - Deduction & sale)*10%=8500

*Closing WDV = Opening WDV- Deduction & sale – Depreciation = 95000-(500+9450) = 85050

*Closing WDV updated here will as it is calculated in India - Income Tax Act Fixed
Asset Schedules report.

6. Block of Asset Migration

During migration of the assets from Legacy system to oracle Application, the recommended way to
migrate / like the assets to the block of assets is to

o Define the blocks / financial year starting from the oldest date placed in service of the asset
which you have to migrate.

o Then link the assets based on its date placed in service for each year and then run the
localization reports.

OFI GST –Assets Integration 18

 For example, if the assets are added right from the year 1980, then, first define the Block of
Assets for the financial year 1980. Then assign all the assets which have DPIS of 1980 to the
block of assets in “India block of Assets" form. Run the program ‘India Income Tax Act Fixed
Assets Schedule’ for the year 1980. This will calculate the localization depreciation for the block
of assets and will arrive at the closing balance for the year 1980.This also, will create another
record in the ‘Block Of Assets’ Screen for the year 1981 giving the opening balance equal to the
Closing Balance of the year 1980. Now we can upload all the assets falling in the year 1981 and
Then run the ‘India Income Tax Act Fixed Assets Schedule’ report. The same steps need to
be followed for all the fiscal years until we reach the current financial year.

7. Procure To Pay (P2P) Cycle for Asset Items

The steps involved in Procure to Pay cycle for for Capital Goods are
 Create A PO to buy a capital Item and with Non Recoverable GST taxes applied on it.
 Create a receipt for the above PO and Create an ERS invoice
 Validate the AP invoice, create accounting and transfer accounting to GL.
 Run the Mass Additions create program. This will interface all the third party invoice
details / amounts which are having CGIN Item.
 Run India mass addition Create program to interface the non-recoverable taxes to
Fixed assets
 From the FA super user responsibility, create an Asset by changing the status to
POST and entering the required information.
 Run the Post mass addition Program which will create the asset and the non-
recoverable tax amounts will get added to asset cost.
Note:- Under GST solution, for transferring a non recoverable taxes to FA, the ‘Allow
Unallocated Line Types” check box should be checked in fixed asset Book control setup.

8. Summary
The above document will provide the below benefits:

 Base FA setup and Localization FA setup for Block of Asset

 Base FA Transaction & impact on OFI for those transactions

 Relevant Concurrent Programs with its functionality

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