As a part of day-to-day business needs, organizations may require transfer of material from one Inventory Organization to another Inventory Organization. Whenever, such movement of material from one Organization to another happen, necessary tax implications relating to Central Excise and Value Added Tax regimes need to be addressed to facilitate movement of goods.
Oracle Inventory provides 2 ways to transfer goods between inventory organizations:
Internal Sales Order, and
Inter Organization Transfer
Oracle Financials for India also supports Inter Organization Transfer now.
Whenever there is movement of goods from one Inventory Organization to another Inventory Organization through inter organization transfer using Oracle Financials for India, the business needs addressed are:
Default Tax Category at the transaction level.
Define the Receiving Organization as the Internal Customer
Define or Change Other Taxes at the time of Shipment in the Shipping Organization
Generate Excise Invoice Number at the time of Shipment in the Shipping Organization
Generate VAT Invoice Number at the time of Shipment in the Shipping Organization
Update Excise Records at the time of Shipment in the Shipping Organization - RG 23 D in the case of Trading Organization and relevant registers in case of Manufacturing Organization.
Generate VAT Invoice Number at the time of Shipment in the Shipping Organization
Generate Accounting Entries related to Central Excise at the time of Shipment in the Shipping Organization
Generate VAT Accounting Entries at the time of Shipment in the Shipping Organization
Generate Accounting Entries at the time of Shipment for Other Taxes in the Shipping Organization
Default taxes at the time of receiving
Define Other Taxes at the time of Receiving in the Receiving Organization
Update Excise Records at the time of Receiving in the Receiving Organization - RG 23 D in the case of Trading Organization and relevant registers in case of Manufacturing Organization.
Claim Credit for CENVAT able Taxes in the Receiving Organization.
Generate Accounting Entries for CENVAT Credit in the Receiving Organization.
Generate Accounting Entries for VAT Credit at the time of Receiving in the Receiving Organization.
Account Other Type of Taxes at the time of Receiving in the Receiving Organization.
Update VAT Records at the time of Receiving in the Receiving Organization.
Claim VAT Credit at the time of Receiving in the Receiving Organization.
Update Item Cost at the time of Receiving in the Receiving Organization for nonrecoverable taxes.
Defaulting Taxes to IL Inter Organization Transfer: For Items that attract Localization Taxes, Tax Category will be defaulted on the IL Inter Organization form when an Inter Org Transfer is performed. These taxes will be defaulted based on the Tax Defaulting Rules. Taxed would be Defaulted automatically based on Item Category assigned to the Customer - Customer Site; Customer – Null Site or based on the Item Class assigned to the Tax Category for the internal customer.
Manual Changes to Defaulted Taxes to IL Inter Organization Transfer: Taxes defaulted during Inter Organization transfer can be modified manually in case of a need.
Tax Base Amount: User can define precedence logic for calculation of Tax Base Amount on which the Tax Rate would be applied. The Tax Base Amount can either be the line amount or line amount including other taxes calculated for the transaction.
Defaulting Assessable Value to IL Inter Organization Transfer: The user has an option to use Assessable value that is different from the Cost of the Item. This Assessable price is picked for the respective taxes defaulted based on Tax Defaulting Rules. Assessable Prices are defaulted automatically when an Assessable Price List is assigned to the Customer, Customer Site or Null Site for the internal customer.
Generation of Excise Invoice Number: When the Item shipped has Excise related Taxes, an Excise Invoice Number gets generated once the transaction is saved. All excise related registers will get updated on completion of the transaction. The sequence used or followed for the Excise Invoice Number generation is that of the Domestic Sequence set up in the Organization Additional Information.
Generation of VAT Invoice Number: When the item being shipped has VAT type of Taxes and is marked as VAT able, a VAT Invoice Number is generated once the transaction is saved. The tax repository gets updated on completion of the transaction.
Tax Accounting: The India Local Tax engine generates Accounting Entries only for the items related to Localization Taxes. Oracle base Inventory will generate the accounting entries for the basic value of Inventory transferred.
Costing: Item cost of the material transferred is calculated and updated by the base inventory. The nonrecoverable taxes are moved separately to the item cost by the localization engine. Oracle Financials for India Inventory Transfer supports transfer and receipts of inventory from an average cost organization to standard cost organizations and vice versa.
Updating RG 23 D Registers: In case of Trading Organization, RG 23D gets updated both in the Sending and Receiving Organization as against RG 23 A / C or RG1 for raw materials, capital goods or finished goods item in a manufacturing organization.
Reversal of CENVAT Claim: In case of Capital Goods being shipped during the same year of purchase, the accrued CENVAT Claim will be reversed and Excise Invoice will be generated for the same. The user needs to match the items transferred with its original receipt quantity in order to claim the accrued CENVAT credit. Note: This is possible only in case of In Transit Inventory Transfer.
Reversal of VAT Claim: In case of Items attracting VAT Type of Taxes and the Claim of VAT is being spread across a period of time and transfer of item happens during the period, the unclaimed VAT will be reversed and VAT Invoice Number will be generated in the Shipping Organization. Note: This is possible only in case of In Transit Inventory Transfer. The user needs to match the items transferred with its original receipt in order to claim the accrued VAT credit.