Define Legal Reporting Units and Tax Reporting Units

Legal Reporting Units (LRUs) are the lowest level components of a legal structure that require registration.

You can create a legal reporting unit whenever the legal entity has to support several registrations of the same kind or same legislative category. The legal reporting unit is created automatically when the legal employer is created. The legal reporting unit (terminology used in Fusion Financials Applications) is known as the Tax Reporting Unit (TRU) in HCM.

Define a Legal Reporting Unit

Use the following steps to define a Legal Reporting Unit:

1. Select Manage Legal Reporting Unit in the Define Legal Reporting Units for Human Capital Management task group.

2. Click on Go to Task.

3. You will be prompted to Select and Add or Create New in scope selection. You can Select and Add the previously created Legal Entity to edit further, or create a new Legal Reporting Unit:

4. When creating a LRU for Income Tax, select India in the Territory list of values. For other types of LRUs (PF, PT, ESI and LWF), the territory would typically be one of the states in India.

5. Enter the Name of the Legal Reporting Unit, the Start Date and End Date.

6. The Identifying Jurisdiction for the territory will be displayed by default when the Territory is selected. Select a different Jurisdiction if required. For example, when creating a LRU for Income Tax (with India as the territory), you need to change the default jurisdiction India Company Law to India Income Tax.

7. Enter the Legal Reporting Unit Registration Number or the TAN Number.

   Note: The field name is different based on the selected jurisdiction.

8. Select the Legal Address previously defined.

9. Optionally choose if this is the Main Legal Reporting Unit and associated effective start date.

10. Click Save and Close.

    Note: In most cases a legal entity is a legal reporting unit and you do not need to create additional ones. However, you may have to create additional legal reporting units if there is a specific reporting requirement where registrations are not the same as that of the legal entity.

Define the Legal Reporting Unit as a Tax Reporting Unit

You must configure additional information for legal reporting units to designate them as tax reporting units.

To configure the TRU:

1. Select the Manage Legal Reporting Unit HCM Information task.

2. On the Legal Reporting Unit HCM Classification page, select the check box Tax Reporting Unit to designate the LRU as a TRU.

3. Click Next.

   On the Tax Reporting Unit Details page, complete the fields as shown below:

   1. Select the required Tax Reporting Unit Type from the list.
      Note: You need to create separate TRUs for each type: income tax, provident fund, professional tax, employee state insurance, national pension scheme, and labour welfare fund.

   2. Select the Associated Legal Employer from the list.

   3. Select the required Tax Reporting Unit Currency. For India, it is INR.

4. Click Submit