This chapter covers the following topics:
Order to Cash refers to the business process for receiving and processing customer sales. It follows Opportunity to Order and covers business-to-business (B2B) and business-to-consumer (B2C) sales.
The Financials for India functionality lets you satisfy all your needs related to Tax calculation required for a Sales order Transaction.
Tax Regime
Tax Type
Tax Rates
Tax Category Setup (Optional)
Tax Rule Setup (Optional)
Item Classification Setup
First Party Registration
Third Party Registration
Document Sequencing
Shipping Parameters
Global Parameters
Document Sequencing discussed in detail in the upcoming chapters Steps 10 and 11 are specific to Financials for India Order Management for tax defaultation to Receivables and document sequence generation.
Shipping Parameters
Navigate to the Shipping Parameters window, (N) OM responsibility > Oracle Order Management > Setup > Shipping > Shipping Parameters.
Set the Raise Business Events option to Yes.
Global Parameters
Navigate to the Global Parameters window, (N) OM responsibility > Oracle Order Management > Setup > Shipping > Global Parameters.
Set the Raise Business Events option to Yes.
The header displays the tax details and other information defaulted based on setups. Add the tax category to all lines, specific lines, or modify the tax category that got defaulted. You can see the Item, Tax Category, Organization, Location, and Tax amount.
Navigate to the Sales Order window, (N) Oracle Order Management > Orders, Returns > Sales orders.
Create a Sales Order. Provide all the required Header and Line Information. Save the Sales Order and Navigate back to Sales Order header.
Navigate to India Tax Details window, using Tools > India Tax Details.
Enter the document number as the Sales Order Number or the transaction number.
Displays the status of document, Entered, Booked, or Closed.
Enter the currency code used for the transaction.
Enter the Delivery Line number in the Shipment Number.
Displays the line number of the item in the Delivery Details ID field.
Displays Tax Point Basis default from the Tax type. You cannot modify the value.
Pick Release the sales order, (N) Oracle Order Management > Shipping > Transactions.
Select the Launch Pick Release in the Shipping Transaction window.
Ship Confirm the Sales Order, (N) Oracle Order Management > Shipping > Transactions > Provide Order Number > Click on Find > Delivery > Ship Confirm.
Based on the setup done in Shipping and Global Parameters, the concurrent process, India - Check Delivery OM/INV Interface, is invoked. Make sure process completes successfully.
Navigate to Tools > India Tax Details to check the taxes and Invoice number.
Note: You cannot modify taxes once the sales order is Ship confirmed.
Shipped Checkbox is checked which shows the line is ship confirmed. The Tax Point Basis (TPB) is Delivery which gets defaulted based on the tax used and the option provided while defining the tax type. Invoice number is blank because the Document Sequence setup must be done.
To sequence the invoice number for different transaction types, it is required that you assign a prefix to a sequence series. And as far as legal requirement, the sequence should be refreshed at the beginning of a new fiscal year. Assign effective dates for a sequence series:
(N) Oracle Financials for India > Tax Configuration > Define Document Sequencing
Enter the Sequence Name for the transaction.
Specify the Start Number for a specific Sequence.
Displays the current document number of the sequence used.
Enter a prefix to the invoice number that is generated.
Specify an end number for the document sequences as the Last Number.
Enter the Stat Date.
Enter the End Date to disable the sequencing.
Enter or select the Tax Regime Name that is defined in the Tax Regime.
Enter or select the Registration Number for the selected Tax regime.
Select the Organization Type. Valid values are:
Operating Unit
Inventory Organization
Select the organization Name. The list contains organizations related to the registration number and organization type selected.
Enter or select the location related to the organization.
Select the Document Type. Valid values are:
AR Transactions
Corrections
Default
Inter Org transfer
Manual Entry
Receipts
Return to Vendor
Sales Order
You can define different document sequences for different types of documents. If you select default the document sequence applies to all the documents.
Select the Document Category. The document category name depends upon the document type selected.
Select the Item Classification from the list of values.
Start Date gets defaulted from Document Sequence header.
Enter an End Date to disable the sequencing for this particular combination. Once the Document Sequence is defined the Invoice number is generated as follows for a sales order.
| Event | Tax Basis | Account | Debit | Credit |
| Ship Confirm | Delivery | Suspense | Tax Amount | |
| Liability | Tax Amount |
Order to cash (OTC or O2C) is a set of business processes that involve receiving and fulfilling customer requests for goods or services. Order to Cash (O2C or OTC) normally refers to the business process for receiving and processing customer sales.
The term is most prominent in the design and improvement of Enterprise Resource Planning (ERP) systems.
Flow
Create Sales Order Header and Line details.
Navigate to India Tax Details window using Tools > India Tax Details. Add taxes if defaulting method was not selected.
Pick Release the sales Order.
Ship Confirm the Sales Order.
India - Check Delivery OM/INV Interface concurrent process runs, if the business events are set up properly. Generates Invoice number based on Document Sequencing setup.
Navigate to India Tax Details window using Tools > India Tax Details to check the taxes and Invoice number.
Run the workflow background Engine and AutoInvoice Import program.
Creates AR transactions. Navigate to India Tax Details window to check the taxes defaulted from sales order and Invoice number
Apply Receipt to the AR Transaction
Refer to Chapter 4. Purchase to Pay Flow for details on Sales Order. The remaining steps are explained below
The AutoInvoice is a concurrent process that interfaces Sales Orders from Order Management to Invoices in Accounts Receivable.
Run the Workflow Background Engine.
Run the AutoInvoice Import Process.
Find Transactions.
Navigate to the India Tax Details window using Tools > India Tax Details.
You cannot modify taxes once the AR transaction is complete.
Taxes from Sales order and the Invoice number are defaulted.
Navigate to Create Accounting window using Tools > Create Accounting.
Navigate to View Accounting window using Tools > View Accounting.
Accounting Entries
| Event | Tax Basis | Account | Debit | Credit |
| AR Invoice Accounting | Delivery | Receivable | Tax Amount | |
| Liability | Tax Amount |
Note: Note: As the Tax Point Basis (TPB) for the tax type is Delivery, there are no accounting entries passed specifically by Oracle Financials for India.
Create Accounting and view them by using Tools > View Accounting.
As the Tax Point Basis (TPB) for the tax type is Delivery, there are no accounting entries passed specifically by Oracle Financials for India.
You can select the Tax Point Basis while defining the Tax Types, based on which the accounting happens.
Note: Two taxes are added with different Tax Types to illustrate accounting based on TPB.
| Tax Type | Tax Point Basis (TPB) | Tax Rate | Tax Amount |
| O2C_REC | Delivery | 16 | 408 |
| GST_O2C_INVOICE | Invoice | 12 | 306 |
Tax Point Basis gets defaulted after ship confirm and the Tax Point Basis is set as Delivery and AutoInvoice for TPB as Invoice.
During Ship Confirm accounting and Invoice Number Generation happen only for the Tax Type with tax point basis as Delivery.
| Event | Tax Basis | Account | Debit | Credit |
| Ship Confirm | Delivery | Suspense | Tax Amount | |
| Liability | Tax Amount |
At the time of AutoInvoice, Oracle Financials for India inserts tax distributions with respective accounts and generates Invoice Number for Tax Type with tax point basis as Invoice.
| Event | Tax Point Basis | Tax Distribution Credit Account |
| AutoInvoice | Delivery | Suspense Account |
| AutoInvoice | Invoice | Liability |
Accounts receivable is a legally enforceable claim for payment held by a business for goods supplied and or services rendered that you have ordered but not been paid. These are invoices raised by a business and delivered to the customer for payment within an agreed timeframe.
You can create Receivables Transactions directly navigating to the Receivables windows.
Flow
Create the Header, Bill-To, Ship-to etc details, and save the information.
Click Line Items and fill the line level details.
Navigate to India Tax Details window using Tools > India Tax details.
Pick the Organization and location. The same is required for adding taxes, tax defaults, if any.
Complete the invoice and navigate back to India Tax details window.
On completion of invoice the Invoice number gets generated from the Document Sequencing setup.
Create Accounting and View the same.
Standalone AR Invoice
Navigate to Transactions window using (N) Oracle Receivables > Transactions > Transactions.
Create the Header, Bill-To, Ship-to etc and save the transaction.
Click on Line Items and fill the line level details.
Navigate to India Tax Details window, using Tools >India Tax details
Pick the Organization and location. The same is required for adding taxes and tax defaults, if any.
Add the taxes manually.
Complete the Invoice.
Navigate to India Tax Details window using Tools > India Tax Details
Note: Tax cannot be modified once Receivables transaction is complete.
On completion of invoice the Invoice number gets generated from the Document Sequencing setup.
Account and view the accounting There are no accounting for Oracle Financials for India.
| Event | Tax Point Basis | Account | Debit | Credit |
| Ship Confirm | Delivery | Receivable | Tax Amount | |
| Liability (Oracle Financials for India Distribution) | Tax Amount | |||
| AR Invoice Complete | Invoice | Receivable | Tax Amount | |
| Liability (Oracle Financials for India Distribution) | Tax Amount |
When creating sales orders, there are many instances where you need to create a BILL Only Sales Order. There are situations when the company is creating an Order for invoicing but there will not be any shipments for this order, For example, if you buy a Warranty for a product, then there is no physical shipment needed.
If you have requested for a service of any product, there is no physical shipments involved. In such a case, when the order line is created it is in Entered Status. On booking the Order, the line status changes to Booked. Once workflow background process runs, the order line is closed.
Flow
Create the Header, Bill-to, Ship-to options and save the Header information.
Click on Line Items and fill the line level details.
Navigate back to India Tax Details.
Taxes get defaulted if default mechanism is set.
Otherwise, add the taxes manually.
Book the sales order.
Run Workflow background engine and run the AutoInvoice Import process.
Taxes get defaulted and based on Document Sequence Invoice number gets generated.
Apply the Receipt to the same.
Apart from above entries which are created by Base, Oracle Financials for India creates the following accounting when the tax point basis is Delivery.
| Event | Tax Point Basis | Account | Debit | Credit |
| Application | Delivery | Suspense Account | Tax Amount | |
| Liability | Tax Amount |
Oracle Financials for India does not generate any accounting.
Taxes get recalculated based on the TPB, provided if the tax rate is different on TPB.
Case 1
Tax rate is 16% till 14-APR-2016 and the same is 20% starting from 15-APR-2016.
Select Tax Point Basis as Delivery.
Create a Sales order on 14-APR-2016 and book the same.
Pick Release and Ship confirm the same on 15-Apr-2016. Query the same from fulfilled orders.
Navigate to India Tax Details using Tools > India Tax Details. Ensure that tax amount gets recalculated during Shipping as the Tax Point Basis used in the Tax Type is Delivery.
After running Autoinvoice Import the taxes on fulfilled orders gets carried forward to the AR invoice as well.
Case 2
Tax recalculation during AutoInvoice:
The tax rate is 14% on 05-MAY-2016 to 06-MAY-2016 for Tax rate code GST_O2C_INVOICE_12 which has TPB as INVOICE and the same is 7% starting from 07-MAY-2016
Create a Sales Order on 05-May-2016, pick release and ship confirm the same
Perform AutoInvoice on the 7th May and Find that tax amount gets recalculated during AutoInvoice as the Tax Point Basis used in the Tax Type is Invoice.
When payments are received in advance for the supply of goods or services that are subject to GST, tax is accounted as a self-assessed tax on receipt of such payments. GST calculated on advances are claimed as tax offset upon supply of goods or services. While accounting for the GST liability on receipt of payment in advance, customers are required to report the HSN/SAC code of the goods and services to be supplied for which the advance is received.
Listed below are the various processes on advanced receipt functionality:
Find below the details which gives a quick understanding of the setups to be performed for mapping the Advance Receipts requirement:
Tax type definition
Tax rate code definition
Tax category setup
Reporting type code definition
Item Classification definition
Third party registrations setup
Make sure the flag Self Assessed or Reverse Charge flag is enabled
The Reporting codes help enable HSN, SAC details required to attach to Receipt Receiving transactions.
You must use below three seeded reporting codes for setup:
GST_HSN_CODE
GST_SAC_CODE_ITEM
GST_SAC_CODE_TP
These codes are user configurable and provide values as applicable to your business.
GST_HSN_CODE
Create the HSN codes at Inventory Item level for applicable goods.
Navigate to Define Reporting Types window using (N) Oracle Financials for India > Reporting > Define Reporting Types.
Query for the reporting code GST_HSN_CODE.
Define the HSN codes.
Assign the HSN codes to specific Inventory Item in Item classification window using the (N) Oracle Financials for India > Item Definition > Define Item Classification > Reporting Codes.
GST_SAC_CODE_ITEM
Create the SAC codes at Inventory Item level for the applicable goods.
Navigate to Define Reporting Types window using (N) Oracle Financials for India > Reporting > Define Reporting Types.
Query for the reporting code GST_SAC_CODE_ITEM.
Define the SAC codes.
Assign the SAC codes to specific Inventory Item in Item classification window using the (N) Oracle Financials for India > Item Definition > Define Item Classification > Reporting Codes.
GST_SAC_CODE_TP
Create the SAC codes at third party level. This option is used when you have the services applicable but do not have installed inventory module. SAC Codes defined under third party take precedence in defaulting the codes on to the transaction, that is, Receiving Transaction and Receipt.
Navigate to Define Reporting Types window using (N) Oracle Financials for India > Reporting > Define Reporting Types.
Query for the reporting code GST_SAC_CODE_TP.
Define the SAC codes. Note: It is possible to assign only one SAC code in the third party registration form for any specific customer.
Note: It is possible to assign only one SAC code in the third party registration form for any specific customer.
Receipt Creation
Create the AR Receipt using following navigation whenever the amount is received from customer.
Navigate to Receipts window using (N) Oracle Receivables > Receipts > Receipts.
Save the receipt details.
Navigate to India Tax Details using Tools > India Tax Details.
Attach taxes on the receipt.
Create multiple or single receipt lines based on HSN and SAC as applicable. These codes are mutually exclusive and it is not possible to define both HSN, SAC codes together on single receipt line.
Receipt Number will be populated by default from Parent Receipt form.
Select the Organization Name from the list of values that contains organizations related to the registration number and Organization Type selected.
Select the location related to the organization selected.
Select the receipt Currency.
Enter the receipt Line number. You can add multiple Lines if the advance need to breakup with multiple lines.
Enter the applicable HSN Code.
System default the Third party SAC code if it is defined in Third party registration. You can override the SAC code manually here.
Attach the Tax Category here. Otherwise, you can define rules to default the tax category.
Enter the Receipt Amount.
Tax amount applicable is auto-populated once the taxes are attached.
Enter the GSTN Acknowledgement Number after the Receipt is confirmed.
Enter the Date on which the GSTN Acknowledgement is received in the Acknowledgement Date.
Verify the Taxes populated and apply the taxes.
Attach the Tax Rate applicable.
Enter the Tax Point Basis that would be the payment by default.
Enable the Self Assessed or Reverse Charge option in the Tax type definition.
Confirm the Receipt taxes once you review the details.
Once the Receipt taxes are confirmed the system creates receipt tax accounting and the tax repository is populated with the tax Liability details.
Navigate to Review Tax Repository window using the (N) Oracle Financials for India > Settlement Management > Review Tax Repository.
Click Find to check the tax repository entries for Document type AR Receipt.
Click transaction details to review the associated tax details against receipt. If the GST acknowledgment details are available, capture the same on the receipt and save it.
You cannot modify acknowledgment details once they are saved.
| Event | Tax point Basis | Account | Debit | Credit |
| Application | Delivery | Suspense Account | Tax Amount | |
| Liability | Tax Amount |
Navigate to the Transactions window using (N) Oracle Receivables > Transactions > Transactions.
Create AR transaction with Transaction Source, Bill to, Ship to options with required details.
Click Line Items and capture the line level details.
Navigate to India Tax Details window using Tools > India Tax details.
Complete AR Invoice.
After AR transaction is completed, system generates the tax accounting. Tax repository is populated with the Tax Liability details.
Navigate to Tax Repository window using (N) Oracle Financials for India > Settlement Management > Review Tax Repository.
Click on Find to check the tax repository entries for the Document type AR Transaction.
Click on transaction details to review the associated tax details against Transaction.
| Event | Tax Point Basis | Account | Debit | Credit |
| AR Transaction Complete | Invoice | Expense Account | Tax Amount | |
| Liability | Tax Amount |
Navigate to Receipts window using (N) Oracle Receivables > Receipts > Receipts.
Query the Receipt for which the AR Invoice is to be applied or unapplied.
Click Apply and select the AR transaction to be applied or unapplied.
Save the details. Note: Ensure that HS and SAC Code details are same between the AR Transaction and Receipt.
Select the transaction to be applied or unapplied
System will not generate any tax accounting and no repository will hit during this events (application or unapplication of AR Invoice).
The Process of accounting and repository creation for AR transaction application unapplication will be driven by “India - Period Ending Process”.
India - Period Ending Process India - Period Ending Process is the key concurrent process introduced in GST for generating offset tax accounting. It prepares the records for filing to GSTN. The offset accounting is generated for AR transaction application or unapplication when applied to receipt, and also when HSN or SAC codes are same between these transactions.
The concurrent process has the following parameters:
Select the Tax Regime applicable.
Select First Party Registration Number.
Select Open Period in the Period Name for which the account entries are generated.
Specify the running mode:
Save – Use this mode to generate repository entries in draft mode.
Final – Use this mode to generate repository entries in final version and accounting will be frozen.
It is recommended that you schedule this program at regular intervals to have the repository entries and accounting generated for AR Invoice application or unapplication. If the Concurrent is Run in Save mode, then the system generates the repository entries for application or unapplication with Reporting status of Save. If the Concurrent is Run the Final mode, then the system generates the repository entries with the status of Ready to File and the accounting is generated.
| Event | Tax Point Basis | Account | Debit | Credit |
| AR Accounting Apply | Invoice | Liability | Tax Amount (Applied Amount) | |
| Advanced Suspense | Tax Amount (Applied Amount) | |||
| AR Accounting Unapply | Invoice | Advanced Suspense | Tax Amount (UnApplied Amount) | |
| Liability | Tax Amount (UnApplied Amount) |
After accounting is generated and the reporting status is Ready to File, the, you cannot modify or reverse the accounting.
Following steps are involved in receipt reversal process:
Navigate to Receipts window using (N) Oracle Receivables > Receipts > Receipts.
Query the receipt that must be adjusted or reversed.
Check the Tax details.
Perform Receipt Reversal by entering the details. The receipt is reversed.
Once the Receipt is reversed , the system creates receipt tax accounting and the tax repository reverses to tax Liability details.
Navigate to Tax Repository window using (N) Oracle Financials for India > Settlement Management > Review Tax Repository.
Click Find to check the tax repository entries for Document type AR Receipt.
| Event | Tax Point Basis | Account | Debit | Credit |
| AR Receipt Reversal | Invoice/Payment | Liability | ||
| Advance Suspense | Tax Amount |
AR Debit memo is essentially an incremental billing for the amount that is included in the original invoice.
To sequence the invoice number for different transaction types, you must define document sequence by assigning a prefix and a start number of the sequence.
Refer to the Defining Document Sequecing topic for more details. Following setups display how to assign AR Debit Memo transaction type to an existing document sequence.
Navigate to the Document Sequencing window using (N) Oracle Financials for India > Tax Configuration > Define Document Sequencing.
Query the document sequence that you want to use for AR Debit Memo.
Assign the transaction type of AR Debit Memo for which you want to generate document sequencing.
Ensure that the base transaction type used for creating AR debit memo is being mentioned as Document Category while assigning the document sequence.
Create AR Debit Memo Transaction:
Ensure that Type is same as used in document sequencing assignment setup.
Enter Transaction Line Details.
Navigate to India Tax Details window using Tools > India Tax Details to enter the tax details for the debit memo.
Enter Organization and Location Details.
Enter Tax Details (if not defaulted).
Click Apply.
Save the details.
Return to base receivables transaction window and complete the transaction.
Complete option is enabled.
Navigate to India tax Details window to check whether Tax Invoice Number has been generated or not. Tax Invoice number and date display in Tax details.
In a Business environment, balances are largely affected with changes in price rate for transactions of a retrospective period. For all these, you can use the feature of Supplementary Transactions in Oracle Financials for India. Using the Supplementary Transactions you can identify the source documents affected by these changes, calculate the amount of Invoice, or a Credit Memo has to be raised.
The Supplementary Transaction helps identify, track and account the price changes to Identify the transaction for which Supplementary Invoice or Credit Memo are to be raised for changes in Price, Tax, or Assessable Price Change.
Following are the features of Supplementary transactions handling:
Raise Supplementary Invoice or Credit Memo
There is an option to raise a supplementary invoice for the identified transactions. The option of not raising the invoices would be useful in scenarios where you would not be raising supplementary invoices for a few transactions. And also have an option of creating Manual Invoices and credit notes or price revisions and tax rate changes.
Track Price changes
You can track the previous Price lists and Tax Codes
Revised Price List
For Standalone AR invoices, it is necessary to enter a Separate Revised Price List into the system from Price List Menu.
Assessable Value
It can also be called as Transaction Value Price list where there is change in the Assessable Value.
To import the generated Supplementary Invoices or the Credit memo as AR Transactions in Transactions window it's source should be defined in. After the source is defined, it is picked up by running the AutoInvoice Import Concurrent process.
Navigate to Sources window using (N) Oracle Receivables > Setup > Transactions > Sources.
Check if INDIA INVOICES source is defined. if it is not defined, then perform the below steps:
Define Transaction Source in the above navigation with the name INDIA INVOICES.
At the Description field, enter India Localization Supplementary Invoices or TDS Credit Memos.
Save the record.
Define the Transaction type for the generated Supplementary Invoice or the Credit Memo. And these details are populated in the Supplementary Transactions window for the eligible transaction. Below are the steps for defining Transaction Type, if it doesn't exist in the system.
Navigate to Transaction Type window using (N) Oracle Receivables > Setup > Transactions > Transaction Types.
For Defining Credit Memo:
Enter the name JAI Credit Memo.
Select Credit Memo as Class.
Enter the Description as JAI Credit Memo.
Enter the Creation Sign as Negative Sign.
Enter other mandatory required details.
Enter the Accounts for this Transaction type under the Accounts tab.
For Defining Supplementary Invoice type / JAI Invoice
Enter the name JAI Invoice.
Select Invoice as Class.
Enter Description value as JAI Invoice.
Enter the Creation Sign value as Positive Sign.
Enter other mandatory required details.
Enter the Accounts for this Transaction type under the Accounts tab.
Exports The main objective of this document is to help understand the procedure to be followed so to map the Customer requirements in reference to the Goods and Services tax (GST) - Exports being introduced in India.
GST-Exports can be of the following types:
Zero Rated: GST shall not be charged on goods and services exported from India. In Case, the supply of goods and services qualifies as export out of India as per the Place of Supply Rules the transaction shall be treated as Zero Rated Supply.
GST Under Rebate: If the business is required to make any payment towards statutory liability (like IGST) for the relevant Exports transaction, then you must book it as liability but the liability will not be charged to the Customer. In this case, business is required to claim the refund of the tax paid per relevant procedural guidelines.
Note: This business case is still being evaluated further by the Product development team and hence is not being covered as part of the current scope of the exports functionality.
Setups Following are the setups involved in mapping the India GST Exports requirement:
Item Classification definition
Reporting type code definition
Third party registrations setup
Tax rate code definition
Tax category setup
Tax rules definition
Define Item Classification code
Reporting type code:
Third party registrations setup
Define tax rate code
Define tax category code
Define tax rules
Zero rated GST
GST is not charged on goods and services exported from India. In Case, the supply of goods and services qualifies as export out of India as per the Place of Supply Rules the transaction is treated as Zero Rated Supply.
Create Sales Order with zero rated IGST.
Shipment Delivery.
Once the ship confirmation is done, the system generates the following accounting entries:
Dr. IGST Suspense A/c, Amount = 0
To, IGST Liability A/c, Amount = 0
Note: Though it is a zero rated transaction, the accounting entries are being generated for tracking purposes.
You must run the Journal Import with following values to import the accounting entries from GL interface to GL:
User_je_category_name = Ship Confirm
User_je_source_name = Financials India
For a zero rated GST, it can be observed that no tax amount carried forward to AR Transaction from Order.
Note: You can generate and maintain a separate tax invoice numbering sequence for the Exports transactions by defining a separate transaction type and defining the document sequence setup for this transaction type.