GST Functional P2P Flow

Pre-Release Document
Oracle Financials for India (OFI)

Goods and Services Tax (GST)
Procure to Pay Functional
Author: Vaishali and Somdeep (P2P)

Somdeep (Reverse Charge and ERS Invoice)
Creation Date: 21-Mar-2016
Last Updated: 02-Mar-2017
Document Ref:
Version: 1A
Organization: Oracle India Private Limited.
OFI-GST Procure to Pay Flow 1

Document Control
Change Record
Date Author Versio Change Reference

n
21-Mar-16 Vaishali and 1A Initial document

Somdeep
30-Sep-16 Vaishali and 1.0 Phase-I frozen
document
Somdeep
30-Dec-16 Vaishali and 1.1 Modified the ERS
invoice flow chart to
Somdeep include running ADS
(Pay On Receipt
AutoInvoice)’ Program
separately
02-Mar-17 Somdeep 2.0 Reverse Charge Process
and ERS
Invoice
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 Procure to Pay Flow

2
Table of Contents
Pre-Release
Document ..........................................................................
.................................... 1
Document
Control ...........................................................................
....................................... 2
Phase1 ............................................................................
.......................................................... 6
1 –
Introduction ......................................................................
.................................................... 6
2 –
Scope..............................................................................
..................................................... 6
3 – Prerequisite
Setups ............................................................................
.................................. 6
4 – Functional
Flow ..............................................................................
...................................... 7
5 – Requisition to Purchase Order (Pre-PO- PO

Documents) .................................................... 8
5.1 Flow
Diagram ...........................................................................
........................................ 8
5.2 Create
Requisition .......................................................................
..................................... 9
5.3 India tax details

form ..............................................................................
.........................11
5.4. Create RFQ (Request for

Quotation) ........................................................................
......13
5.5 Creating
Quotation .........................................................................
.................................15
5.6 Create Purchase Order from the approved

Requisition....................................................17
6 – Tax recalculation
logic .............................................................................
............................20
7 – Tax on
receipts ..........................................................................
.........................................20
7.1 Flow
Diagram ...........................................................................
.......................................20
7.2 Receipt
Creation ..........................................................................
....................................21
8 – Tax Accounting on
Receipts ..........................................................................
......................25
8.1 Accounting for Receipt Routing - Direct Delivery and Standard

Routing ........................27
8.1.1 Flow
Diagram ...........................................................................
.................................27
8.1.2 Direct Delivery – Recoverable

Tax ............................................................................29
8.1.3 Direct Delivery – Non-Recoverable

Tax ....................................................................29
8.1.4 Standard Routing - Recoverable

Tax ........................................................................30

3
8.1.5 Standard Routing - Non-Recoverable
Tax .................................................................30
9 – PO/Receipt Matched AP
invoice ...........................................................................
..............31
9.1 Flow
Diagram ...........................................................................
.......................................31
9.2 Process and

Accounting ........................................................................
..........................31
10 – Standalone AP
Invoice ...........................................................................
...........................35
10.1 Flow
Diagram ...........................................................................
.....................................35
10.2 Process and

Accounting ........................................................................
........................35
11 –Tax Recovery Accounting

(Interim) .........................................................................
...........37
11.1 Flow
Diagram ...........................................................................
.....................................37
11.2 Process and

Accounting ........................................................................
........................38
12 – Third Party
Invoices ..........................................................................
................................44
12.1 Flow
Diagram ...........................................................................
.....................................45
12.2 Process and

Accounting ........................................................................
........................46
13 – Costing Effect – Accounting

Entries ...........................................................................
.......50
13.1 Average
Costing............................................................................
....................................50
13.2 Standard
Costing ...........................................................................
................................51
Phase2 ............................................................................
.........................................................53
14 –
Introduction ......................................................................
.................................................53
15 –
Scope..............................................................................
..................................................53
16 – Reverse
Charge ............................................................................
....................................53
16.1 Model
Law................................................................................
.........................................53
16.2 GST Functionality of Reverse

Charge ............................................................................
...54
Flow
Diagram ...........................................................................
.............................................55
16.4
Configuration:.....................................................................
...............................................56
16.5 HSN/SAC
Code:..............................................................................
..................................60
16.6 Linking of Reporting Code value to 3rd party

Registration: ................................................61

4
16.7
Prepayment:........................................................................
..............................................62
16.8 Standard
Invoice ...........................................................................
....................................64
16.10 Period Ending

Process: ..........................................................................
.........................66
16.11
Accounting ........................................................................
...........................................69
17 – ERS
Invoice ...........................................................................
...........................................69
17.2 Process and

Accounting ........................................................................
........................71
16 –
Summary............................................................................
...............................................73
17 – Call to
Action ............................................................................
.........................................74

5
Phase1
1 – Introduction
The Procure to Pay cycle (P2P) is vital to an organization as in this process the
organization buys and
receives goods or services from its vendors and makes necessary payments. This
business process
covers the process of requesting, purchasing, receiving, paying for and accounting
for goods and
services.
2 – Scope
This document provides the details of Functional flow for ‘Oracle Financials for
India’ (OFI) Procure to
Pay cycle from GST point of view along with accounting entries.
Note: This document provides the details of Functional flow for ‘Oracle Financials
for India’ (OFI)
Procure To Pay cycle from GST point of view along with accounting entries. Note:
The current
content has been compiled in reference to the frozen scope of the Phase-I
deliverables (Ref: GST
Phase -1 Deliverables.docx)
3 – Prerequisite Setups
For the P2P cycle to work in the new GST architecture, the below setup needs to be
defined
 Regime
 Tax types
 Tax rates
 Tax Categories
 Tax Rules
 Tax Defaulting basis
 Item Classification
 Claim term
 Common Configuration
 First and Third party Registration

6
Flow Diagram
To start with, this document facilitates with a flowchart which will allow the
users to get an outline of the
setup flow for Procure to Pay Cycle. Some of the steps outlined in this flowchart
are required and some
are Optional. Required step with Defaults means that the setup functionality comes
with pre–seeded,
default values in the application. However, to ensure a successful setup, you need
to review those
defaults and decide whether to change them to suit your business needs. If you need
to change the
default values, you should perform the corresponding setup step. You need to
perform Optional steps
only if you plan to use the related feature.
Regime Registration Tax types (R) Tax rates (R)

(R
Tax Defaulting Document sequence

basis (R) Tax Categories
(R)
(O)
Define Item Define Claim

Terms
Tax Rules (R)
Classification (R) (R)
Third Party First Party

Registration Common
Configuration
Registration
(R) (R)
(R)
Note: - In The above flow diagram R standard for ‘Required’ and O stands for
‘Optional’
4 – Functional Flow
The P2P cycle comprises of the following steps,
Create Requisition Create RFQ

Create Quotation
(Localization taxes – (Localization taxes –
(Localization taxes –
applied) Applied)
Not Applied)
Receipt creation (Localization taxes

Create Purchase
–Applied) Taxes are freezed Once
Order (Localization
receiving is done
taxes – Applied)
Create Payable Invoice-

Localization taxes from receipts
Invoice Payment
are copied to Invoice

7
5 – Requisition to Purchase Order (Pre-PO- PO Documents)
Every organization that operates a business has to purchase material such as raw
materials services etc.
The procurement process of any organization consists of many steps like material
requirement planning,
creation of purchase requisition, receiving quotations from various suppliers etc.
Please refer to the
following section for details
5.1 Flow Diagram
Create Requisition Enter

Header/Line Info
Navigate to Tools India Tax Details. Tax category is

defaulted based on defaulting mechanism defined
Create RFQ  Tax category is defaulted from requisition
Create Purchase Order

and Approve

defaulted from requisition to Purchase order

8
5.2 Create Requisition
A purchase requisition is an internal request to purchase a material / service
which will have details of
certain quantity of material or service on a certain date which is required by the
organization. To create
requisition navigate to
Responsibility  Oracle Purchasing Requisitions  Requisitions
Enter Requisition Header:
The header holds the general information about the requisition that is related to
all the lines. Choose the
requisition type (here it is purchase requisition). Preparer is the default person
who is creating the
requisition and cannot be changed. You can give the description in the description
field.
Enter Requisition Line:
In the requisition line, select the item that you wanted to purchase and enter the
quantity and need by
date. In the Source details tab, you can input detailed information. You can give a
specific note to the
buyer which might give particular information related to this purchase. RFQ
required check box denotes
that the purchase of the item requires a request for quote.
Requisitions can be added in any currency set up in EBS by identifying the currency
code and exchange
rate type on currency tab

9
Click on distribution button and enter the charge account
Close the form and save your work. Click the ‘Approve’ button to submit this
requisition for approval.
Now navigate to Tools  India tax details form. The India tax details form will
show the tax category
Defaulted.
For more information on the tax defaultation logic refer the ‘OFI-GST- Tax
Defaultation flow’
document.

10
Tax
Category is
defaulted
Notes:-
 Unlike earlier we will no longer have Localized forms in the new GST solution
and to view the tax
details the navigation is Tools India tax details
 Tax category defaulted based on tax defaultation logic can be manually

Overridden at each document
level until the document is approved.
5.3 India tax details form
SL No Field Functional
Description Query/Enabled
1 Organization Inventory Organization

name No
2 Location Inventory Organization

Location No
3 Document Number PO number

No
4 Revision / release Number

No
5 Currency PO currency
No
6 Amount PO line amount

No
7 Tax amount Total tax amount

No

11
8 Total Amount Total PO amount
No
9 Line Number Po Line number

No
10 Item Item Code

No
11 Item Description Descript of the item attached to PO

No
12 Tax category Tax category Defaulted based on

Yes
defaulting Mechanism
13 Tax rate name Tax type attached to the tax

No
category
14 Tax type Tax type attached to tax category

No
15 Tax point basis Determines the point in which tax

No
accounting is done. Gets defaulted
from Tax type setup
16 Precedence Gets defaulted from tax category

No
setup
17 Tax conversion date Date on which tax is calculated

No
18 Tax rate Tax rate defined at tax rate setup

No
19 Tax amount Amount calculated for each tax type

No
20 Recoverable amount Tax amount which can be

No
recovered. Get populated only if the
tax type is a recoverable
21 Recoverable Get populated only if the tax type is

No
a recoverable
22 Inclusive Get populated only if the tax type is

No
a inclusive
23 Self Assessed / reverse charge Gets defaulted from tax type

No
24 Party name and Party type Gets defaulted from PO

Yes
12
5.4. Create RFQ (Request for Quotation)
A Request for Quotation (RFQ) is a formal request sent to the suppliers to
find the pricing and other
information for an item or items. Based on the information supplied, the
supplier quotes a quotation
against the RFQ form.
In Oracle EBS, RFQ’s can be auto created from an existing Purchase

Requisition or can be a fresh RFQ.
Navigation to Auto create the RFQ is
Responsibility  Oracle Purchasing (USA) Auto Create and then query the
Requisition number
Your Requisition summary is shown in the next screen. Check box your
Requisition line and in
the Document Type, select RFQ and click Automatic button to Auto Create RFQ.
It will navigate to a new window. Here the RFQ Type is Standard RFQ and click
create button
Select the line

against which RFQ
needs to be
Select
created
the RFQ
type
In the next window, RFQ is auto created from an existing Purchase

requisition.

13
Click Suppliers button and enter the details of the Suppliers to whom you want to
send this RFQ.
Click on Terms button and add payment terms and freight terms. Click Price Breaks
button for entering
pricing information for the RFQ.
Now from the Tools India tax details form, we can see that tax category is
defaulted

14
Tax category is
defaulted
Save the transaction.
5.5 Creating Quotation

A quotation is a supplier’s response to RFQ. Now we will create quotations
based on the response from
the suppliers with relevant to RFQ which we have created in step 5.4.
To create a quotation from the RFQ, first query the RFQ. The below picture
shows the completed RFQ.
Tools
Copy
Document

15
In the next screen, enter the details of quotation sent by the supplier. Click OK
button.
Repeat the same steps if you want to create multiple quotation for multiple
suppliers.
Once the quotation is created, system will show the below message
Change the status of the quotation to Active and approve the quotation.

16
Change
status to
active
5.6 Create Purchase Order from the approved Requisition

Purchase Order (PO) is the formal request to a vendor to supply certain materials
or services. A PO can
be created with reference to a requisition or RFQ or another PO.
Responsibility  Oracle Purchasing Auto Create and then query the Requisition
number
Select Document
type as ‘Standard
PO’

17
Your Requisition summary is shown in the next screen. Check box your Requisition
line and in
the Document Type, select standard PO and click Automatic button to Auto Create PO.
By clicking
Automatic button, a standard PO is created based on the details provided in the
Purchasing requisition.
You can select Supplier either in the New Document form or in the Purchase Order
form
Click on ‘Create’
Button to confirm
the PO creation
After clicking on the Create button in the above screen a Standard PO is created as
follows

18
In the shipment form, Shipment number, Org, Ship-to, UOM, Quantity and Need-by-date
are shown by
default. These fields can be edited as needed.
Even in the more tab and distribution details tab, the default values will be
populated from requisition.
Now, Navigate to Tools  India tax details.
The default tax category is automatically defaulted here
Tax category is
defaulted from
requisition level
Now approve the PO. No accounting entry happens when a PO is created.
Note:
Unlike earlier we will no longer have Localized forms in the new GST solution and
to view the tax details
the navigation is Tools  India tax details

19
6 – Tax recalculation logic
As per the current architecture, the tax defaultation engine should recalculate the
taxes at every
document level. However if the tax is already defaulted / manually overridden at
parent document level,
then the same tax category gets defaulted for further documents until unless there
is some change. If the
master document does not have the tax category attached, then based on the tax
defaultation logic the
tax category will get defaulted at each document level.
7 – Tax on receipts
Once the PO is sent to the supplier, the supplier sends the goods to the
organization. The goods now
have to be received in Oracle.
7.1 Flow Diagram
Select the PO lineEnter

Inventory details

defaulted from PO level
Check on ‘Confirm taxes’ Check box to freeze the tax

category and it is mandatory to check
Navigate to Receipt form

and Save the receipt
‘Receiving Transaction processor’ program will be fired and

it will process Base / Localization tax details

20
7.2 Receipt Creation
Navigation for creating a receipt is
Responsibility  Oracle Purchasing  Receiving  Receipts
Enter the PO number and click Find button
Select the line

against which
receipt needs to
Shows the PO
be created
details against
which receipt is
created
Check the Lines you want to receive and enter the sub inventory details
In the lower part of the screen, Purchasing displays the following detail
information for the current
shipment line: Order Type, Order Number, Source, Due Date, Item
Description, Hazard, Destination, UN
Number, Receiver Note, and Routing.
Now if we navigate to Tools  India tax details, we can see that tax
category is defaulted here also.

21
Tax category
defaulted
Now we have to click on ‘confirm taxes’ check box to freeze the tax category. Once
this check box is
checked, overriding the tax category is not possible.
Note:
 If a receipt is saved without checking the ‘Confirm Taxes’ check box, the
Receiving Transaction
Processor program will end in error and no receipts will be created.
 In GST solution ‘India Receiving Transaction’ Processor program will not be

triggered and has no
relevance.
 Unlike earlier we will no longer have Localized forms in the new GST solution
and to view the tax
details the navigation is Tools India tax details
Once the check box is checked, below message will appear

22
‘Confirm Taxes’
check box
needs to be
checked to
freeze the taxes
before receipt
creation
Confirmation
message once
the taxes are
freezed
Click on Header and save the receipt to get the receipt number
Once the receipt is saved, system automatically triggers the “Receiving Transaction
Processor” (RTP)
concurrent. Unlike earlier, now “India Receiving Transaction Processor program”
will not be fired. The
base Receiving Transaction Processor concurrent itself will process the India
localization tax details.

23
Receiving transaction
processor program is fired
after receipt creation and it
will create / process both
base receipt detail as well

as
Localization tax details
Once the RTP concurrent is completed, in the Receiving transaction Window we can
see that receipt
processing has already happened

24
8 – Tax Accounting on Receipts
Based on the tax point basis, tax types like recoverable / non-recoverable,
different routing method
adopted, different accounting entries will get generated at different stages.
The accounting entry generated after the receipt creation and this is the core
accounting
Event Account Debit Credit
Receiving Inventory Line Amount

Receipt
Inventory AP Accrual Line Amount
For the India tax details, the below lines are inserted in GL_INTERFACE table after
the Receiving
transaction processor program is completed.

25
The below script can be used extract data from GL_INTERFACE
Select gcc.segment1,
gcc.segment2,gcc.segment3,gcc.segment4,gcc.segment5,gi.code_
combination_id,gi.entered_dr,gi.entered_cr,gi.user_je_category_na
me,gi.reference10
from gl_code_combinations gcc, gl_interface gi
where gi.date_created like sysdate and gi.code_Combination_id =
gcc.code_Combination_id and reference10 like '%Receipt
number%';
Below accounting entry is generated for each tax type
Receiving Inventory Tax Amount

Receipt
Inventory AP Accrual Tax Amount

26
8.1 Accounting for Receipt Routing - Direct Delivery and Standard Routing
8.1.1 Flow Diagram
Create PO Receipt Routing set to
Direct Delivery Standard

Routing
Navigate to Tools India Tax Details. Navigate to Tools

India Tax Details.
Attach Category recoverable or Non- Attach Category
recoverable or Non-
recoverable
recoverable
Navigate to Receipt form and select Navigate to

Receipt form and select
the PO line for receipt creation the PO line for
receipt creation
Navigate to Tools India Tax Details. Navigate to Tools

India Tax Details.
Check ‘Confirm taxes’ check box. Check ‘Confirm
taxes’ check box.
‘Receiving Transaction processor’ program ‘Receiving Transaction

processor’ program
will be fired and it will process Base / will be fired and it will
process Base /
Localization tax details. Both Receiving and Localization tax details.
Only Receiving
Delivery transaction will be created. transaction will be
created.
Lines are inserted in GL_INTERFACE table Lines are inserted in

GL_INTERFACE table
for tax accounting (refer query mentioned in for tax accounting
(refer query mentioned in
Chapter 8 to extract the data) Chapter 8 to
extract the data)
Perform the Receiving

transaction by navigating to
Purchasing Receiving 
Receiving transactions

27
When a recoverable tax category is attached, in India tax details form (both at PO
and receipt level) the
Recoverable check box will be checked and recoverable amount will be populated.
Recoverable check box is
checked and Recoverable
amount is calculated.
Note:
 For a tax type to be recoverable, the below setup has to be in place
- Recoverable check box needs to be checked at Tax type Setup
- Recoverable option needs to be set to ‘Yes’ in item classification setup
- Claim term has to be defined for the Tax type.
If any of the above setup is missing, then the tax type will be treated as a non-
recoverable tax.
When a non-recoverable tax category is attached, in India tax details form (both at
PO and receipt level)
the Recoverable check box will be unchecked and recoverable amount will not be
populated.

28
Recoverable check box is
unchecked and
Recoverable amount is not
calculated.
8.1.2 Direct Delivery – Recoverable Tax

The accounting entry generated in GL_INTERFACE is
Event Account Debit

Credit
Tax Interim Recovery Tax Amount

Receipt
Inventory AP Accrual A/c Tax
Amount
8.1.3 Direct Delivery – Non-Recoverable Tax

Receiving Inventory Tax amount

Receipt
Inventory AP Accrual Tax amount

29
8.1.4 Standard Routing - Recoverable Tax
Event Account Debit

Credit

Receipt
Amount
8.1.5 Standard Routing - Non-Recoverable Tax

Event Account Debit

Credit

Receipt
Inventory AP Accrual Tax
Amount
Note:
 The non–recoverable tax amounts need to be added to item cost. So after

delivery transaction, lines
are inserted in MTL_MATERIAL_TRANSACTIONS (MMT) and MTL_TRANSACTION_ACCOUNTS
(MTA).
For more information on queries that can be used to find out the details of the
lines inserted in the
MMT and MTA tables, refer document 1065343.1.
 Period End Accrual functionality which is not supported in current architecture

will not be supported
even in GST solution.

30
9 – PO/Receipt Matched AP invoice
In oracle payables an invoice can be created by using the purchase order / receipt
information from
purchasing system to enable online matching with invoices. Invoiced or billed items
are matched to the
original purchase orders / receipt created to ensure that invoice is created only
for goods or services you
ordered and/or received.
9.1 Flow Diagram
Create Invoice  Match

Action ‘Receipt’
Click on Match option Select receipt  Click on Match

button
Line / distribution details are defaulted from

Receipt level to Invoice
Navigate to Tools India Tax Details. The tax

category is defaulted from Receipt to invoice
Since Tax point basis was Delivery, the taxes are freezed in
India Tax Details form
Validate and Run Create accounting
9.2 Process and Accounting

Create Payables invoice
Responsibility: Payables responsibility to create an AP invoice
Navigation: Invoice Entry Invoices
Create an Invoice for supplier against whom PO /receipt is created.
Invoice Header
In invoice header level, select the operating Unit, invoice type and enter the PO
number i.e. 65 in our
example. Once you select the PO number, supplier name and Site automatically gets
defaulted from the
PO.

31
Matching Receipt to the invoice
To create a receipt matched invoice, the match type in Invoice header should be
“Receipt”.
Match Action
is set to
‘Receipt’
We shall not enter the invoice line / distribution details as this will come
automatically from matching the
invoice with Receipt.

32
The next step would be to Click on Match button in Invoice work bench and query
for the Receipt which
we are intending to match to the invoice and click on find.
Query the
Receipt
Select the line which needs to be matched to the invoice and click on Match
button
Click on ‘Match’ button

to
default distribution
details
from receipt to
Invoice

33
Now we can see that the line details and Distribution details at invoice level is
automatically populated
from PO / receipt.
Tax Defaultation
Now if we navigate to Tools  India tax details, we can see that Taxes which are
defaulted at receipt are
defaulted at invoice level as well
Tax category
from Receipt
got defaulted to
Invoice
Tax Point basis is set

as ‘Delivery’
Now validate the invoice and run Create accounting. Accounting entry generated
The accounting class for the tax

type
is set as ‘Miscellaneous’

34
10 – Standalone AP Invoice
Standalone AP Invoices will be raised for non-item based expense or service
activities and they will not
have any reference to any purchasing documents like PO, receipt etc. These invoices
are directly created
in invoice work bench by manually entering the supplier details and distribution
details.
As Item information is not available for such invoices, Item-based taxes will not
be applicable for
standalone invoice.
10.1 Flow Diagram
Enter the Header details like invoice

type, Supplier Name, site etc
Click on Line Items and fill the line

level and distribution details
Navigate back to Header. Tools -

India Tax details
Pick the Organization and location.

The same is required for adding
taxes/tax defaultation if any
Lines are inserted in
GL_INTERFACE table for tax

Validate and Account the invoice
accounting (refer query
mentioned in Chapter 8 to extract
the data)
Tax details can be viewed in India Tax
Details form / View accounting
(Accounting class ‘Miscellaneous
Expense’

Responsibility: Payables responsibility to create an AP invoice Navigation:
Invoice  Entry  Invoices
In invoice header level, select the operating Unit, invoice type, Supplier name and
site details etc.
Now navigate to Line level details and enter the Line and distribution Details

35
Now navigate to Tools  India tax details
Enter the Organization

and Location details
Tax category
defaulted
The tax point basis is

‘Invoice’
Based on the tax default rule we have setup, the ‘P2P testing 2’ tax category is
defaulted automatically.
Below we can also see the Taxes attached to the ‘P2P testing 2’ category.
Once the Organization and location details are entered, save the transaction and
navigate back to invoice
work bench and validate and Account the invoice. The accounting entry generated at
this stage is
Tax lines are generated

with accounting class as
‘Miscellaneous Expense’

36
11 –Tax Recovery Accounting (Interim)
Users have the flexibility of selecting the Tax Point Basis (TPB) while
defining the Tax Types
based on which the accounting will happen at differently. In the same way the
recovery process
can also be done at different stages based on the Tax Point Basis. They are
11.1 Flow Diagram
Create PO Enter header /

line details
Navigate to Tools India Tax Details. Attach tax category

with Recoverable tax type and TPB as Delivery
Navigate to Receipt form and select the PO

line for receipt creation
Navigate to Tools India Tax Details. Check

‘Confirm taxes’ check box.
Lines are inserted in

‘Receiving Transaction processor’ program will be fired and
accounting (refer query

it will process Base / Localization tax details
mentioned
in Chapter 8 to extract
the data)
Navigate to Tools India Tax Details. From Menu
open
Enter the claim details and click on  populate

values
Lines are
inserted in
GL_INTERFACE
table for tax
Select the lines which needs to be processed 
accounting
(refer query
Enter claim term details click on Process option
mentioned in
Chapter 8 to extract
the
data)
The processed line status is changed from

‘Pending Recovery’ to ‘Recovered’

37
Once the receipt accounting is done, for a receipt with recoverable taxes,
The accounting entry is generated in GL_INTERFACE is
Event Account Debit

Credit

Receipt
Amount
Once the receipt accounting is done, to process recovery amount, navigate to

38
Now in India tax details form navigate to
Tools Process
Claims

In the Claim details form enter the tax invoice number and tax invoice date and
enter the Action as
‘Recover’
Enter the tax

information Details
Once the above details are entered click on ‘Populate Values’ button which will
populate the tax invoice
number and tax invoice date to all the tax lines
Click on ‘Populate
values’ button to
default the Tax invoice
information details to
each line level. Post
that each line will have
the tax invoice number,
date information
entered at header
level.
Now select the tax line which you want to process or you can also choose Select all
option if you want to
process all the tax lines. Also before processing the field ‘Intended Use’ needs to
be populated.

40
Enter Intended
use option
Manufacturing
or Non
Manufacturing
Once the above information’s are entered, click on ‘process’ button.

Below confirmation message will be
shown
Confirmation
message for
Recovery
Processing
Now we can see that Status of the tax line is changed from Pending
Recovery to Recovered

41
The line
status is changed
from
‘Pending recovery’ to
‘Recovered’
In the above case, only 50% of the tax amount is recovered and other 50% is pending
for recovery on
next month. That is because of the claim term ‘GST Claim Term’ Setup. As the setup
of claim term GST
Claim Term’ is
Also, the once the recovery is processed,
The accounting entry is generated in GL_INTERFACE is

42
Event Account Debit
Credit
Tax Recovery Recovered

Amount
Recovery
Tax Interim Recovery Recovered
Amount
Note:
 Interim recovery to recovery – currently recovery process is manually done

via process recovery
option and this will be an Interim Solution. We are checking the
feasibility to automate the entire
process.

43
12 – Third Party Invoices
Third party invoice functionality provides provision to pay to the Vendor other
than the PO Vendor. This
will be required for paying the services offered by other Vendors related to that
PO. An approved Invoice
for the Non-PO Vendor will be created automatically when the invoice is created via
payable open
interface.
For using the third party invoice functionality, the tax type attached to the
PO should have the
‘Update vendor on
transaction’ check box
should be checked at
tax type definition.

44
12.1 Flow Diagram
Create PO  Enter header
and line information
Navigate to Tools India Tax Details. Attach tax category

with ‘Update vendor on transaction’ check box checked
Navigate to Receipt form and select the PO line for receipt

creation
Navigate to Tools India Tax Details. Change the

party Name and party site at tax type level  Click
apply. Click on ‘Confirm taxes’ Check box
Four concurrent requests are triggered Lines

are inserted in

 Receiving Transaction Processor accounting
(refer query mentioned
 ADS (Pay On Receipt AutoInvoice) in Chapter
8 to extract the data)
 Third party Payables Open Interface Import
 Payables Open Interface Import
Payables Open Interface Import – Imports Invoice for

Item line for PO vendor and
Third party Payables Open Interface Import - Imports

Invoice for tax line for Non PO vendor
Validate and Account both Standard

Invoice and Third party Invoice

45
Create a purchase order with tax type which has ‘Update vendor on transaction’
check box checked at tax
type setup.
In Receipt form, before saving the receipt navigate to Tools  India tax details.
Change the ‘Party Name’
and ‘Party site’ to a new vendor and click apply button to save the changes
Change the Party
Name and Party Site
to a Non PO vendor
Click Apply to
save the changes
Note:
The third party vendor details can also be updated at PO level and if it is updated
at PO level, the same
gets defaulted to receipt level as well.
Now click on confirm taxes check box to freeze the tax details

46
Now once the receipt is saved, system automatically fired the below concurrent
Below concurrent
are fired
In the above request set, the program ‘Third party Invoices - Payables open
interface Import (Payables
Open Interface Import)’ creates the Third party invoice against the Non –PO vendor
and ‘Payables Open
Interface Import’ program creates the invoice against the vendor in the PO. The
output of the ‘Third party
Invoices - Payables open interface Import’ shows invoice for tax amount has been
created against the
third party vendor.

47
Invoice created
against Third party
vendor
The output of ‘Payables Open Interface Import’ program shows the invoice details
created against the PO
vendor.
Invoice created
against PO vendor
Now in invoice work bench, when queried, the invoice created against PO vendor will
show the Item + tax
amount in India tax details form even though invoice line level only item line
amount is reflected.

48
Below accounting is created for the third party invoice

13 – Costing Effect – Accounting Entries
13.1 Average Costing
In a average costing organization, the below accounting is generated for
A. Recoverable Taxes
After receipt Accounting
Event Account Debit

Credit
Interim recovery A/c Tax Amount

Receipt
A/c
After Recovery
Event Account Debit

Credit
Tax Recovery Tax Amount

Receipt
In case of recoverable taxes, the MTL tables will not be impacted / hit with the
tax amount.
B. Non Recoverable Taxes
After receipt Accounting
Event Account Debit

Credit

Receipt

50
Once the delivery transaction is done, MTL_TRANSACTIONS_INTERFACE table gets
updated with non-
recoverable tax amount and the same gets added to item cost. Accounting entry at
that stage will be
Material Tax Amount

Receipt
Receiving inventory Tax Amount
13.2 Standard Costing

In a standard costing organization, the below accounting lines are inserted in
GL_INTERFACE table once
the Receiving transaction is completed
A. Non-Recoverable taxes
Accounting entry for PO receiving

Receipt
Accounting entry for Delivery transaction is
Purchase Price Tax Amount

Variance
Receipt
Note:
In case of standard costing Organization, the MTL tables will not be impacted / hit
with the tax amount.

51
B. Recoverable taxes
After receipt accounting, the accounting entry generated in GL_INTERFACE is
Interim Recovery Tax Amount

Receipt
Once the recovery is done, the accounting entry generated in GL_INTERFACE is
Recovery Tax Amount

Receipt
Interim Recovery Tax Amount
Note:
 There is no relevance of PO destination in GST architecture. Whether the

destination is ‘Expense’
or ‘Inventory’ the accounting treatment will be same.
 The accounting impacting on costing and OPM remains same as it is in

current architecture.

52
Phase2
14 – Introduction
The Procure to Pay cycle (P2P) is vital to an organization as in this process the
organization buys and
receives goods or services from its vendors and makes necessary payments. This
business process
covers the process of requesting, purchasing, receiving, paying for and accounting
for goods and
services.
The OFI functionality lets you satisfy all business needs related to Tax
calculation required for a Reverse
Charge Transaction and ERS Invoice.
15 – Scope
This document provides the details of Functional flow for ‘Oracle Financials for
India’ (OFI) Procure to
Pay cycle from GST point of view along with accounting entries.
Note: This document provides the details of Functional flow for ‘Oracle Financials
for India’ (OFI)
Reverse Charge and Pay On Receipt (ERS) cycles from GST point of view along with
accounting
entries. Note: The current content has been compiled in reference to the frozen
scope of the
Phase-2 deliverables (Ref: GST Phase -2 Deliverables.docx)
16 – Reverse Charge
16.1 Model Law
“Reverse charge’’ means the liability to pay tax by the recipient of supply of
goods or
services instead of the supplier of such goods or services in respect of such
categories of supplies as
notified under sub-section (3) of Section 8. The concept of Reverse Charge existed
earlier under the
Service Tax provisions for services like Works Contract, Manpower, Goods transport
Agencies, Legal
services etc., However, under the GST, Reverse charge mechanism has been introduced
both for
Goods and Services. Accordingly, all other provisions of this Act and CGST Act, as
applicable, will apply
to the recipient of such goods and / or services, as if the recipient is the
supplier of such goods and / or
services i.e. for the limited purpose of such transactions, the recipient would be
deemed to be the
‘supplier’
Section 12(3) talks about Time of supply of Goods, wherein for Reverse Charge
cases, the time of
supply would be the earliest of the following dates:
(a) The date of the receipt of goods, or
(b) The date on which the payment is made, or
(c) The date immediately following thirty days from the date of issue of invoice
by the supplier:

53
While the above said concept is already prevalent under the Service Tax
regulations, the concept is
altogether new under the Excise and especially VAT, where predominantly the point
of determinants were
removal from factory and sale.
Section 13 (3) talks about Time of Supply of Services, wherein for Reverse Charge
cases, the time of
supply would be the earliest of the following dates
(a) The date on which the payment is made, or
(b) The date immediately following sixty days from the date of issue of invoice
by the supplier
In case, it is not possible to determine the time of supply of services under the
above said options,
the time of supply shall be the date of entry in the books of account of the
recipient of supply.
16.2 GST Functionality of Reverse Charge

As per the Model law requirement, we need to capture the Reverse Charge on
Prepayment. Below are
the salient features of the Reverse Charge functionality on Prepayment:
 We need to calculate the tax as ‘Self Assessed’ on Prepayment.

 There is the requirement to capture the HSN (Goods) or SAC (Services) codes
in Prepayment.
 Also, we need to account the liability of Reverse Charge on Prepayment. GST
laws specify that it
should be Reversal entry instead of Net Off entry on Prepayment application
to standard
invoice with Reverse charge taxes.
 Need to have the Repository update on the Reverse Charge taxes of
Prepayment as well as the
accounting.
 The Accounting of Reverse Charge taxes to the Period End Processing
Concurrent which
has been introduced as a part of Model law feature. This will avoid
multiple accounting
adjustments happening in the invoice life cycle and will consider the net
consolidated value in the
period end process.

54
Flow Diagram
Configure HSN/SAC Code in the

seeded Reporting Type
Create a Prepayment Invoice having Reverse Charge

Taxes attached to it and HSN/SAC code attached
Validate and Pay the Prepayment Invoice
Create a Standard Invoice having Reverse Charge Taxes attached to it

and same HSN/SAC code attached as well
Validate the Standard Invoice
Apply the Prepayment to Standard Invoice based on

lines having same HSN and SAC codes
Repository will get updated
Lines
are inserted in
GL_INTERFACE
table for tax
Run the Period End Process in ‘Save’ and then in
liability accounting
‘Final’ modes

55
16.4 Configuration:
Regime:
Regime Type: Transaction Tax

Tax Authority: GST Tax Authority
Tax Type:
Self Assessed/Reverse Charge: 'Y'
Mandatory
checkbox for
Reverse
Charge Taxes

Tax Rate:

Tax Category:
Third party Registration:

Tax Rule: Define the Tax Rule based on business requirement
Claim Term:

16.5 HSN/SAC Code:
1. HSN Code is meant for Goods. For inventory item(reporting code only for item)
2. SAC Code is meant for Services. For non inventory item(reporting code for
both 3rd party and
item)
3. New seeded Reporting Types are introduced to capture the details. These
Reporting Types are
User configurable.
4. At transaction level we have the flexibility to modify the HSN/SAC code
defaulted from 3rd Party
Registration or Item Classification
Seeded Reporting Types for HSN and SAC codes.
Entity is 3rd party which means we will

1. SAC Code for Non Inventory Item: GST_SAC_CODE_ITEM
have to attach the Reporting Code
2. SAC Code for 3rd Party: GST_SAC_CODE_TP
value to the 3rd party Registration.
3. HSN Code for Item: GST_HSN_CODE
Likewise, if Entity is Item then the
Reporting Code value to be attached to
Item Classification.

60
Attached the
Reporting
Code value to the
Third
16.6 Linking of Reporting Code value to 3rd party Registration: party Registrations

61
16.7 Prepayment:
In prepayment we have the provision to attach the Reverse Charge

taxes unlike the current architecture.
In the current architecture the

“India Tax Details” UI was not
Defaulted from Third Party Registration

enabled but here its enabled
though the field has the flexibility to
change the value
Organization and Location

is mandatory
Defaulted from Tax
Type setup

62
Validate and Pay the Prepayment:

16.8 Standard Invoice
Mandatory
SAC Code should be

same as that of PP
invoice

Note:
 When you are going to create a Reverse Charge for a Prepayment you are
accounting the tax
liability. Again when you create the AP invoice for which the TPB is set,
you are going to
calculate for the full value and when the Prepayment is applied, the system
will check if the
SAC/HSN codes are same in both documents and if those are same then it will
allow you to
trigger an offset entry for the Reverse Charge which is calculated on PP.
 If SAC code is entered, HSN code will be disabled. So both SAC and HSN
codes are mutually
exclusive.
 Prepayment can have 2 lines having multiple HSN/SAC codes, only the
adjustment will be by
grouping of HSN/SAC codes. Application will be done at line level by
grouping of HSN/SAC
codes. So the system will allow to apply those lines of prepayment where
HSN/SAC codes are
same.
 Prepayment VALIDATE, Standard Invoice VALIDATE and Prepayment APPLICATION
does not
create any accounting. Only period Ending process will create accounting
and update the
repository.
16.9 Prepayment Application

65
16.10 Period Ending Process:
 Data should get populated into the Repository(table
jai_rgm_recovery_lines) once the
prepayment is applied to the Standard invoice
 Based on the data populated, the Period Ending Process shall create the
accounting
in GL
 For Standard invoice there will be a record inserted into the
repository table with
liability account and for Prepayment also there will be a liability
account. Once the
Prepayment is applied to Standard Invoice, there will be a negative
Reversal entry
against liability to adjust the prepayment application.

66
A new concurrent program: India - Period Ending Process is introduced for
the period ending
process. There are 2 valid modes of running the period end process
a. Save - In this mode, the invoices will be prepared for GSTN and the
user can view those
details and they can upload the information to the GSTR
b. Final - In this mode all the records will be locked and the accounting
will get created in GL
Running the program in Save mode:
The status of the Repository against the transaction can be found out by the
column:
REPORTING_STATUS_FLAG which will be marked as ‘S’ when the program is run in Save
mode

67
Running the program in Final mode:
The status of the Repository against the transaction can be found out by the
column:
REPORTING_STATUS_FLAG which will be marked as ‘RF’ (Ready to File) when the program
is run in
Final mode. Once it’s filed, the system will not allow any adjustment to the
invoice. So the user can
go and take the data and file it to GSTN
At this point of time the LIABILITY Accounting will get generated. So with the
Period end Process
in Final mode the system will generate Liability accounting and Adjustment
accounting in GL

68
16.11 Accounting
Once Period End Process Program is completed
Liability Tax Amount

Period End
Process
Suspense Tax Amount
17 – ERS Invoice
Payment on Receipt enables the user to automatically create standard, unapproved
invoices for payment
of goods based on receipt transactions. Invoices are created using a combination of
receipt and purchase
order information that eliminates duplicate manual data entry. It automatically
creates invoices with
multiple items and distribution lines, and includes tax. Payment on Receipt is also
known as Evaluated
Receipt Settlement (ERS).

69
17.1 Flow Diagram
Create PO for Supplier / Supplier site which has

ERS Invoice setup
Navigate to Terms  Set ‘Pay on’ option to

‘Receipt

defaulted based on defaulting mechanism defined
Create a receipt Check the ‘Confirm taxes’

check box
Lines are
inserted in
Receiving Transaction Processor program GL_INTERFACE
table for tax
will be triggered accounting
(refer query
mentioned in
Chapter 8 to extract
. the
data)
Run the ‘ADS (Pay On Receipt

AutoInvoice)’ Program
ERS invoice is imported to Payables
Validate the ERS invoice and run create

accounting

70
Create a purchase with Pay on option set to ‘Receipt’. Once the PO is approved,
create a receipt. Once
the receipt is saved, ‘Receiving Transaction Processor’ program will be triggered
automatically. After
successful completion of ‘Receiving Transaction Processor’ program, run the ‘ADS
(Pay On Receipt
Autoinvoice) program:-
 Receiving Transaction Processor

 ADS (Pay On Receipt
AutoInvoice)
Once receiving transaction processor program is completed

Receipt
The output of payable Open interface program, the ERS invoice number which got
created will be
displayed

71
ERS invoice number
which got imported
to payables
When we query the invoice number in invoice work bench and navigate to Tools
 India tax details form,
the tax category has defaulted from receipt level.
Tax category is defaulted from
Receipt. Since confirm taxes
check box is checked at receipt
level, the fields are freezed at
invoice level

72
Once the invoice is validated and Accounted, the below accounting entry is
generated by navigating to
Tools
Notes:
1. For both Recoverable and Non recoverable taxes, the tax lines will hit the
AP Accrual Expense
Account
2. For ERS invoices, the TPB should always be set at ‘DELIVERY’
16 – Summary
The above document will provide the below benefits:
 Transaction flow in different stages of P2P in Oracle GST solution.

 Summary accounting entries generated at each stage
 Major difference between the current India Localization structure and the
GST solution.
 This document will help you understand the different scenarios /
transaction flows in P2P cycle
 Reverse Charge Process
 ERS Invoice

73
17 – 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.
You can also refer the documents in GST Info Center (Documentation Tab) released as
part of
Phase2 deliverables.
E-Business Suite Release 12: India Goods and Service Tax (GST) Info Center (Doc ID
2176820.2)

74

GST Functional P2P Flow

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

GST Functional P2P Flow

Uploaded by

Copyright:

Available Formats

Pre-Release Document

Oracle Financials for India (OFI)

Author: Vaishali and Somdeep (P2P)

Organization: Oracle India Private Limited.

OFI-GST Procure to Pay Flow 1

Date Author Versio Change Reference

21-Mar-16 Vaishali and 1A Initial document

Rajnish Kumar Director, Tax

OFI-GST Procure to Pay Flow

5 – Requisition to Purchase Order (Pre-PO- PO

5.3 India tax details

5.4. Create RFQ (Request for

5.6 Create Purchase Order from the approved

8.1 Accounting for Receipt Routing - Direct Delivery and Standard

8.1.2 Direct Delivery – Recoverable

8.1.3 Direct Delivery – Non-Recoverable

8.1.4 Standard Routing - Recoverable

OFI-GST Procure to Pay Flow

9.2 Process and

10.2 Process and

11 –Tax Recovery Accounting

11.2 Process and

12.2 Process and

13 – Costing Effect – Accounting

16.2 GST Functionality of Reverse

16.6 Linking of Reporting Code value to 3rd party

OFI-GST Procure to Pay Flow

16.10 Period Ending

17.2 Process and

OFI-GST Procure to Pay Flow

 Tax Defaulting basis

 First and Third party Registration

OFI-GST Procure to Pay Flow

Regime Registration Tax types (R) Tax rates (R)

Tax Defaulting Document sequence

Define Item Define Claim

Third Party First Party

Create Requisition Create RFQ

Receipt creation (Localization taxes

Create Payable Invoice-

OFI-GST Procure to Pay Flow

5.1 Flow Diagram

Create Requisition Enter

Navigate to Tools India Tax Details. Tax category is

Create RFQ  Tax category is defaulted from requisition

Create Purchase Order

Navigate to Tools India Tax Details. Tax category is

OFI-GST Procure to Pay Flow

Responsibility  Oracle Purchasing Requisitions  Requisitions

Enter Requisition Header:

Enter Requisition Line:

OFI-GST Procure to Pay Flow

OFI-GST Procure to Pay Flow

 Tax category defaulted based on tax defaultation logic can be manually

5.3 India tax details form

1 Organization Inventory Organization

2 Location Inventory Organization

3 Document Number PO number

4 Revision / release Number

6 Amount PO line amount

7 Tax amount Total tax amount

OFI-GST Procure to Pay Flow

9 Line Number Po Line number