Tax types and account assignments

We can define any new tax type as such introduced by Statute using the tax type definition form. For example, in the current context, user can define the tax types: CSGT, SGST, and IGST using this form.

These tax type codes can further be attached to the transaction flows as applicable.

(N) Oracle Financials for India >> Tax Configuration >> Define Tax Type

We would need various Tax Types. Some of impacting dimensions are:

1 – Types of GST tax (IGST / CGST / SGST)

2 – Inventory Org

3 – Recoverability

4 – Offset applicability

5 – Tax point Basis at which you want accounting of tax

For demonstration purpose we will use Recoverable, Offset applicable and Delivery level accounting tax type

NOTE: Recoverable check box value plays important role in recoverability of Tax. But remember tax recoverability depends on attributes mentioned at three different levels (Item classification, Tax type definition and Claim term).

You may refer one of related article How to make India GST regime tax entry as recoverable in Oracle EBS?

Add records for each location being used for transactions.

Note: Mentioning Location here is an optional field, we will leave it blank so that the setup at Inventory Organization level will be applicable to all the locations of that specific organization.

Optionally you can also define reporting code at tax type level

Define Tax Rate Code

We would need various Tax rate. Some of impacting dimensions are:

1 – Types of GST tax

2 – Slab of GST ( Zero / Essential / Standard / Luxury and so on)

3 – Inventory Org

4 – Rate type (Adhoc / Percentage / Fixed and so on)

5 – Inclusive or not

6 – Tax Status (Standard / Exempt / Zero / Reduced)

For demo purpose we will define Percentage based tax.

Accounting details got defaulted from Tax Type.

We cannot add anything here, if required we need to make modification at tax type level only.

Optionally you can also define reporting code at tax rate level

Tax Category

We can define the association of the item and the tax category using this form.

(N) Oracle Financials for India >> Item Definition >> Define Item Categories

Fundamental of Tax category remains same in GST case as well. This is nothing but a set of taxes with structure of precedence/s.

Claim terms

This is a critical setup if the tax need to be recoverable. Each tax type which need to be recoverable should have records in claim terms.

Just selecting ‘Recoverable’ flag at tax type level and In Item classification as Recoverable = Y does make it recoverable at transaction level. Not sure why Oracle included this in transaction level recoverability!

Please note:

• Each Tax type which you need to be Recoverable should be added in the Assignment section list.
• ‘Intended use’ and ‘Location’ mentioned at Claim term shall match with the ‘Intended use’ on the transaction level (PO / Sales Order). This is a non-mandatory field, so if you keep both these fields blank here then from claim term perspective it tax will be recoverable for all the Intended uses and all location. Thought Oracle suggest to do enter records for each required tax type with combination of Intended use and Location, You can keep it blank!, I verified it at transaction level it works fine.
• Item Classification is not mandatory, keep it blank unless you have a reason to cancel tax recoverability

You may refer one of related article How to make India GST regime tax entry as recoverable in Oracle EBS?

Click here for more articles on India GST implementation in Oracle EBS R12 and Decoding GST for India in Oracle EBS R12 way