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Oracle Financials for India Implementation Guide
Release 12.1
Part Number E13657-05
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VAT Setup

Defining Value Added Tax Regime

Regime would be used to define rules that would be applicable to all Taxes assigned to it

On a Regime, you would define rules that would be applicable to all transactions created from the Organizations assigned to it. Information defined here would be generic unless you assign different properties at an Organization Level.

Tax Information related to Value Added Tax Regime will be handled through a new screen called ‘Regime Registration’ that was introduced through the Service Tax Solution. The functionality of these forms has been enhanced so that Value Added Tax Regime can be setup through them.

To implement SHE Cess Solution, Regime Registrations for Service Tax and Tax Collected at Source needs to be updated with the SHE Cess Tax Type Accounts.

To update Service Tax Regime, access Regime Registration form from India Local Purchasing > India Localization > India VAT/Service Tax > Setup > Regime Registration.

Note: It is advisable to use different Accounts for Service SH Education Cess Tax Type - Interim Recovery Account, Recovery Account, Interim Liability Account and Liability account.

Regime Registration
Field Name Description
Header Section In this section Regime Name, description and effective dates of the Regime is captured.
Regime The LOV contains
1. Service Tax
2. Value Added Tax
You should pick ‘Value Added Tax’.
Description Short description of the Regime
Regime Registration Details block  
Registrations tab This section captures the Registration details of the Regime. These Registration details are used in the reports that are generated. You should enter the Registration details in the ‘Registration Value’ column by picking up the appropriate ‘Registration Type’ and ‘Registration Name’. You can capture as many Registration details as required.
Sequence This is the Sequence Number of the Registration Types to be captured. This may not be Serially Numbered. You cannot use duplicate sequences.
Registration Type LOV containing:
1. Primary Registration Number
2. Secondary Registration Number
3. Others
Pick the appropriate Registration Type.
Registration Name LOV containing:
1. Registration Number
2. Jurisdiction
3. Ward No
4. Range No
5. Circle
6. Same Invoice No for Excise and VAT Regimes
Pick appropriate Registration Name
Registration Value You should enter the actual Registration value in this field.

These Registration details are applicable at the Regime Level. These Registration details will default on all the Organizations that are assigned to this Regime. The user has the facility to change the default values at an Organization Level.

Note: For Value Added Tax Regime, you need to specify value for “Same Invoice No for Excise and VAT Regimes” attribute. A ‘Yes’ in this field indicates that the Excise Invoice Number, wherever available would be considered as VAT Invoice Number. If the value is set to ‘No’, setup made in the VAT Document sequence setup would be considered for VAT Invoice Number generation.

The Service Tax distribution transaction only hits the PLA registers by default. If you want the service tax distribution to hit the RG register, you must perform the following setup:

  1. Navigate to Registration Tab and Click Add Row.

  2. Select Others for Sequence and Registration Type.

  3. Enter 'Service Tax Distribution in RG / PLA' as the Registration Name.

  4. Enter 'RG' or 'PLA' as the Registration Value.

Note: You must perform the above setup if you want the service tax distribution to hit the RG register.

Regime Registrations - Tax Type

This section of the screen shows the Tax Types associated to the regime and the 4 accounts related to this Regime.

Field Name Description
Regime Registration Details block  
Tax Types Tab In this section of the screen Tax Types and the Accounting Information related to this Regime are setup.
Sequence This is the Sequence Number of the Tax Types to be captured.
Tax Types You should associate all the Tax Types falling under the VAT Regime and that are applicable to your business.
LOV containing:
  • Value Added Tax

  • Turnover Tax

  • Purchase Tax

  • Entry Tax

  • Octroi - IND

Description Displays the description of the Tax Type
Parent Tax Type This field is not relevant for VAT Regime
% of Parent This field is not relevant for VAT Regime
Tax Accounts Details block Accounts that are going to be used for accounting of Service Tax are specified here.
Sequence This is the Sequence Number of the Account to be captured.
Account Name LOV contains:
Interim Recovery Account
Recovery Account
Interim Liability Account
Liability Account
Please refer Accounting Section for detailed discussion on the accounts
Account Value Pick Accounting flex fields for each of the account.

Click Organization to view the Regime Organization Registration screen. This screen shows the organizations assigned to the regime.

Assigning Organization
Field Name Description
Header  
Regime This field will default from ‘Regime Registration’ form.
Description This field will default from ‘Regime Registration’ form.
Organization Details block All the Organizations falling under this Regime are associated to the Regime here.
Organization Type For VAT only ‘Inventory Organizations’ is applicable
Organization Name Name of the Organization that has to be associated to this Regime.
Registrations Tab  
Registration Details block The Registration details that are given at the Regime Registration details are defaulted to the Organizations. These Registration details will default on all the Organizations that are assigned to this Regime. The user has the facility to change the default values at an Organization level. You cannot delete a Registration here.
Registration Type Will show default Value from ‘Regime Registrations’ screen.
Registration Name Will show default value from ‘Regime Registrations’ screen.
Registration Value Will show default value from ‘Regime Registrations’ screen. You can edit the information.
Default This checkbox will be checked whenever default Registration Value at the Regime level are retained. It gets unchecked when Registration Value is modified.

The Tax Types tab shows the Tax Types associated to the regime and Organization and the 4 accounts related to this Regime and Organization combination.

Tax Types
Field Description Description
Tax Types Tab The Tax Details that are given at the Regime Registration details are defaulted to the Organizations. These tax details will default on all the Organizations that are assigned to this Regime. The user has the facility to change the default values at an Organization level.
Tax Details block  
Tax Type Will show default value from ‘Regime Registrations’ screen.
Description Will show default value from ‘Regime Registrations’ screen.
Account Details block  
Account Name Will show default value from ‘Regime Registrations’ screen.
Account Value Will show default value from ‘Regime Registrations’ screen.
Pick accounting flex fields for each of the account specific to the Organization.
Default This checkbox will be checked whenever default Account Value at the Regime Level are retained. It gets unchecked when account value is modified.

Define Claim Terms

Defining claim term for VAT is an important setup in the PO – AP cycle. The claim term defined here determines the VAT claim amount in the VAT – Tax claim form.

You can define flexible claim terms for a combination of the following:

  1. Regime

  2. Item Class

  3. Regime Registration Number

  4. Organization (location)

The combination of the above has to be unique. Based on the above setup, Claim Terms will be defaulted in the VAT – Tax Claim form. Flexibility provided in defining the periods of the claim terms: The user has the flexibility of defining timing of first claim (first instalment/start period) the number of claims (number of instalments) and the timing of next instalments (subsequent instalments).

Number of instalments – Number of claims

You can define as many number of instalments for a particluar claim term. Based on these number of instalments, the VAT tax claim on the receipt will be deferred over a period of time and will be claimed in equal instalments based on the ‘subsequent instalments’ setup. The number of instalments are the total instalments and includes the first instalments and subsequent instalments.

The following table describes the Claim Terms Definition window.

Field Name Description
Header Section  
Term Name Enter a name for the template.
No. of Instalments Enter the number of instalments.
First Instalment – Start Period section Enter the start period and select the first instalment day.
Enter the day of the month on which you wish to claim the first instalment.
Subsequent Instalments section  
Every Enter interval/frequency of the subsequent instalments.
Subsequent Instalments day Select the subsequent instalment day.
Day of Month Enter the day of the month on which you wish to claim the subsequent instalment.
Assignments Block  
Regime Select the value added tax regime.
Item Class Select the item class.
Regime Registration Number Select the registration number
Organization Select the organization, the list is based on the regime registration number.
Location Select the location, the list is based on the organization.

Define VAT Document Sequencing

You can define document sequencing using the Document Sequencing Setup window. VAT Invoice sequence generation depends upon the setup made for the Value Added Tax Regime. You have to set up whether you want to generate the same invoice sequence for VAT and Excise using the “Same Invoice No for Excise and VAT Regimes” attribute. This is a mandatory setup that you need to perform irrespective of the value of “Same Invoice No for Excise and VAT Regimes” attribute.

The following table describes the Document Sequencing Setup window.

Field Name Description
Regime Code Select a VAT regime.
Regime Description Regime description.
Registration Number Select a registration number.
Organization Name The list contains organizations related to the registration number selected.
Location Select the location related to the organization.
Effective From This date cannot be lesser than the system date.
Effective To You can enter an effective To Date to disable the VAT document sequencing.
Document Type You can define different document sequences for different types of documents. If you select the default, the document sequence applies to all the documents.
Document Type Name The document type name depends upon the document type selected.
Start Number Enter a start number here. If you wish to start the document sequencing from 1, then you should enter 0 as the start number.
Prefix Enter a prefix to the invoice number that is generated.
End Number You can specify an end number for the document sequences. If the document sequence is exhausted, the VAT invoice generation program will end into an error.

Note: When VAT document sequences are exhausted, you will get the following error:

+++ After call to jai_rgm_doc_seq_pkg.Gen_Invoice_number with lv_inv_gen_process_flag = EElv_inv_gen_process_message Document Numbers are exhausted. Please set the End number to a larger value+++

In such cases, you will have to make setup additions.

Define Item Classification

Items need to be classified in order to define recovery claim terms for them. Following are the attributes that are to be captured for each items:

Attribute Name Attribute Value
Applicable This attribute defines the applicability of VAT to items. This attribute is important in determining whether VAT will be charged in the OM - AR cycle.
Yes: VAT is applicable on the OM - AR cycle and VAT liability on these transactions will be accounted. All items on which VAT liability arises should be defined as Yes.
No: VAT is not applicable for these items and you should not attach VAT taxes at the time of transactions.
Item Class This item classification is important from the accounting and VAT claim point of view. You can define different accounting and VAT claim rules for different classes of items.
Raw Materials: All material on which VAT needs to be claimed in the PO - AP cycle should be defined as Raw Materials.
Capital Goods: All capital items on which VAT needs to be claimed in PO - AP cycle should be defined as Capital Goods.
Finished Goods: All items on which VAT liability arises in the OM - AR cycle should be defined as Finished Goods.
Other Goods: This is the residuary category. Items may be defined as Other Goods and accounting rules can be defined for these as well.
Recoverable This attribute defines whether input tax claim of VAT taxes can be availed. This attribute is important in determining whether VAT claim can be made for an item in the PO - AP cycle.
Yes: Input VAT claim in PO - AP cycle can be availed based on this attribute. All input material on which input VAT claim has to be made should be defined as Yes.
No: Input VAT claim is not applicable if this attribute set to No.
Item Folio This is a dummy attribute where users can store any requisite data which can be used in future for custom needs.

Define VAT Authority

Ability to define VAT Authority is needed for settlement of VAT Taxes. User can identify a VAT authority by assigning the Supplier Type of "VAT Authority - IND".

To classify a supplier as a VAT Authority, access Supplier window from the following navigation path. India Local Purchasing - Supply Base - Suppliers

Define Customer Registrations

You can specify VAT Registration number for each Customer. If this registration number varies by Customer Site, you can specify this number for each Customer Site. Along with the VAT Registration Number you also assign a Assessable Price list to the Customer. This price list would be used in calculating the VAT Taxes.

To access Customer Tax Information India Localization window, using the following navigation path:

India Local Order Management>Customers>Additional Information

The following table describes the VAT section on the Tax Information India Localization window.

Field Name Description
Reg No Specify the VAT Registration Number applicable to the customer, Customer Site.
Assessable Value You can select from the list of Price Lists. The price specified in the list here would replace the Line Amount while calculating VAT Taxes.

Define Supplier Registrations

You can specify VAT Registration number for each Supplier. If this registration number varies by Supplier Site, you can specify this number for each Supplier Site. Along with the VAT Registration Number you also assign a Assessable Price list to the supplier. This price list would be used in calculating the VAT Taxes.

To access Supplier Tax Information India Localization Screen, using the following navigation path:

India Local Purchasing Supply Base Additional Supplier Info

The following table describes the VAT section on the Supplier Tax Information India Localization window

Field Name Description
Reg No Specify the VAT Registration Number applicable to the supplier site.
Assessable Value You can select from the list of Price Lists. The price specified in the list here would replace the Line Amount while calculating VAT Taxes