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Oracle Financials for India (OFI)

Goods & Services Tax (GST)


White Paper on Accounting

Author : Srikanth Reddy


Creation Date : 08-Jul-2017
Last Updated : 10-Jul-2017
Document Ref :
Version : 1A

Organization: Oracle India Private Limited

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Document Control

Change Record

Date Author Version Change Reference

01-Jun-2017 Srikanth Reddy 1A Initial Document


31-Oct-2017 Srikanth Reddy 380 Accounting Corrected

Reviewers

Name Position
Rajnish Kumar Director, Tax Development
Pavan Raparla Team Lead, OFI-GST
Sumit Dhariwal SME-GST

Audience

Name Position
12.1.3 Implementation team
12.1.3 Customers

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Table of Contents

I. Background of OFI Accounting Architecture: .......................................................................................................................................4

II. List of GL Sources & GL Categories generated by OFI: .................................................................................................................4

III. List of Natural Accounts used by OFI: ...............................................................................................................................................4

IV. Functionality wise accounting ……………………………………………..........................................................................................

i. Goods & Services Tax Accounting at Procure To Pay (Inventory Item)............................................................ ……….…..……..5

ii. Goods & Services Tax Accounting at Procure To Pay (Expense Item)……………………………………………………...………..6

iii. Goods & Services Tax Accounting at Reverse Charge Mechanism ………………………………………………………..…….....7

iv. Goods & Services Tax Accounting at BOE…………………………….…………………..…………………………………..……….7

v. Goods & Services Tax Accounting at Order To Cash………………..………………………………………………………….……..8

vi. Goods and Services accounting at RTV/RMA………………………………………………………………………………….………9

vii. Goods and Services Tax Accounting at IRISO cycle (FOB: Shipment)……………………………………………………….……………….…..….. .10

viii. Goods and Services Tax Accounting at IRISO cycle (FOB: Receipt)………………………………………………………………………….………...11

ix. Tax Deduction at Source accounting …………………………………………………………………………………………………………………….. 12

x. Goods and Services Tax Accounting for ADVANCE RECEIPT………………………………………………………………….……12

V Call to action…………………………………………………………………………………………………………………………..………..12

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i. Background of GST(OFI) Accounting Architecture:

In OFI product, accounting entries for the Goods and Services Tax posted directly to the General ledger
interfaces from the respective tax repositories at each event in Procure to Pay cycle, Order to Cash Cycle
and other functionalities like RCM, BOE, Advance Receipt and IRISO etc.
User need to be import the tax accounting entries from Gl_Interface to General Ledger

II. List of GL Sources & GL Categories generated by OFI :

GL Source GL Categories Event


Financial India PO Receiving PO Receipt -Receiving
Financial India Delivery PO Receipt - Delivery
Financial India AP Validate AP Invoice Accounting
Financial India Prepay Apply Prepayment Application
Financial India Bill of Entry Bill Of Entry Accounting
Financial India Ship Confirm Sale Order ship confirm
Financial India AR Complete AR Transaction Complete
Financial India Receipt Create Advance Receipt Creation
Financial India Receipt Apply Adv Receipt application on Transaction
Financial India Receipt Reverse Advance receipt reverse
Financial India Inter-Org Ship Inter-Org transaction

III. List of Natural Accounts used by OFI

Natural Account Segment Qualifier Associate Place


Receiving Inventory Assest account Receiving Options
Inventory AP accrual Liability account Organization Parameters
Expense AP Accrual Liability account Purchasing Options
Material account Assest account Organization Parameters
Interim Recovery Assest account Tax Type
Recovery Assest account Tax Type
Interim Liability Liability account Tax Type
Liability Liability account Tax Type
Rounding Expense/Revenue Tax Type
Expense Expense Tax Type
Suspense Revenue Tax Type
Advance Suspense Revenue Tax Type

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IV. Functionality wise accounting

1. Goods and Services Tax Procure To Pay (Inventory Item)

Document/Accountin Condition Accounting DR CR

g Event Amount Amount

Purchase Order PO Approve No Accounting

Receipt Receiving Recoverable:

Tax Point Bases = Delivery CGST/SGST/IGST Interim Recovery a/c XXX


XXX
To Inventory AP Accrual a/c

Non-Recoverable:

Receiving Inventory a/c XXX

To Inventory AP Accrual a/c XXX

Tax Point Bases = Invoice  No accounting for recoverable Taxes

Delivery Recoverable:

No Accounting for recoverable tax

Non-Recoverable:

Inventory Material /Purchase Price Variance a/c XXX

(Average /Standard costing)

To Receiving Inventory a/c XXX

Note: Average costing accounting at deliver done by

Cost management

Claim ITC (Input Tax Credit) CGST/SGST/IGST Recovery a/c XXX

To CGST/SGST/IGST Interim Recovery a/c XXX

Invoice Receipt Matched Invoice

Tax Point Bases = Delivery Inventory AP Accrual a/c XXX

To Supplier Liability a/c XXX

Tax Point Bases = Invoice CGST/SGST/IGST Interim Recovery a/c XXX

To Supplier Liability a/c XXX

PO Matched Invoice Non-Recoverable:

Item Expense a/c XXX

To Supplier Liability a/c XXX

Standalone Invoice CGST/SGST/IGST Interim Recovery a/c XXX

To Supplier Liability a/c XXX

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2. Goods and Services Tax accounting at Procure To Pay (Expense Item)

Document/Accounting Condition Accounting DR Amount CR Amount

Event

Purchase Order PO Approve No Accounting

Receipt Receiving

Tax Point Bases = Delivery Recoverable:

CGST/SGST/IGST Interim Recovery a/c XXX


XXX
To Expense AP Accrual a/c

Non-Recoverable:

Receiving Inventory a/c XXX XXX

To Expense AP Accrual a/c

Tax Point Bases = Invoice


 No accounting for recoverable

Taxes

Delivery Recoverable:

No Accounting for recoverable tax at Delivery

event

Non-Recoverable: XXX

Expense Item a/c XXX

To Receiving Inventory a/c

Claim ITC (Input Tax Credit) CGST/SGST/IGST Recovery a/c XXX

To CGST/SGST/IGST Interim XXX

Recovery a/c

Invoice Receipt Matched Invoice

Tax Point Bases = Delivery Expense AP Accrual a/c XXX

To Supplier Liability a/c XXX

CGST/SGST/IGST Interim Recovery a/c XXX


Tax Point Bases = Invoice

To Supplier Liability a/c XXX

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3. Goods and Services Tax Accounting at Reverse charge Mechanism

Document/Accounting Condition Accounting DR Amount CR Amount

Event

Prepayment Prepay with RCM CGST/SGST/IGST Suspense a/c XXX

tax To CSGST/SGST/IGST Liability a/c XXX

Standard Invoice SI with RCM tax CGST/SGST/IGST Interim Recovery a/c XXX

To GST Tax Liability a/c XXX

Prepayment application on Prepay Application CSGST/SGST/IGST Liability a/c XXX

standard Invoice To CGST/SGST/IGST Suspense a/c XXX

4. Goods and Services Tax Accounting for BOE

Document/Accounting Condition Accounting DR Amount CR Amount

Event

BOE BOE Confirm No Accounting

BOE Invoice BOE Invoice BOE Tax Expense a/c XXX

Accounting To Custom Authority Liability a/c XXX

BOE Invoice Custom Authority Liability a/c XXX

Payment To Cash Clearing / Cash a/c XXX

BOE Application on Receiving Inventory a/c (Custom Tax– Non-Rec) XXX

Receipt Interim Recovery a/c (Recoverable Tax) XXX

To BOE tax Expense a/c XXX

Claim (Recoverable Recovery a/c XXX

Tax) To Interim Recovery a/c XXX

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5. Goods and Services Tax Accounting for Order To Cash Cycle

Document/Accounting Condition Accounting DR Amount CR Amount

Event

Sale Order Sale Order Book No Accounting

Ship Confirm Ship Confirm

Tax Point Bases = Delivery CGST/SGST/IGST Suspense a/c XXX

To CGST/SGST/IGST Liability a/c XXX

Tax Point Bases = Invoice  No Accounting for delivery/Ship

Confirm

AR Invoice (Import) Auto-invoice Import

Tax Point Bases = Delivery Account Receivable a/c XXX

To CSGST/SGST/IGST Suspense XXX

a/c

Tax Point Bases = Invoice XXX

Account Receivable a/c XXX

To CSGST/SGST/IGST Liability a/c

AR Transaction (Manually)
AR Transaction Complete Account Receivable a/c XXX

To CGST/SGST/IGST Liability a/c XXX

AR Credit Memo (Manually) AR-CM complete CSGST/SGST/IGST Liability a/c XXX

To Account Receivable a/c XXX

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6. Goods and Services accounting at RTV/RMA.

Document/Accounting Condition Accounting DR Amount CR Amount

Event

Return To Receive Before ITC CREDIT Recoverable Tax:

> No Accounting for Recoverable taxes

Non Recoverable Tax:

Receiving Inventory a/c XXX

To Material / Purchase Price a/c


XXX

Post ITC CREDIT Recoverable Tax:

taken > No Accounting for Recoverable taxes

Non Recoverable Tax:

Receiving Inventory a/c

To Material / Purchase Price a/c

Return To Vendor Before ITC CREDIT Recoverable Tax:

Inventory AP Accrual a/c XXX


XXX
To CGST/SGST/IGST Interim Recovery a/c

Non Recoverable Tax:

Inventory AP accrual a/c XXX

To Receiving Inventory a/c XXX

Post ITC CREDIT Recoverable Tax:

taken  No accounting

Non Recoverable Tax:

Inventory AP accrual a/c XXX

To Receiving Inventory a/c XXX

Debit Memo Before CREDIT Supplier Liability a/c XXX

To Inventory AP accrual a/c XXX

Post ITC CREDIT Supplier Liability a/c XXX

taken To CGST/SGST/IGST Liability a/c


XXX

RMA Order No Accounting

AR Credit Memo Credit Memo Complete CGST/SGST/IGST Liability a/c XXX

To Receivables a/c XXX

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7. Goods and Services Tax Accounting at IRISO / Inter-Org cycle (FOB: SHIPMENT)
Document/Accounting Org Accounting DR Amount CR Amount

Event

Internal Requisition No Accounting

Internal Sale Order No Accounting XXX

XXX

IS Ship Confirm Shipping Org Inter-Org Receivable a/c XXX

Shipping Org To CGST/SGST/IGST Liability a/c XXX

Receiving Org Intransit Inventory a/c XXX

Receiving Org To Inter-Org Payable a/c XXX

Inter Company AR Transaction Shipping Org Account Receivable a/c XXX

Shipping Org To Inter-Org Receivable a/c XXX

Internal – Receipt : Recoverable Tax:

Receiving Receiving Org CSGST/SGST/IGST Interim Recovery a/c XXX

Receiving Org To Intransit Inventory a/c XXX

Non Recoverable tax:

Receiving Org Receiving Inventory a/c XXX

Receiving Org To Intransit Inventory a/c XXX

Delivery No Accounting for recoverable Tax

Non- Recoverable Tax

Receiving Org Inventory Material / Purchase Price Variance a/c XXX

(Average / Standard costing )

Receiving Org To Receiving Inventory a/c XXX

Note: Average costing accounting at deliver done

by Cost management

Intercompany AP Invoice Receiving Org Inter-Org Payable a/c XXX

Receiving Org To Supplier Liability XXX

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8. Goods and Services Tax Accounting for IRISO / Inter-Org (FOB: Receipt)

Document/Accounting Org Accounting DR Amount CR Amount

Event

Internal Requisition No Accounting

Internal Sale Order No Accounting XXX

XXX

IS Ship Confirm Shipping Org Intransit Inventory a/c XXX

Shipping Org To CGST/SGST/IGST Liability a/c XXX

Inter Company AR Transaction Shipping Org Account Receivable a/c XXX

Shipping Org To Inter-Org Receivable a/c XXX

Internal – Receipt Receiving Sending Org Inter-Org Receivable a/c XXX

Sending Org To Intransit Inventory a/c XXX

Receiving Org CSGST/SGST/IGST Interim Recovery a/c XXX

Receiving Org To Inter-Org Payable a/c XXX

Receiving Org Receiving Inventory a/c ( Non Recoverable tax)

Receiving Org To Intransit Inventory a/c

Delivery No Accounting for recoverable Tax

Non- Recoverable Tax

Receiving Org Inventory Material / Purchase Price Variance a/c XXX

(Average / Standard costing )

Receiving Org To Receiving Inventory a/c XXX

Note: Average costing accounting at deliver done

by Cost management

Intercompany AP Invoice Receiving Org Inter-Org Payable a/c XXX

Receiving Org To Supplier Liability XXX

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9. Goods and Services Tax Accounting for ADVANCE RECEIPT

Document/Accounting Condition Accounting DR CR

Event Amount Amount

Advance Receipt Receipt Confirm CGST/SGST/IGST Advance Suspense a/c XXX

To CGST/SGST/IGST Liability a/c XXX

Receipt Application Receipt applied on CGST/SGST/IGST Liability a/c XXX

AR Transaction To CGST/SGST/IGST Advance Suspense a/c XXX

10. Tax Deduction at Source Accounting

Document/Accountin Condition Accounting DR Amount CR Amount

g Event

Standard invoice Accounting Item Expense a/c XXX

To Supplier Liability a/c XXX

TDS Standard Invoice Standard invoice TDS liability Clearing a/c XXX

Validation To Income Tax authority Liability a/c XXX

CM invoice Standard invoice Supplier liability a/c XXX

Validation To TDS liability clearing a/c XXX

V- Call to Action

This is not the final document and we will incorporate further changes in this document according to your queries and Business Scenarios.

You can also refer the documents in GST Info Center (Documentation Tab) released as part GST

E-Business Suite Release 12: India Goods and Service Tax (GST) Info Center (Doc ID 2176820.2)

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