Regime is used define rules applicable to all taxes assigned to it. You need to complete this setup step before you move ahead with other setups.
Setups made for a regime are applicable to all transactions created for the organizations assigned to it. Information defined here is generic unless you assign different properties at the organization level.
To create a TCS Regime, access Regime Registration screen from India Local Receivables > India TCS/VAT/Service Tax > Setup > Regime Registrations.
| Field Description | Description |
|---|---|
| Header Section | In this section regime name, description and effective dates of the regime is captured |
| Regime | The LOV contains a new value - ‘Tax Collected At Source’ regime. |
| Description | Short description of the regime |
| Short description of the regime | |
| 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 | Pick appropriate Registration Type from Primary Registration Number, Secondary Registration Number, Others. |
| Registration Name | Pick appropriate Registration Name from TAN No, AR Receipt Class, Batch Source Debit Memo, Batch Source Credit Memo. |
These registration details are applicable at the regime level and will default on all the organizations that are assigned to this regime. However, you can change the default values at the organization level.
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 TCS Regime, access Regime Registration form from India Local Receivables > India TCS/VAT/Service Tax > Setup Regime Registrations.
Note: It is advisable to use different Accounts for TCS SH Education Cess Tax Type - Interim Liability Account and Liability account.
Organizations have to register with various TCS Authorities. The registration are the basis for all settling tax liability and tax repository updates. You can setup TCS registration details using TCS Regime. If the TCS Registration varies by organization, you have the option to change the default values at the organization level.
To create TCS Registration Details, access Regime Registration screen from India Local Receivables > India TCS/VAT/Service Tax > Setup > Regime Registrations > Registrations.
TCS tracking or reporting for Organization is based on the TAN Number defined. Hence it is mandatory to define the correct TAN number for the organization. You must not attempt to change the TAN Number.
For entry of Advance Receipts, Receipt Class entry is required. The Zoom feature is enabled only for the Receipt Class entered in Regime Registration.
Batch Source for ‘Debit Memo’ and ‘Credit Memo’ are required to enable system to generate Debit / Credit memos for TCS Transactions. Debit notes are generated whenever you save an Advance receipt while Credit note is generated when this advance receipt is applied to an Invoice transaction with TCS. Localization inserts data in AR interface tables based on this setup. User needs to run Autoinvoice import program to get the actual Debit/Credit Memos for TCS in Receivables.
TCS Tax Types have to be assigned to the TCS regime. All transactions with taxes of these Tax Types assigned would be considered for TCS Repository updates. The following three Tax Types have been seeded and can be used for TCS Tax:
Tax Collected at Source
TCS Cess
TCS Surcharge
You cannot add additional Tax types for Tax definition and need to use only the seeded Tax types. You can assign TCS Tax Types to TCS Regime. Transactions for the Tax Types that are assigned to the regime will be considered for TCS related processing and settlement. For each Tax Type, the user can also specify GL Accounts. You can change these accounts for each organization.
To assign TCS Tax Types, access Regime Registration screen from India Local Receivables > India TCS/VAT/Service Tax > Setup > Regime Registrations > Tax Types.
For each Tax Type, you can specify GL Accounts and also have a separate GL Account for each organization. To assign GL Accounts for Tax Types, access Regime Registration screen from India Local Purchasing > India TCS/VAT/Service Tax > Setup > Regime Registrations > Tax Types > Tax Account Details.
| Field Description | 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 three tax types - Tax Collected at Source, TCS Cess and TCS Surcharge. |
| Description | Displays the description of the Tax Type |
| Parent Tax Type | Parent Tax Type is not applicable for Tax collected at source. |
| % of Parent | % of Parent is not applicable for Tax collected at source. |
| Tax Accounts Details block | Accounts that are going to be used for accounting of Tax Collected at Source are specified here. |
| Sequence | This is the sequence number of the Account to be captured. |
| Choose from Interim Liability Account and Liability Account.
Note: Refer Accounting section for detailed discussion on the accounts. |
|
| Account Value | Pick accounting flex fields for each of the account. |
Apart from the final Liability Account, you must define one interim account to store the TCS that is not accrued. Eg., Shipment is made but Invoice not raised would result in balance in Interim account. Defining separate accounts for each tax type and specific to each Organization in General Ledger helps in better tracking of TCS accounting.
Regime must be assigned to all organizations it applies to. Taxes defined under this regime will default only for transactions created for these organizations.
As TCS is applicable on sale of specified goods, Inventory organizations and locations are considered for TCS setup. User can assign Inventory organizations and locations to the TCS Regime. If the Registration details and the Tax Account details vary by organization, you can change the default values. To assign organization/locations, access Regime Organization Registration screen from India Local Receivables > India TCS/VAT/Service Tax > Setup > Regime Registrations > Organizations.
| Field Description | 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 TCS, only Inventory Organization is applicable |
| Organization Name | Name of the Inventory organization that has to be associated to this regime. |
| Registrations Tab | |
| Registration Details block | The registration details specified in 'Regime Registration' are defaulted to the organizations. These registration details will default on all the organizations that are assigned to this regime. You can change the default values at the organization level. |
| Registration Type | This field will default from ‘Regime Registrations’ screen. |
| Registration Name | This field will default from ‘Regime Registrations’ screen. |
| Registration Value | This field will default from ‘Regime Registrations’ screen. You can edit this information. |
| Default | This checkbox will be checked whenever default registration value at the regime level are retained. It is unchecked when registration value is modified. |
Organizations having their operations spanning across different states would register under each state. In such cases, you can define TCS Registration number for each Inventory Organization/Location combination. To assign organization/locations location details, access Regime Organization Registration screen from India Local Receivables > India TCS/VAT/Service Tax > Setup > Regime > Registrations >Organizations.
You can have different GL code combinations for each of the Organization/Location. To enable this, you must assign Tax Accounts for Organization/Locations. Unless, different accounts are setup for each organization/location combination, the Accounts specified at Regime Registration level will be used for all organizations. To create GL Accounts by Organization/location access Regime Organization Registration screen from India Local Receivables > India TCS/VAT/Service Tax > Setup > Regime Registrations > Organizations.
| 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. You cannot delete a registration here. |
| Tax Details block | |
| Tax Type | This field will default from 'Regime Registration' screen. |
| Description | This field will default from 'Regime Registration' screen. |
| Account Details block | |
| Account Name | This field will default from 'Regime Registration' screen. |
| Account Value | This field will default from 'Regime Registration' screen. Pick accounting flexfields for each account specific to the organization. |
| Default | This checkbox will be checked whenever default account value at the regime level are retained. It will be unchecked when account value is modified. |
Under TCS Regime, items have to be classified into following categories:
Alcoholic liquor for human consumption
Timber obtained under a forest lease
Timber obtained under any mode other than forest lease
Any other forest product not being timber or tendu leave
Scrap
Parking Lot
Toll Plaza
Mining and Quarrying
Tendu leaves
You must classify the items under the above categories, which would be required for proper reporting. You can setup templates with possible Item classifications. Multiple items can be assigned to templates at a time. This feature enhances usability and minimizes time required to complete this setup.
To define Item Classifications, navigate to India Local Receivables > India TCS/VAT/Service Tax > Setup > Item Classification.
Note: If item classification is not carried out for an item, when you book a sales order or when you try to complete a Receivables Invoice with TCS Taxes, you will get the error: "cannot find item classification for "TCS" regime and "LocFGIN" item of 2832 Organization ID".
You cannot enter a TCS AR Invoice without using items i.e., using description or memo line. In such cases item classification is not possible.
Item classification is mandatory to meet the reporting requirements of TCS regime and hence the above restriction to use an item that is properly classified.
In the base application we need classify the supplier as India TCS Tax authority and also do the supplier registration in Oracle Financials for India.
New Tax code needs to be defined for tracking TCS Taxes. You can identify a TCS tax by defining a Tax code using the following Tax types:
Tax Collected at Source
TCS Cess
TCS Surcharge
To define a Tax code, access Tax code definition window from India Local Receivables > Setup > Tax > Taxes.
Note: You need to define a different Tax Code each for TCS Cess and TCS Surcharge Cess. .TCS Cess should not be used for TCS Surcharge Cess even though the Tax percentage is the same. This is essential because a single transaction cannot have the same tax ID multiple times.
To carry out a transaction classified as TCS exempted transaction, you must define a tax code with zero Tax Percent and the Original Tax Percent that would have been normally charged. Similarly, to carry out a transaction classified as Concessional TCS transaction, you must define a tax code with reduced Tax Percentage that needs to be charged and the Original Tax Percent that would have been normally charged, if such transaction did not attract a concessional TCS rate.
Tax category should be defined for defaulting Taxes. You can create multiple Tax Categories with TCS Taxes to ensure that defaulting / selecting right Tax category results in correct TCS taxes with Surcharge and Cess. Apart from above, you need to create two additional separate Tax categories:
Tax Category with only tax type of Tax Collected at Source and TCS Cess to attach to receipts to deduct TCS on Advance Receipts.
Tax Category with only tax type of TCS Surcharge and TCS Cess to be attached to Threshold setup. This would ensure automatic charging of Surcharge whenever the total billing to the customer exceeds the threshold setup.
To define a Tax category, access Tax category definition window from India Local Receivables > Setup > Tax > Tax Categories.
Note: If the Tax category has other type of taxes, then the same would not appear in LOV of the TCS Threshold definition screen. Hence, you must perform the above Tax category setup before TCS Threshold setup.
Item category should be defined to default TCS taxes based on Customer/Site combination selected. You can create Item Category to ensure the right Tax Categories with TCS Taxes is attached to corresponding items to ensure that defaulting/selecting right Tax Category results in correct TCS taxes with Surcharge and Cess. To define an Item category, access Item category definition window from India Local Receivables > Setup > Tax > Item Categories.
You must define TCS Thresholds to ensure the system automatically tracks cumulative sales above a particular limit (current limit is 10 Lakhs) and starts charging Surcharge for sales when such Threshold is crossed. To perform Threshold Setup, access thresholds setup window from India Local Receivables > Setup > Tax > Threshold Setup.
Tax Identification or Permanent Account numbers (PAN number) will be allotted to eligible organizations. You must capture these details through the Customer Additional Information, Oracle Financials for India User Guide. To enter TCS Registration number for a Customer, access Customer Tax Information India Local window from India Local Receivables > Customers > Additional Information.
The Receipt Class needs to be defined in Base Receivables by navigating to Oracle Receivables > Setup > Receipts > Receipt Classes. The Advance Receipt for TCS Receipt Class or Payment Method is used for TCS Advance Receipts only and not for generic receipts that do not attract TCS Tax Type. The Receipt Class defined here will be attached in Regime Registration and Payment Method entered in the Receipt Class will be available in the LOV while entering receipts.
To define the transaction type, navigate to Oracle Receivables > Setup > Transactions > Transaction Types. Select Debit Memo as the Class and you must specify value for Terms field to enable import. Creation Sign must be set to Negative.
Define the transaction source in Oracle receivables by navigating to Oracle Receivables > Setup > Transactions > Sources.
It is recommended that you define and use separate TCS Credit Debit notes to ensure that the same does not clash with other transactions and are easily tracked. The TCS Debit Notes are generated when you enter an Advance Receipt. It is also generated for the total Threshold amount when the TCS Threshold limit is exceeded. Similarly, a TCS Credit Note is generated when an advance receipt is applied to a transaction having TCS, or such receipt is cancelled or reversed. A TCS Credit Note also gets generated when the TCS Threshold limit which was exceeded earlier is decreased due to either reversal or incompletion of invoices. You must run the AutoInvoice program to get the TCS Debit or Credit Note reflected in Receivables.
You must have a Receipt Class attached for TCS Regime. This enables attaching TCS tax category to the receipt using the Zoom feature. This is used to deduct TCS Taxes against Advance Receipts made by customers. To attach Receipt Class, access Regime Organization Registration screen by navigating to India Local Receivables > India TCS/VAT/Service Tax > Setup > Regime Registrations Organizations.
Note: Receipt Class can be attached either at the Regime level or at the Organization level.