© 2013 Copyright Genpact. All Rights Reserved.
Headstrong: A Genpact company
1
India Localization
Demystified
Presentation Title Goes Here
Date: 8th Nov 13
Location: Hyderabad
Speakers- Vivek Bhatia and Venkat
Kompella *(Genpact)
©2013 Copyright Genpact. All Rights Reserved.
Table of Contents
About the speaker(s)
Project Da Vinci
Infrastructure Industry( Key Challenges)
Project Based tax transactions (O2C and P2P)
Questions
Genpact Overview
©2013 Copyright Genpact. All Rights Reserved.
3
About the speaker(s)
About the Speakers
Vivek Bhatia
Overall IT experience
12
Oracle Experience
13 Years
Skill Set
Oracle Apps Financials and Projects
Oracle Corp Experience
3 years
Qualifications
•
•
•
•
Bachelor Of Engineering
Masters if Business Administration ( Finance – Full Time)
Masters In Economics and
Masters in Finance and Control
Venkat Kompella*
Overall IT experience
15 Years
Oracle Experience
12 Years
Skill Set
Oracle Apps Financials and Projects
Oracle Corp Experience
3 years
Qualifications
•
•
•
©2013 Copyright Genpact. All Rights Reserved.
Bachelor Of Technology
Masters in Business Administration ( Finance)
Project Management Professional (PMP) from PMI, USA
5
I have been impressed with
the urgency of doing. Knowing
is not enough; we must apply.
- Leonardo da Vinci
©2013 Copyright Genpact. All Rights Reserved.
6
India Localization in
Oracle R12
India Localization in Oracle R12
Tax Requirement
Direct Taxes
Indirect Taxes
Income tax
Tax Collected at
Source
Tax Deducted at
Source
Depreciation as
per Income Tax
Act
VAT & Sales Tax
Service Tax
Customs
Excise
Input Tax Recovery
(VAT)
Input Tax Recovery
CVD recovery and
CENVAT
CENVAT
Allocation with
Excise Duty
©2013 Copyright Genpact. All Rights Reserved.
8
Considerations for Localization Configuration
R12 : A BIGTHANK YOU ORACLE :
•
•
•
No Additional Patch
No additional Localization Flex Fields
Service Tax on Unmatched invoices : Reducing Redundancy
and Non Value Added Jobs
WHAT MORE CAN BE ENHANCED:
•
Transfer of Balances across Inventory Organizations
automatically
•
Pass Localization entries through SLA for all Sub Ledgers
©2013 Copyright Genpact. All Rights Reserved.
9
Considerations for Localization Configuration
•
•
Inventory Organization Setup
•
Tax regimes, Input credits, liability etc., are defined at the
organization level
•
•
•
Accounting, P&L and Balance sheet at inventory org level?
•
This decides if we need inventory organization as part of our CoA
and define TDS accounts as centralized or at balancing segment
level
India Localization configuration is at inventory
organization level.
Use Localization for Gross Reporting
TDS liability to be consolidated centrally or maintained as per
balancing segment
©2013 Copyright Genpact. All Rights Reserved.
10
Gross Reporting: Use a Combination of SLA and India
Localization
Business Requirement to have multiple receivables accounts
along with gross up of Tax to revenue and expense
•
•
•
•
•
•
Dr Receivables 1
Dr Receivables 2
Dr Receivables 3
Dr Expense (Tax)
Cr Revenue
Cr Revenue (Tax)
©2013 Copyright Genpact. All Rights Reserved.
11
Service tax
Service Tax
Major features of Service tax functionality provided in the Oracle
Financials for India are mentioned below:
•
Defining Service tax regime and the registration details of the
Organization.
•
•
•
•
Definition of Service tax type codes, as applicable.
•
•
•
Facilitating the settlement of Service tax liability.
Definition of rules for accounting for Service tax.
Provision to default the Service type applicable for Suppliers/Customers.
Provision to distribute the service tax credit available across inventory
organizations.
Provision to maintain and view the Service tax repository.
Reporting requirements with respect to Service tax.
©2013 Copyright Genpact. All Rights Reserved.
13
14
Service Tax Registration
Assign Tax
Type
and Account
©2013 Copyright Genpact. All Rights Reserved.
14
Assigning Organizations
Regime has to be assigned to all organizations to which it is applicable. Taxes defined under this
regime would default only for these organizations.
©2013 Copyright Genpact. All Rights Reserved.
15
Title
Under the Organization details, User will be able to assign the Inventory Organizations to which
the service tax regime is applicable. Also if an inventory organization is having multiple locations,
all those locations have to be assigned under this regime. Otherwise processing of Service taxes
will happen only for the assigned locations.
©2013 Copyright Genpact. All Rights Reserved.
16
Customer Additional Information
To be able to make transactions in Order to Cash cycle, Customer additional information setup need to
be completed for those Customers from whom service tax amount will be recovered. In this form, Service
tax registration number and the Service tax type applicable for that particular Customer needs to
provided. If Service type is defined here, then it will be defaulted in the transactions. Otherwise
Users need to manually update the service type in the transactions.
©2013 Copyright Genpact. All Rights Reserved.
17
Supplier Additional Information
To be able to make transactions in Procure to pay cycle, Supplier additional information setup need
to be completed for those suppliers to whom service tax amount will be paid. In this form, Service
tax registration number and the Service tax type applicable for that particular supplier needs to
provided. If Service type is defined here, then it will be defaulted in the transactions. Otherwise
Users need to manually update the service type in the transactions.
©2013 Copyright Genpact. All Rights Reserved.
18
Tax code definition
In Tax code definition form, Service tax type codes can be defined and the same can be used in the
transactions. It has to be noted that Service tax codes have to be defined as recoverable taxes by
specifying the credit percentage as 100. Otherwise the accounting will not happen as mentioned in this
document and those taxes will be considered for costing in Procure to pay cycle.
©2013 Copyright Genpact. All Rights Reserved.
19
Title
Currently the following tax types are applicable for Service tax and the same have been provided
as seeded values in the tax type field:
•
•
•
Service tax
Education cess on Service tax
Secondary Higher education cess on Service tax.
©2013 Copyright Genpact. All Rights Reserved.
20
Inclusion of Service Types
It may be noted that the user in the application can manually add service types. The need for addition of service types
arises whenever Government of India added more services vide inclusion in Finance Act. The same can be done using the
below steps:
•
•
•
Navigate to Oracle Purchasing > Setup > Purchasing > Lookup Codes
Query with Type as JAI_SERVICE_TYPE
Click on New and specify the code, Meaning, description and effective from date.
By doing this, User will be able to select the new service types as well in the transactions.
Service type mentioned in the Supplier additional information and Customer additional information would be used to default
automatically in transactions like Purchase Order and Receivables transaction and Sales Order respectively. This defaulted
value can be changed in those transaction forms. If this setup is not carried out and service type is not mentioned even in
the transaction forms also, then Users will not be able to perform settlement.
In Purchase Order localized form, as
shown above, Service type got
defaulted from the Supplier additional
information setup. Also the User can
change this value. Similarly in Sales
Order localized form and Receivables
transaction localized form also, User
can change the defaulted service type
values. However service type cannot
be changed when a RMA is created
with
reference to Order or Invoice. In this
case, Service type of the original order
will get copied to the RMA order and is
shown in view mode only.
©2013 Copyright Genpact. All Rights Reserved.
21
VAT and Service Tax on Work Orders – Is it a Tradeoff?
•
Complex PO (self service POs) are not supported
by India Localization
•
Complex POs provide the features of advance recoupment,
retention and retention releases
•
This is a trade off between using the Complex PO and India
Localization
•
Is there any workaround to this?
©2013 Copyright Genpact. All Rights Reserved.
22
VAT and Service Tax on Work Orders
•
When we create complex PO there is no provision
to include the India localization taxes
•
When work confirmation done this is also in the self service
pages with no provision for local taxes
•
The work confirmation creates a receipt in the form
•
Query for the receipt from the localization form and attach the
required localization taxes.
•
Now when the invoice is created by matching to the receipt the
local taxes are included in the invoice
©2013 Copyright Genpact. All Rights Reserved.
23
Excise and Customs
©2013 Copyright Genpact. All Rights Reserved.
24
25
Excise Duty
Excise Duty
•
Excise Duty is a federal tax on manufacture of goods
•
Oracle Finance India localization provides solutions to meet the complex
requirements
©2013 Copyright Genpact. All Rights Reserved.
25
Excise
Define Excise Invoice Generation
• This feature can be used to automate the Excise Invoice document sequence
generation - You can setup a document sequence for the combination of
Transaction Type, Order/Invoice Type and Register Type.
•
You can define an alpha/numeric value which would be prefixed to the number
series generated for each excise invoice.
Pre Requisites:
• Setups needs to be done in define Bond register where the user needs to
associate an Order type for all transactions Order Management module and
Transaction source for all transactions from Accounts Receivable module.
•
The Order type and transaction source will be associated with different type
of excise removals (like domestic with excise, Bond, Export with excise etc.).
©2013 Copyright Genpact. All Rights Reserved.
26
Excise Invoice Generation contd.
©2013 Copyright Genpact. All Rights Reserved.
27
Define Sub-Inventory Locations
As a part of Localization , the sub-inventories have to be associated to a combination of Organization/Location. Excise related
transactions and records would be updated only for those sub inventories that are identified as bonded for
manufacturing organizations and as traded for trading organizations.
NAV: GEIN MMF Local Inventory > India Localization > Setup > Sub Inventory Locations
©2013 Copyright Genpact. All Rights Reserved.
28
Define Item Localization Information
The recording, recoverability and reporting of localization taxes would depend on the India Localization related information setup for the item
The updation of the Dispatch transaction into the Excise / CENVAT credit would be considered only when the Excise /Modvat is set to ‘YES’.
Accounting from Organization Additional Information
The option chosen in the Item Class attribute would be the basis on which, the type of excise credit register that has to be considered. The Trading
item is transacted in a trading item.
Here initially you can define Attribute Template and then assign item with that template.
NAV: GEIN MMF Local Inventory > India Localization > Setup > Item Setup > VAT/Excise Item Classification
©2013 Copyright Genpact. All Rights Reserved.
29
Define Tax Code and Categories
Basic, CST etc , VAT, Custom Duty
Tips:
If you can identify your
purchase and sales
transactions into clear
categories, for which a similar
set of taxes with similar
precedence and calculation
are applicable, then you can
group such taxes into a Tax
Category.
In a Tax Category you can
choose the Taxes, along with
the precedence order and
calculation basis. You can
however, manually add new
tax lines and can change,
delete, change precedence
for the defaulted lines.
©2013 Copyright Genpact. All Rights Reserved.
30
Associate Tax Categories to Item Categories
Tips
Item Category allows you to
assign Tax Categories to an
inventory items in an
Organization. You can attach
an item category to the
Additional customer/supplier
information. The Taxes
defaulted for a transaction line
would be based on the Item
Category attached to the
Supplier/customer and the Tax
Category assigned to the Item
in this category.
©2013 Copyright Genpact. All Rights Reserved.
31
Supplier Additional Information
Tips
Before you start using the Supplier/ supplier
site for a localization transaction, it would be
a necessary for you to define India
Localization related information for the
Supplier/ Supplier Site. The supplier
registration information, with various tax
authorities, Assessable Price List that would
be the base for the calculation of the Excise
Base Amount and default Item Category can
be defined here. The definition would be the
Supplier NULL Site and for Supplier Site.
The primarily Tax defaulting would be from
the Supplier Site. In absence of any Tax
Category at this level, the system would
pickup the value from the NULL Site.
You will also have to enter the Income Tax
and TDS related details applicable for the
Supplier Site.
©2013 Copyright Genpact. All Rights Reserved.
32
Bond Registers
Tips
Export of Excisable product. SEZ sales> Amount to Govt ,
Govt provides Bond e.g 1 lakh.. Shipping sales order. Tax
amt is 1000
©2013 Copyright Genpact. All Rights Reserved.
The calculation of excise duty and updating
of excise registers are based on the setup
made in the define bond register. Before
making this set up the user need to define
the Order types and transaction sources.
Excise transactions are classified as:
• Domestic with Excise
• Domestic without Excise
• Export with Excise
• Bond Register (Export under Bond)
Excise transactions need to be identified
based on the Organization/Location
combination and against each excise
transaction multiple Order types and
Transaction sources can be assigned. Order
type need to be assigned to excise related
transactions from Order Management
Module and Transaction source need to be
assigned for all excise related transactions
through the Receivable module.
NAV: GEIN MMF India Local Order
Management > India Localization >
Registers > Define Bond Registers
33
Additional Price List
Tips:
If the Taxable basis for the
calculation of the excise
duty is different from the
Price at which the item is
sold, the, you will have to
create additional Price
lists with the Item Excise
Assessable Price.
This price list has to be
attached to the
Customer/Customer Site
and Supplier/Supplier Site.
The assessable price
would be considered only
for the calculation of the
excise duty.
©2013 Copyright Genpact. All Rights Reserved.
34
Claim Cenvat on Receipt
Tips
Claim Cenvat on Receipt
NAV: GEIN MMF Local Purchasing >
India Localization > Receipts > Claim
Modvat on Receipts
To claim the Cenvat against receipt put
the Organization name, Location, and
Receipt Number. Then click on Find
Button.
.
Put the Excise Invoice Number and Date
check ‘Claim CENVAT’ flag and finally
click on Claim button
©2013 Copyright Genpact. All Rights Reserved.
35
Transactions Overview & Register Update
Transaction Type
Impact on Excise Registers for Item Types
RMIN
FGIN
CGIN
Miscellaneous Receipt RG Update
RG 23A Part 1
RG 1
RG 23C Part 1
Miscellaneous Issue RG Update
RG 23A Part 1
RG 1
RG 23C Part 1
Cycle Count Adjustment
RG 23A Part 1
RG 1
NA
Physical Inventory Adjustment.
RG 23A Part 1
RG 1
RG 23C Part 1
Move Order Issue
RG 23A Part 1
RG 1
NA
WIP Component Return
RG 23A Part 1
RG 1
NA
WIP Assembly Completion
RG 23A Part 1
RG 1
NA
WIP Assembly Return.
RG 23A Part 1
RG 1
NA
WIP Negative Component Issue
RG 23A Part 1
RG 1
NA
WIP Negative Component Return
RG 23A Part 1
RG 1
NA
WIP Scrap Transaction
RG 23A Part 1
RG 1
NA
Staging transfer of a sales order
RG 23A Part 1
RG 1
NA
©2013 Copyright Genpact. All Rights Reserved.
36
Title
©2013 Copyright Genpact. All Rights Reserved.
37
Title
©2013 Copyright Genpact. All Rights Reserved.
38
Title
©2013 Copyright Genpact. All Rights Reserved.
39
Title
©2013 Copyright Genpact. All Rights Reserved.
40
Define Customs Authority
The Duty advance paid to the Customs Authority has to be booked against a Customs Authority, through a Bill of Entry.
Before you create a ‘Bill of Entry’ India Localization Transaction, you should have defined a Customs Authority. You would
create a Supplier and Site for this Authority. Additionally, in the Type field on the Classification tab, choose ‘Custom
Authorities-IND’. On doing this, when defining a ‘Bill of Entry’ transaction, the Supplier name would be listed in the ‘Customs
Authority’ field LOV on the Bill of Entry India Localization screen. 1.Custom Rate will be 10 %, 7.5% , 5% 2. CVD
(Purchase Price +Custom Duty) 3. Cess 2% on Custom 4. SH 1 %(Custom and CVD). 5. SAD ( Applicable on all)
Define BOE Agent
It would be a pre-requisite to define a BOE Agent before you do a BOE Transaction. Navigate to the
Payables Setup and define the Clearing & agent information. The agent codes would appear in the LOV of
‘Agent Code’ field of the Bill of Entry screen.
NAV: GEIN MMF India Local Payables > India Localization > Setup > Others > BOE Agent
©2013 Copyright Genpact. All Rights Reserved.
41
Tips on TDS
TDS Considerations
•
TDS liability to be consolidated centrally or
maintained as per the inventory organization /
balancing segment
•
If it needs to be consolidated then defining one
tax code is sufficient
•
If it needs to be accounted for each balancing
segment :
•
Define different tax codes for each balancing
segment and assign these tax codes to the
respective suppliers so that the tax liability hits
the respective balancing segments
OR
•
©2013 Copyright Genpact. All Rights Reserved.
Update the company segment for the supplier
credit memo and IT invoices using SLA to
ensure
43
TDS on Prepayments
•
When prepayments are applied to an invoice the TDS deductions
are reversed and creates RTN TDS invoices
•
Ensure that the invoices are validated after the application of
prepayment invoice to have the TDS invoices in sync.
•
When the prepayment application is unapplied it created CAN RTN TDS invoices.
•
Application and application creates multiple RTN invoices and can lead to
reconciliation issues.
•
TDS Invoice DFF will carry Invoice ID against which TDS invoice is corresponding to
•
If the same supplier is a vendor and sub-contractor requiring TDS on subcontractor
invoices and no TDS on vendor invoices (e.g. Oracle Implementation and License
Sale by Partner)
•
•
•
Create two different sites for the supplier for vendor and subcontractor
Update the TDS information for the subcontractor and leave the information
for vendor blank
Invoices will be created based on the site information it will follow the TDS
applicability
©2013 Copyright Genpact. All Rights Reserved.
44
Appendix
Depreciation
•
Defining Block of Assets under different categories based
on applicable rate of depreciation
•
Defining Depreciation calculation criteria based on the
acquisition date of interest. 100% Depreciation on assets
acquired in first six months and 50% on assets acquired
in second half of financial year
©2013 Copyright Genpact. All Rights Reserved.
46
Questions ??
Oracle EAS Practice – An Overview
SIZE
• Over 3,000 Oracle professionals
• Over 3.1 million days of Oracle
experience
Manufacturing
 Discrete
 Process


BFS& I
Banking & FinSvcs
Insurance
Business Services
 Telecom, Media
 Hospitality
EXPERIENCE
• 160+ go-lives in 40+ countries
• Implemented and Supported
Oracle for aggregate revenue of
250 Billion USD
• Support more than 175 Oracle ERP
Instances
• 60% resources > 6 years of
industry experience
• > 80% resources trained in Lean,
Six Sigma, CMMi
EXPERTISE / SKILLS
• Centers of Excellence (CoE)
dedicated for Industry Vertical
Solutions
• Oracle Gold Partner
• 24x7 maintenance & enhancement
capabilities
• Strong DNA of managing Program
Management Offices (PMO)
©2013 Copyright Genpact. All Rights Reserved.
Oracle ERP Suite | Oracle Database | Siebel | Hyperion + OBIEE
ERP
STRATEGY
Implementation/
Rollouts
Upgrades
Support
48
Sample ERP Client Profiles
$13B
Healthcare
Equipment
Manufacturer
$12.7B
Automotive
Manufacturer
$16B
Cable &
Telecom
$23B
Commercial
Finance
Company
$8B
Plastics
Molding
Manufacture
$8B
ETO
Turbine
Manufacturer
$12B Media
Company
$1.3B
Trading
Company
$3B
ETO
Electronics
Manufacturer
$2B
ETO
Gas Engine
Manufacturer
$1.2B
Staffing
Temp
Services
$15B
Consumer
Finance
Company
$52B
Life Sciences
$1.5B
Sub-Sea
Drilling
Manufacturer
$5B
Nulear
Energy
Construction
$2B
Commercial
Lending
$15B
A&D
Manufacturer
$14B
Consumer &
Industrial
Manufacturer
$6.4B
Software and
Technology
$1.8B
Information
Services
$3.6B
Hospitality
Loding
$200M
Telecom
Equip
Manufacturer
$2.1B
Telecom
Services
$500M
Project
Manufacturer
$3B
Renewable
Energy
Manufacturer
$6B
ETO Engine
Manufacturer
©2013 Copyright Genpact. All Rights Reserved.
$2B
Avionics &
Display
Manufacturer
$250M
Furniture
Manufacturer
49
Thank You
©2013 Copyright Genpact. All Rights Reserved.