Understanding the Journal Entry Reclassification for Service Tax Receipts

Run the Service Tax Reclassification AR program to review the receipts for a defined period and also determine whether the tax lines require classification. If the processed line corresponds to a recoverable tax line available, the service tax regime number, and the service category code of the document line are set up in the Point of Taxation program with a value of R for receipt in the Point of Taxation O2C process field or the Reverse Service Tax Liability – Invoice report reversed the non-paid tax liability generated on invoice. 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 4385. To generate a reclassification journal entry, the system uses the GL offset in the cost rule, payment batch number, document number, and GL date.

The Service Tax Reclassification AR program does not account for taxes on the invoices that you accounted for using the Service Tax Liability Generation - Invoice report (R75I700C). This report calculates taxes for invoices for which the system had reversed the tax liability due to payment not received within a defined period. This report accounts for taxes on such invoices after the payment is received for those invoices after the defined period.

The report accounts for tax liability for those reversed records for which the receipt date is greater than the reversion date, and when one of these is true:

• The service category code of the document line has been setup with the value of R 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 Service Tax Liability Generation - Invoice report reversed the non-paid tax liability generated on invoice.

The system stores the reclassification data in the Service Tax A/R File (F75I731).