2 Understanding Localizations for India

This chapter contains the following topics:

• Section 2.1, "Taxes in India"

• Section 2.2, "India-Specific Setup and Processes"

2.1 Taxes in India

The JD Edwards EnterpriseOne India Localization system from Oracle provides tax processing for these types of taxes that are assessed in India:

Type of Tax	Description
Goods and Services Tax (GST) (Release 9.1 Update)	Goods and Services Tax (GST) is a destination-based tax applicable for the supply of goods and services or both. GST is administered concurrently by the central and state governments throughout the value chain. The central government levies the Central GST (CGST) and the state government levies the State GST (SGST) on every supply of goods and services within a state. Both CGST and IGST are levied on the same taxable basis. Integrated GST (IGST) is levied on all inter-state supplies by the centre and then transferred to the destination state. IGST is also levied on imports of goods to India. A portion of the revenue goes to the state government of the consuming state. See Understanding GST (Release 9.1 Update)
Excise Duty	This federal tax is assessed on goods that are produced or manufactured and intended for consumption in India. Excise tax is an indirect tax that the manufacturer passes on to the consumer. The liability for the tax occurs when the goods are manufactured; however, the tax is not accounted for until the goods are shipped. Customers pay the excise tax or duty when they purchase a product. A tariff act specifies which products are assessed for excise tax. See Understanding Excise Tax.
Service Tax	This federal tax is assessed on services that are provided. Service tax is an indirect federal tax that the service provider passes on to the customer. The service provider is responsible for issuing invoices and charging service taxes to customers. See Understanding Service Tax.
Value-added tax (VAT)	This state tax is assessed on the value added to products and goods at different stages of production and distribution. The value added is the difference between the sales price and the purchase price. The state defines the tax rate percentage for a product or item. Some items are exempted from VAT. VAT applies when a product is shipped to a customer whose receiving location is within the same state. When products within a company are transferred to another location that is in a different state, a retention percentage is retained. See Understanding VAT.
Sales Tax	This state tax is assessed on the sale of goods and services. The tax rate percentage depends on the goods and their classification and whether the transaction is conducted within the state (intrastate trade) or outside the state (interstate trade). See Understanding Sales Tax.
Purchase Tax	This state tax is assessed on the purchase of goods. The buyer pays the tax for goods that they purchase from the dealer, and the dealer remits the collected tax to the tax authorities. See Understanding Purchase Tax.
Tax collected at source (TCS)	This federal tax is assessed on goods that are purchased by customers. The supplier charges the tax to the customer and remits the amount to the tax authorities. See Understanding TCS.
Tax deducted at source (TDS) and Works contract tax (WCT)	TDS is a tax that is deducted from income that a company in India pays to a recipient or supplier if the income amount exceeds a specific statutory limit in a financial year. Income might include salary, interest and dividends, payments to contractors and subcontractors, and so on. WCT is a tax that is assessed on contracts for labor, work, or services. Contracts for work include construction, manufacturing, repair, and so on. This tax is not based on the sale of goods. See Understanding TDS and WCT.

2.2 India-Specific Setup and Processes

This table lists the country-specific setup and functionality for India.

Setup or Process	Description
User-defined codes (UDCs)	Set up base-software UDCs with India-specific values, and set up India-specific UDCs for: Legal documents Tax processing See Setting Up UDCs for India.
Next numbers	Set up next numbering schemes for the base software applications that you use, and set up a next numbering scheme to number TDS certificates. See Setting Up India-Specific Next Numbers.
Automatic accounting instructions (AAIs)	You must set up some base software Automatic accounting instructions (AAIs) before you work with service tax and tax deducted at source (TDS). See Setting Up AAIs for India.
Legal documents	Before you can print invoices, vouchers, and other legal documents, you must set up your system by setting up: Legal document types and relationships Issue places Next numbers Print templates See Setting Up Legal Documents for Tax and Export Invoices.
Landed costs	Some tax regimes use landed costs to calculate Indian taxes. See Calculating Taxes for India Based on Landed Costs.
Advanced pricing	Some tax regimes use the Advanced Pricing module in the JD Edwards EnterpriseOne software to calculate the taxes. You define the tax calculations for India by using the JD Edwards EnterpriseOne Advanced Pricing system, then use an India-specific program to define price adjustments. See Setting Up the Advanced Pricing System for India Taxes. See Entering Details for Price Adjustments.
Tax types and tax regimes	Set up relationships between tax types and tax regimes, and then set up price adjustments and level costs for the tax type/tax regime combination. See Assigning Tax Types to Tax Regimes. See Setting Up Level Costs for Combinations of Tax Types and Tax Regimes.
Address book records	Set up tax registration details for companies, customers, and suppliers. See Setting Up Tax Registration Details.
Invoice processing	After you set up legal documents, you can process invoices in India. See Processing Tax and Export Invoices.
Excise taxes	Set up your system to process excise tax, including the setup of: Excise units Excise periods Excise accounts Opening balances Chapter numbers and descriptions See Setting Up the System for Excise Tax. The JD Edwards EnterpriseOne system for India localization provides programs to enable you to process excise taxes including: Excise tax for 100 percent export-oriented units See Working with Excise Tax for 100 Percent Export-Oriented Units Excise-exempt consignments See Processing Excise-Exempt Consignments Excise registers See Working with Excise Registers Cenvat credit See Working with Cenvat Credit in India
Service tax	To set up your system to process service tax, map business units to service tax operating units. See Mapping Business Units to Service Tax Operating Units. To process with service tax: Generate reclassification journal entries for service tax payments. See Generating Reclassification Journal Entries for Service Tax Payments. Generate reclassification journal entries for service tax receipts. See Generating Reclassification Journal Entries for Service Tax Receipts. Update service tax balance information. See Updating Service Tax Balance Information. Generate payments to the Transportation Agency. See Paying the Transportation Agency.
Value-added tax (VAT)	Before you process VAT in India: Assign VAT category codes to item numbers. See Assigning VAT Category Codes to Item Numbers. Map business units to states. See Mapping Business Units to States. Set up general ledger accounts for VAT and CST transactions. See Setting Up General Ledger Accounts for VAT and CST Transactions. Set up retention percentages and deferred periods. See Setting Up Retention Percentage and Deferred Periods for State-Level Constants. Enter opening stock adjustment amounts for VAT credit. See Entering Opening Stock Adjustment Amounts for VAT Credit.
Sales tax	To work with sales tax in India: Enter form details for invoices and vouchers. Calculate offset amounts. Calculate VAT offset amounts. Associate stock transfers to purchase orders. See Entering Form Details for Sales Tax and Purchase Tax Concession. See Working with Transactions for Sales Tax.
Purchase tax	To work with purchase tax in India: Assign form types to vouchers. Enter form details for vouchers. Print the list of items used for personal consumption. Update purchase orders and purchase taxes. Enter direct expenses. See Working with Transactions for Purchase Tax.
Tax collected at source (TCS)	To work with TCS: Calculate TCS for prepayments. Enter TCS payment details. Update the TCS register. See Working with TCS Prepayments and Payments.
TDS and work-contract tax (WCT)	Before you process TDS and WCT: Set up suppliers and assign tax types to suppliers. Enter TDS and WCT rates and rate concessions. Enter TDS document company information. See Setting Up the System for TDS and WCT. To work with TDS and WCT: Calculate TDS on prepayments, expense accounts, and receipts. See Calculating TDS. Work with vouchers for TDS and WCT. See Working with Vouchers for TDS and WCT.