Understanding Journal Entry Reclassification for Service Tax Payments

Run the Service Tax Reclassification AP program to review the service payments for a defined period, and to also determine whether the tax lines require classification. The Service Tax Reclassification AP program calculates tax liability if the processed line corresponds to a recoverable tax line within the service tax regime and also the service category code of the document line is set up in the Point of Taxation program with a value of P for payments in the Point of Taxation P2P process field or the Reverse Service Tax Credit – Voucher report reversed the non-paid tax credit taken on voucher.

This program generates a reclassification journal entry with credit information for the account associated with AAI item 7585 and debit information for the account associated with AAI item 4285. The system uses the general ledger (GL) offset in the cost rule, payment batch number, document number, and GL date to generate a reclassification JE. The system stores the reclassification data in the F75I742 table.

The Service Tax Reclassification AP program does not account for taxes on the vouchers that you accounted for using the Service Tax Credit Generation - Voucher report (R75I700D). Also, this report accounts for taxes for vouchers for which the system had reversed the tax credit due to payment not done within a defined period. This report accounts for taxes on such vouchers after the payment is done for those vouchers after the defined period, when one of these is true:

• The service category code of the document line has been set up with the value of P in the Point of Taxation O2C process field of the Point of Taxation Setup program. The system retrieves this value from the F75I051 table.

• The Reverse Service Tax Credit program has reversed the non-paid tax liability generated on invoice.

The system processes both standard service tax records and advance service tax payments when you run the Service Tax Reclassification AP program. The system determines whether the voucher is for an advance service tax payment based on the information stored in the F75I411 table. If a record is for an advance payment, the system:

1. Changes the value in the Record Processed Y/N field in table F75I411 to Y (yes) if the voucher if fully paid.

   If the voucher is not fully paid, the system leaves the value as N (no).

2. Adds a record to the Advance Service Tax Payment File table (F75I754) for each advance service tax payment processed, setting these values:

   • Reclass field is set to Y (reclassified)

   • Payment Status field is set to 01 (reclassification processed; not paid).

   The system changes the value in the Record Processed Y/N field to Y (yes) and the value in the Payment Status field to 02 (paid).

3. Adds a record to the Advance Service Tax Balance File table (F75I760).