R12.2.4 india localization setup

Krithivasan nkvasan54@gmail.com P a g e | 1
INDIA LOCALIZATION SETUP – R12.2.4
These setups have been done in E Business Suite – R 12.2.4.
Organization Chart:
This organization is being setup as part of Vision India Group. Vision India Ledger is
used. Two Legal Entities NK Company Ltd., and NK JV Company Ltd. are created as
part of Vising India Group. Vision India Ledger is used. NK Company Ltd., has two
Operating Units, one at Bangalore and another at Chennai. NK JV Company has one
operating Unit at Mumbai. Each Operating Unit is a profit centre, represented by
Balancing Segment Values, 11, 12 and 21 respectively.
CMI – Chennai Manufacturing Inventory, CTI - Chennai Trading Inventory,
BMI – Bangalore Manufacturing Inventory, MMI – Mumbai Manufacturing
Inventory
Vision India
Group
NK Company Ltd.
Chennai OU
BSV 11
CMI CTI
Bangalore OU
BSV 12
BMI
NK JV Company Ltd
Mumbai OU
BSV 21
MMI
Vision India
Ledger

Before we start, let us understand the pre-requisite for India Localization:
PART A: Pre-requisite for India Localization set in R12.2.4 E Business Suite:
1. Ensure India Localization is Licensed: Singapore
Refer Metalink Note: Doc ID 2051883.1
2. Disable India Global Flexfield:
Following are the details of the Global Descriptive Flexfield:
Application: Regional Localizations
Title: JG_AP_INVOICE_DISTRIBUTIONS
Context Field Values:
Code: JA.IN.APXINWKB.DISTRIBUTIONS
Name: Invoice Distributions
Description: Asia/Pacific Invoice Distributions Information
There is no use to India Distributions GDF in 12.2.4, it can be disabled. This GDF are
used to capture TDS, WCT and Income Tax details in the earlier release and in
R12.2.4, TDS has been moved to Menu in Payable Invoice Work bench.
Refer Metalink Note: Doc ID 2051883.1
3. Set Profile Options for Responsibility:

How to Enter Tax id in Invoice Distribution for TDS deduction in R12 (Doc ID 464904.1)
The system profile options needs to set to the following values at the responsibility level
with no conflicting values at other levels
JG: Application:: Regional Localizations
JG: Product : Asia Pacific Localization
JG: Territory : India
4. Ensure AD Event is set and India Localisation Triggers are Enabled:
(SPECFIC TO R12.2.4. There is no separate India Localisation patch and is
included in the base patch) - Doc ID 1959695.1
Though no patch is required, AD Event should be set to “JA” and India
Localization Triggers are to be enabled.
The file jai_enable_trg.sql has an AD Event check for the event
'JAI_EXISTENCE_OF_TABLES' and if AD API Is_Event_Done returns TRUE, only then
the code to enable the JAI triggers is executed.
The sql for setting AD Event and enabling India Localization triggers are available in
the following directory. They should be run as apps user:
$JA_TOP/12.0.0/patch/115/sql
1. jai_set_ad_event.sql with ‘JA’ as parameter and
2. jai_enable_trg.sql
5. E-BUSINESS TAX realted set up are required, which has to be done
after setting up Legal Entity and Operating Units.
Dummy E-Business Tax Regime to Rate setup needs to be performed in order to use
India Localisation features in Order Management and Receivables. E-Business tax
replaces 11i Receivable Tax engine.
For Procure to Pay, there is no requirement / interaction with E-business tax. Definition
of IL taxes would suffice.
PART B: BASE APPLICATION REATED SETUPS
1. Create Responsibilities required:
Seeded India Menus are available. Necessary Responsibilities should be created and
profile option for JG, GL, GL: Ledger Name, HR User, HR Business Group should be
setup. Multi-Org Access need to be created for accessing all the OUs from the same
responsibilities.
2. Setup Accounting Fledfield:

Since Vision India Ledger is used, value 11, 12 and 21 are added to the company
segment values:
General Ledger, Vision India > Setup > Flexfields > Key > Values
Name: India_Company (B) Find
Insert 3 values, 11, 12 and 21
3. Setup Legal Entities:

General Ledger > Accounting Setup Manager > Accounting Setup
Query: Vision India Ledger
Choose Update Accounting Options:
(T) Legal Entities:
(B) Create Legal Entity:
Territory: choose “India”

NK JV Company Ltd:
ADD Legal Entity to Ledger:
Assign Balancing Segments for Legal Entity: (P) Update Balancing Segment Value
Setup GL: GL Data Access Set and GL: Ledger Name profile options for your
Responsibilities. Setting GL: Ledger Name Profile option must be setup for providing
access to various India Localization setup from the Responsibilities. Refer: Operating
Unit/Inventory Organization not appearing in the Regime Registration Form (Doc ID
1382226.1)

4. Setup Operating Units
From a setup perspective, the HR location attached to the Operating Unit
address should definitely contain the Country as India.
Bangalore Operating Unit:
(B) Others
Chennai Operating Unit Setup:

Mumbai Operating Unit:
Submit “Replicate Seed Data” Concurrent Program for the Operating Units:
Responsibility: System Administrator

Submit the Replicate Seed Data for Bangalore Operating Unit and Mumbai Operating
Units also.
5. Setup Multi Org Access Control
MOAC setup is required to access all the Operating Units from the same responsibility.
Create a Global Security Profile from HRMS responsibility and setup MO: Security
Profile for all Responsibilities. Optionally, setup MO: Default Operating Unit profile.
Ensure that MO: Operating Unit profile is null at Responsibility level.
India HRMS > Security > Global Profile
Run Security List Maintenance Concurrent Program for the profile created
Set Profile Options at Responsibility Level:

MO: Security Profile
MO: Default Operating Unit
This profile to be setup for other Responsibilities which needs Operating Unit access
like Purchasing, Receivables, Order Management, Assets, Cash Management, Tax
Manager also.
6. Setup E-Business Tax:
Dummy E-Business Tax Regime to Rate setup needs to be performed in order to use
India Localisation features in Order Management and Receivables. E-Business tax
replaces 11i Receivable Tax engine.
For Procure to Pay, there is no requirement / interaction with E-business tax. Definition
of IL taxes would suffice.
India Local Taxes are defined under India Local Responsibilities > Setup > Taxes
Refer: 10-44 Oracle Financials for India Implementation Guide Question No.162
India Localization uptake of E-Business Tax in R12 and the relevance of 'Localization' tax
code [ID 472055.1]
6.1 Define "Party Tax Profiles"
Responsibility: Tax Manager
(Ensure MO: Security Profile or MO: Operating Unit Profile is set for this responsibility
to have access to the Operating Unit(s)
Navigation: Tax Manager > Parties > Party Tax Profiles
Party Type Operating Unit owning Tax Content
Party Name Your OU name
Click on "GO” button.

(B) Create Tax Profile
Important: Do not check “Use subscription of Legal Entity” check box
(B) Apply
6.2 Define “Regime”
Following regime should be defined with exact values as given:
Tax Regime Code IN-SALES_TAX
Name IN-SALES_TAX
Regime Level Country
Country Name India
Effective Date Current date
Allow Tax Recovery Checked

(B) Continue
(B) Add Row
Party Name Your Legal Entity
Configuration for Taxes and Rules Common Configuration with Party Overrides
Party Name Your Operating Unit
Configuration for Taxes and Rules Common Configuration with Party Overrides
The configuration should be done for each of the Legal Entity and Operating Unit for
which India Localization setup is being done.
(B) Finish
Ensure that configuration saved message is displayed
6.3 Create Tax
Tax Manager –> Tax Configuration Tab > Taxes
Create a Tax with following values:
Tax Regime Code IN-SALES_TAX
Configuration Owner Global Configuration Owner and Operating Unit
Tax Source Create a new tax
Tax LOCALIZATION
Tax Name LOCALIZATION
Effective Date Current Date
Tax Currency INR
Rounding Rule Down
Applied Amount Handling Recalculated
TAX RECOVERY CONTROLS
Allow Tax Recover Checked
Primary Recovery Type PREC1

Once the Global Configuration owner is created, use Copy and Overide
option Button to create tax for each of the Legal Entity and Operating Unit
NK Company Ltd
Chennai Operating Unit:

After completing for all LEs and OUs the Tax page:
6.4 Create Tax Status
Tax Manager -> Tax Configuration > Tax Statuses
Create Tax Status with following values:
Field Query
Tax Regime Code IN-Sales_Tax
Configuration Owner Global Configuration Owner
Tax LOCALIZATION
Enter These Values
Tax Status Code STANDARD
Name LOCALIZATION
Effective From current date

(B) Apply
Query the Tax Status Created for Global Configuration Owner in the Tax Status
search.
Copy and Override Configuration Owner for each of the Legal Entity and Operating
Unit for which India Localization is to be used
NK Company Ltd
Chennai Operating Unit

6.5 Create Tax Rate
Create Tax Rate with following values:
Tax Regime IN-SALES_TAX (Choose)
Configuration Owner Global Configuration Owner (Choose)
Tax LOCALIZATION (Choose
Tax Status Code STANDARD (Choose)
Tax Rate Code LOCRATE (Enter)
Rate Type Percentage (Select from LOV)
Percentage Rate 0 (enter)
Effective From current date (defaults)
(B) Apply
Copy and Override Configuration Owner for each of the Legal Entity and Operating
Unit for which India Localization is to be used
NK Company Ltd

Chennai Operating Unit
7. Setup Inventory Organizations:
From India Localization perspective some of the points should be borne in mind while
setting up Inventory Organization.
a) Inventory Module should have Installed status.
Financials for India does not support when Inventory module is installed in
shared mode. Following modules are recommended to be installed:-
1. Bills of Material for calendar.
2. Inventory module for associating Inventory Organization with location.
3. Order Management for adding OE: Item Validation Organization
Refer Metalink Note: What is the impact on Financials for India when
Inventory module is installed in Shared mode? (Doc ID 885533.1)
b) Costing method for inventory organization should be either Standard or
Actual Costing.
In case other costing methods are used, Non Recoverable taxes like CST,
Customs Duty and Third party Taxes would not be considered correctly for

costing and will result in wrong inventory valuation, if the Oracle Financials
for India taxes are involved in the transaction cycle.
Costing Methods Supported By Financials For India (India Localization) (Doc
ID 793269.1 and 1280474.1)
7.1 Setup Locations (If already created at the time of Creation of LE, query and
ensure Shipping Tab parameters are enabled) Navigation: Purchasing >
Setup>Organizations>Locations
7.2 Setup Inventory Organization
Navigation: Purchasing > Setup > Organizations > Organizations

(B) Others > Accounting Information
(B) Others > Inventory Information
Inventory Parameters Tab

Costing Tab
Revision, Lot, Serial and LPN tab

ATP, Pick, Item Sourcing
Inter-Org Information

Other Accounts
(B) Others > Receiving Information

7.3 Link Inventory Organization to Location
Navigation: Purchasing > Setup > Organizations > Locations
Query Location and in the “Other Details” Tab, choose Inventory Organization
8. Setup Payables
a) Accrue at Receipt
India Localization support only accrue on Receipt. Period End accrual is not
supported.
Does India Localization Support “Period End Accrual” functionality? (Doc ID
1981441.1)

b) Invoice Match Option:
Invoice match option should be set to “Receipt” in view of the setting of
Accrual on Receipt. PO matched Invoices would create Reconciliation
issues.
The PO matched invoice can only be created for service Tax. For any other
tax such as Excise, VAT, CST etc it is mandatory that the "Accrue at Receipt"
flag is checked and the invoice should be created matching to "Receipt"
only.
However even for service tax at the time of creating receipt there will not
be any accounting at the time of receipt when accrue at receipt flag is
unchecked. For Service tax accounting you need to create PO matched
invoice only.
Can PO Matched Invoice Created in India Localization Accrue On Receipt
(Doc ID 1347944.1)
8.1 System Option
It is a system wide setup and not reference to a particular operating Unit.
Payables > Setup > Options > Payable System Setup
8.2 Financial Options
Payables > Setup > Options > Financial Options
Should be set up for each Operating Unit.
Accounting Tab

Supplier – Purchasing Tab
Encumbrance Tab
Tax Tab (Not applicable) – Leave Blank
Human Resources Tab

8.3 Payable Option:
Payables > Setup > Options > Payable Options
Accounting Options Tab:
Currency Tab
Tax Reporting (Not Applicable) – Leave blank

Invoice Tab
Supplier Tab
9. Purchasing Setup
To be setup for Each Operating Unit.
Purchasing > Organizations > Purchasing Options

Complete other required setup for Purchasing and Payables
10. Receivables Setup
Ensure required AR System Profile Options are set using System Administrator
Responsibility
10.1 Define Payment Terms (as required)
Receivables > Setup > Transactions > Payment Terms

10.2 Define Auto Accounting: - For each Operating Unit
Define Auto Accounting for Receivables, Auto Invoice clearing, etc.
10.3 Receivable System Options (For each Operating Unit
Receivables > Setup > System > Systems Option
Accounting Tab:

Trans and Customers:
Miscellaneous Tab
Note Default Country: India
10.4 Transaction Types: (For each Operating Unit)
Receivables > Setup > Transactions > Transaction Type
Credit Memo Transaction Type:

Invoice Transaction Type:
Inter Company Invoice:
Debit Memo:

10.5 Transaction Sources (For Each Operating Unit)
Receivables > Setup > Transactions > Sources

10.6 Define Collectors:
Receivables > Setup > Collections > Collectors
10.7 Define Approval Limits
Receivables > Transactions > Approval Limits
10.8 Define Remit to Address
Receivables > Setup > Print > Remit-to Addresses
10.9 Define Remittance Bank
Payables > Payments > Bank Accounts (Define Bank, Bank Branches & Bank
Accounts, Assign to OU) - Create Grant for the user to access
10.10 Define Receivable Activities:
Receivables > Setup > Receipt > Receivable Activities

Setup Receivable Activities for Finance Charges, Charge Back Reversal, Earned
Discount, Unearned Discount, Adjustments, Bad Debts.
10.11 Define Receipt Class:
Receivables > Setup > Receipts > Receipt Classes
(B) Bank Accounts

10.12 Receipt Source (To be setup for each Operating Unit)
Receivables > Setup > Receipts > Receipt Sources
10.13 Customer Profile Classes
Ensure Customer Profile Class is set with Profile Class Amounts : INR
Receivables > Customers > Profile Classes

10.14 Remit-to Addresses:
Receivables > Setup > Print < Remit-to Addresses
11. Order Management:
11.1 Setup Necessary Profile Options
GL: Ledger Name, GL: Data Access Set, MO: Security Profile etc
11.2 Parameters:
System Parameters: (to be setup for Each OU). Setting Item Validation Organization
is important.
Setup > System Parameters > Values
Parameter Value
Audit Trail Enable when Order is Booked
Call line DFF extension API in COPY Yes

Credit Memo Transaction Type CM_Chennai
Credit Salesperson for Freight on Sales No
Customer Relationships Related Customer
Default value for Action - Copy Complete
Configuration
Yes
Enable Ship Method Yes
Item Validation Organization Chennai Manufacturing
Show Discount Details on Invoice Yes
Global Parameters:
Setup > Shipping > Global Parameters
Ensure “Raise Business Event” is checked. Necessary for IL Taxes to flow from Sales
Order to AR (Doc ID 1631274.1)
Shipping Parameters:
Setup > Shipping > Shipping Parameters (for each Inventory Organization)
Ensure “Raise Business Event” is checked in the General Tab. Necessary for IL Taxes
to flow from Sales Order to AR (Doc ID 1631274.1)

11.3 Define Transaction Types:
Ensure TAX_EVENT is NULL under the Finance Tab. Doc ID 1631274.1
Order Management > Setup > Transaction Types > Define ( To be defined for each Operating
Unit)

Standard Line Type for Chennai OU – Chennai Manufacturing Inventory
Main Tab
Shipping Tab:
Finance Tab:

Define Standard Order:
(B) Assign Line Flow:
Shipping Tab:
Finance Tab: (Ensure Tax Event is NULL)

Define Return Line Type:
Define Return Order:

(B) Assign Line Flow:
Shipping Tab:
Finance Tab:
Mixed Order

11.4 Define and Assign Document Sequence:

10.14.1 Define Sequence:
Order Management > Setup > Documents > Define
10.14.2 Assign Sequence
PART C: INDIA LOCALIZATION SETUPS
1. DEFINE TAX AUTHORITIES:
The liability arising from any tax has to be accounted and paid to the concerned tax
authority within the time limit specified by the particular tax law. These Tax authorities
have to be defined as a supplier and the necessary supplier sites are to be created.
For example, Income Tax Deducted at Source, while making Supplier payments needs
to be accounted against an Income Tax Authority. A Supplier and Site for this Authority
to be created in the Base Application. In the Type field on the Classification tab, 'India
TDS Authority’ should be chosen. Only then, when defining a 'Tax Deduction at
Source' Type of Tax, the Tax Authority Name would be listed in the 'Vendor' field LOV
on the Tax Definition screen. Sites as necessary should be created and OU
assignment should be done.
In Localization form, Additional Supplier Information should be created with a Null site
and for each of the Sites for the authority.

The same Steps to be followed for each of the following Tax Authorities:
Tax Authority Lookup Value
Commissioner of Income Tax India TDS Authority
Commissioner of Sales Tax India VAT Authority
Commissioner of Service Tax India Service Tax Authority
Commissioner of Central Excise India Excise Authority
Commissioner of Customs India Customs Authority
Commissioner of IT India TCS Authority
Create Sites and Assign to OUs
Additional Supplier Info: Null Site
With Site:

2. SEEDED REGIMES and TAX TYPES
REGIMES:
Seeded Regime values are pre-defined in the Asia Pacific Localization Lookups.
Regime Registration of Organizations needs to be done wherever required.
Check whether seeded values are enabled.
TAX TYPES:
Seeded tax types are predefined in Asia Pacifica Localization Lookups – Check
whether enabled.

3. CENTRAL EXCISE / CENTRAL SALES TAX
For Excise, no Regime Registration is required. Accounting Information for Excise is
captured in Additional Organization Information Setup. Only Tax Codes needs to be
setup.
A seeded "Excise" regime (which is a dummy regime) only with the regime header is
available and no attributes are seeded to the dummy regime. No organizations can be
defined for this regime through the Regime Registration form. Defining a Regime
header is done to allow the Item Classification definition for Excise Regime. (Doc id
1938236.1)
3.1 ADDITIONAL ORGANIZATION INFORMATION:
Define the structure of Inventory organizations and locations, which would be
reporting to the Local Tax Authorities.
The information defined at this level would be the basis for Recording, Reporting
and accounting of the location taxes. Apart from this define the organization

registration details with Excise, Customs, Sales Tax and TDS authorities.
This information is available in additional organization information are the basic
data for all India Localization activities and accounting. The Organization and
Locations defined through Common Application would be available for setup. While
creating the additional organization information, it is mandatory to create two sets
of records, one at null location level and another with location.
If multiple organizations are defined within the same excise registered premises,
then you can define one organization and location combination as master
organization and the rest as child organizations having reference to the master
organization based on the ECC code. In such a setup, the master organization is
the organization where excise registers are generated only from the master
organization. The master child relationship is used only to generate consolidated
excise registers at master organization level. You need to run the India Master Org
RG request set to consolidate excise registers at the master organization.
Payable > Setup > Additional Organization Info
Additional Organization Information – Tax info Tab: (Null Location)
Additional Organization Information – Accounting Info Tab: (Null Location)

Additional Organization Information – Preference Tab: (Null Location)
NOTE:
Days allowed for 173L, Sales Tax Return days and Excise Returns days to be left
blank, due to change in Rules.
Additional Organization Information – Trading Info tab: (Null Location) – Applicable
only for Trading Organization
Define Tax Calendar:

Repeat the above with Location:

The above definitions should be done for each of the Inventory Organization.
Definition for Trading Organization: Enable Excise in 23D in Trading Info Tab

ADDITIONAL ORGANIZATION INFORMATION WITH LOCATION: Trading
Organization: Chennai Trading

3.2 DEFINE SUBINVENTORY LOCATIONS IN INDIA LOCALIZATION
Associate sub-inventories to a combination of Organization/ Location. Excise related
transactions and records would be updated only for those sub inventories that are
identified as bonded for manufacturing organizations and as traded for trading
organizations.
Inventory > India Localization > Setup > Subinventory Locations (query
Organization and Locations) > Query Subinventory – Enable Bonded Flag

For Chennai Manufacturing: (Note: Enable Bonded Flag)
For Trading Org: Chennai Trading: Note: Trading is checked by default
3.3 DEFINE BOND REGISTERS
The calculation of excise duty and updating of excise registers are based on the setup
made in the define bond register. Pre-requisite setup: Definition of Order types and
Transaction Sources in the base Application.
Excise transactions are classified as:
• Domestic with Excise
• Domestic without Excise
• Export with Excise
• Bond Register (Export under Bond)
• Same Order Type/Transaction source cannot be mapped to different Excise
related transactions. You need to map business requirements by considering
the localization setup that needs to be carried out for mapping the Excise
Related Transactions.
• Attachment of Order type to 'Domestic without Excise', or 'Trading without
Excise' would mean that Excise Invoice Number for such transaction is not
required. This Setup was mandatory for Tracking ST Forms earlier and is no
longer mandatory for form tracking.
• When Using Master Organization setup for generating Excise Invoice Numbers
at Master Organization level, It is mandatory to setup the Order Type at both
Child Organization and at Master Organization for getting the Correct Excise
Invoice Number.

Excise transactions need to be identified based on the Organization/Location
combination and against each excise transaction multiple Order types and Transaction
sources can be assigned. Order type need to be assigned to excise related transactions
from Order Management Module and Transaction source need to be assigned for all
excise related transactions through the Receivable module. If the
Organization/location is of manufacturing type, excise related transactions for
manufacturing set up need to be associated. Likewise, if the organization/location is
‘trading’ excise related transactions for trading need to be associated.
By associating the Order Types to the excise transactions for an Inventory
Organization and Location, the related Excise Record entries will be passed based on
the nature of goods cleared.
SETUP FOR Chennai Manufacturing (Manufacturing)
SETUP FOR Chennai Trading (Trading)
3.4 DEFINE EXCISE INVOICE NUMBER GENERATION
It is not mandatory for the user to define Excise Invoice Generation Serial Number. If
the User does not define the Excise Invoice Generation Screen, then auto generated
system numbers will be allotted to the Excise Invoice as stipulated under Rule 52 A of

the Central Excise Rules (one sequence for domestic transactions and another for
exports). You can initialize the default values of GP1 & GP2 in the table
ja_in_excise_invoice_no to start from a different number.
However, in case of a business need to generate Excise Invoice number on any
different basis, Excise Generation feature can be used to automate the Excise Invoice
document sequence generation.
 A document sequence for the combination of Transaction Type, Order/Invoice
Type and Register Type can be setup.
 Optionally, an alpha/numeric value which would be prefixed to the number
series generated for each excise invoice can be defined. The setup would be
restricted to the Order/Invoice Types for which it is created.
 For all other Excise Invoices which are created using Order/Invoice Types for
which setup has not been made, the system uses the default number series.
This would be a numeric series, starting with 1, incremented by one. The
sequence would be different for each Organization/location and the nature of
clearance. Within the organization, the sequence would be different for the
Domestic clearances and Export Clearances.
 Before defining the user definable prefixes and excise invoice numbers, setup
needs to be done in define Bond register where the user needs to associate an
Order type for all transactions Order Management module and Transaction
source for all transactions from Accounts Receivable module. The Order type
and transaction source will be associated with different type of excise removals
(like domestic with excise, Bond, Export with excise etc.). Only after associating
an Order type/Transaction source with an excise related transaction type, user
should define the user definable prefixes and excise invoice numbers in this
region.
SETUP FOR Chennai Manufacturing
India Local Inventory > Setup > Additional Organization Info – Query Organization
and Location (B) Tax Calendar (B) Excise Generation
SETUP FOR Chennai Trading

3.5 TAX CODE SETUP – EXCISE AND CENTRAL SALES TAX
Tax codes will be the basis for all localization tax calculations. The Tax Codes to be
defined depends on the Business Needs. Tax codes cannot be updated once saved.
However, but can be disabled by entering the End Date.
India Local responsibility > Setup > Tax Setup > Taxes.
The taxes are relevant to a particular Operating Unit. Once Tax screen is selected,
Inventory Organization has to be chosen from the LOV. In case of Multi-Org, the taxes
set up relate to the Operating Unit corresponding to the Inventory Organization
chosen.
Setup for Chennai OU
Basic Excise Duty - Purchase
Ensure 100% Credit is defined.
Basic Excise Duty for Sales

Basic Excise Duty Sales for Trading Organization:
Note: As per the current functionality in Trading Organization one should not use
precedence based taxes. This is because when you perform match receipt at that time
taxes will calculated based on the receipt to which the order is matched. For correct
tax calculation you need to add Adhoc Excise of taxes (Excise, Education Cess, SHE
Cess) with amount as 0. Once you match it taxes will get calculated automatically
based on the receipt taxes.
CST 2% against Form C

CST without C Form – Normally Local VAT Rate:
3.6 SETUP INVOICE TOLERANCE:
As per Central Excise Act, the Excise duty will be rounded off to the nearest Rupee
and in effect the AP Invoices, the Header Amount and the Distribution Amount will
have minor difference. When there is a difference between header amount and
distribution amount, a hold is created.
To overcome the hold being created, a Tolerance in Percentages and in Amounts can
be created in Localization. Wherever a hold is placed on Invoices due to difference in
Distributions Total and the Invoice Header, then, the system would check for the
tolerance limits setup for Organization. If the difference Amount falls within the
specified limit, then this inserts an Additional Invoice Distribution line for the
Difference Amount and the Invoice is approved. This line would have the line type as
'Miscellaneous' and the charge Account would be as specified in the Invoice Tolerance
Setup for the Organization.

On Re-Approving the Invoices, the system would check for the existence of a
Distribution line for Rounding Amount. If one exists, then the amount of this line would
be updated with the revised difference. This setup to done for each Operating Unit.
India Local Payables - India Localization - Setup - Others - Invoice Tolerance
Upper and lower limits are to be entered as positive values.
3.7 ITEM CLASSIFICATION - Excise:
Item Classification has to setup for each inventory organization. This is to classify the
item for the purpose of excise. For example, an item can be Excisable in one Inventory
Org but non-excisable in another. After creating an item and assigning it to
organization, Item Classification has to be created for the Item in the India
Localization.
Inventory > India Localization > Setup > Item Setup > VAT/EXCISE Item Classification

For Trading Item in the Trading Organization: Tradable Yes and Modvatable No

4. CUSTOMS REGISTRATION AND CUSTOMS TAX CODES
4.1 REGIME CREATION:
As part of BOE enhancement done in 12.2, now the BOE accounting – Paid / Payable
accounts and Write Off account are fetched from regime setup of Customs and not
from Additional Organization setup.
Custom Regime Registration should be done in the Regime Registration form, where
Registration / IEC details, Tax Types with Accounting Codes and DEPB Accounting
Codes are to be provided in the respective tabs.
India Local Payable > India Localization > India TCS/VAT/Service Tax > Setup >
Regime Registration
Registration Tab:
Need to define Registration number as Primary Registration Number IEC code
represents Import Export Code. This is one of the attribute for regime registration
Tax Types Tab:
The following Tax Types are seeded.
Duty Non Recoverable Recoverable
Customs Duty Customs Duty Additional
Customs – Education Cess CVD – Education Cess
Customs – SHE Cess CVD – SHE Cess
Additional Custom Duty Additional CVD
Surcharge
Any Other Customs Tax Type 1

For Each Tax Type a Paid / Payable Account and a Write Off Account to be defined.
Others Tab:
DEPB – Duty Entitlement Pass Book
In case DEPB Credit is available and want to utilize it for paying Customs Duty, in
“Others” tab, DEPB Account should be specified. This account will be picked up in
accounting of DEPB credit if provided during the BOE creation.
Sequence Tax Types Description
1 Customs Duty-IND Customs Duty
2 Customs Duty - Additional-IND Customs Duty - Additional
3 Customs - Education Cess Customs - Education Cess
4 Customs SH Education Cess
Customs SH Education
Cess
5 Additional CVD Additional CVD

4.2 REGIME REGISTRATION - CUSTOMS
Each Inventory Organization should be registered under the Customs Regime.
Select the Organization Type, Organization Name and Location and Save. On saving,
details setup during Regime registration defaults, which can be amended as required.
Tax Type Tab:
Others Tab:

4.3 TAX CODES FOR CUSTOMS:

4.4 ITEM CLASSIFICATION FOR CUSTOMS:
For Imports, certain item parameters (e.g. Tariff Headings and code etc) are required
to be captured. Define custom item classification in VAT/EXCISE - Item Classification
form.
India Local Inventory > Setup > Item Setup > VAT/Excise – Item Classificaiton

4.5 DEFINE BOE AGENT:
Define BOE Agent before using Bill of Entry functionality as BOE Agent would be
listed in LOV of Agent Code field. Use this information for Bill of Entry report for
submitting to Customs Authorities.
India Local Payable > Setup > Others > BOE Agent
5. VAT REGISTRATION AND VAT TAX CODES:
5.1 REGIME REGISTRATION
VAT Regime would be used to define rules that would be applicable to all Taxes
assigned to it. On a VAT Regime, you would define rules that would be applicable to
all transactions created from the Organizations assigned to it. Information defined at
Regime creation would default to organizations assigned to the Regime and the
defaulted values can be modified to suit requirement.
Value Added Tax Registration: Organizations have to register with the various
Value Added Tax Authorities (specific to each state). The Registration would be the
basis for all Recovering Credit on Input Tax, settling Tax Liability and Tax Reporting.
Assigning Tax Types: Value Added Tax Type have to be assigned to the Value Added
Tax Regime. This is a logical grouping of all transactions to which these taxes are
applicable. If the values assigned for a particular tax are different, these would prevail
over those defined for the Regime.
Assigning Organizations: Regime has to be assigned to all Organizations to which
it is applicable. Taxes defined under this Regime would default only for these
Organizations.
Note: GL: Ledger Name profile should be set to the Ledger to which Inventory
Organizations belong so that they will be available for Registration. If different
Ledgers are used, separate Responsibilities to be setup. (1382226.1)
Note: Account Details given in the Regime setup only will be considered for
generating Accounting Entries. Account Details given in the Tax setup will be
ignored.

5.1.1 Regime Registration:
India Local Inventory > India TCS/VAT/Service Tax/FBT > Setup > Regime
Registration
Main Tab:
Tax Types Tab:
5.1.2 Organization Assignment:

5.2 TAX CODES FOR VAT
5.3 DEFINE CLAIM TERMS

Defining claim term for VAT is an important setup in the P2P cycle. The claim term
defined determines the VAT claim amount in the VAT- Claim Terms Definition form.
Any number of instalments can be defined but the total claim should be equal to 100%
Claim terms are defined for a unique combination of the following:
 Regime
 Item Class
 Regime Registration Number
 Organization (location)
India Local Inventory > India TCS/VAT/Service Tax/FBT > Setup > VAT - Claim Terms
Definition
VAT CLAIM FOR CAPITAL GOODS:
VAT CLAIM FOR INPUT:

5.4 DEFINE VAT ITEM CLASSIFICATION
Items are to be classified to define VAT Recovery terms. The Attributes that are to
be defined are:
o Applicable – Whether VAT is applicable for OM – AR Cycle
o Item Class - Raw Material, Capital Goods, Finished Goods or Others
o Recoverable: Yes or no – whether credit can be taken or not
India Local Inventory > Setup > Item Setup > VAT/EXCISE – Item Classification

5.5 DEFINE VAT INVOICE SEQUENCING:
Document Sequencing Setup window is used to define VAT Invoice Sequence
Numbers. VAT Invoice sequence generation depends upon the setup made for the
Value Added Tax Regime. Excise Invoice Number can be used as VAT Invoice Number
by setting up attribute "Same Invoice No for Excise and VAT Regimes" in the VAT
Regime Registration. However, setting up VAT Invoice sequence is a mandatory setup
that needs to be performed irrespective of the value of "Same Invoice No for Excise
and VAT Regimes" attribute.
India Local Inventory > Setup > India TCS/ VAT/Service Tax/FBT > Document
Sequence

6. SERVICE TAX REGISTRATION AND SERVICE TAX CODES:
To configure Service Tax, Service Tax Regime should be setup first. Setups made for
a regime would be applicable to all transactions created from the organizations
assigned to it. Information defined at the Regime level will be the default, which can
be modified at Organization Level, as needed.
Regime Registration details should include assigning Tax Types, Tax Accounts and
Point of Taxation.
Service Tax Education Cess and Service Tax SH Education Cess have been merged
with Service Tax effective 1st June 2015. Hence No need to define them. Reverse
Charge Account also to be defined for interim accounting Reverse Charge. This
account will be debited at the time of Accounting and credited at the time of
settlement.
6.1 Service Tax Regime Registration:
India Local Inventory > India TCS/VAT/Service Tax/FBT > Setup > VAT - Claim Terms
Definition

Note: Effective Date for Service Tax POT should be either the POT patch application
date or current system date and the format must be in DD-MON-YYYY. Reversal days
for Payable can be in month or days.
6.2 ORGANIZATION ASSIGNMENT
Details will default from the First Organization defined at the time of creation of the
Regime. Needs to be changed as required.

6.3 TAX CODES – SERVICE TAX
India Local Purchasing > Setup > Tax Setup > Taxes
 Note: Doc ID 1538419.1
 Service tax has to be defined as recoverable by giving credit percentage in Tax
definition form as 100. In case if it is not 100% Service Tax functionality will
not work as intended.
 Even if the taxes are used in Order to cash cycle they need to be recoverable.
Also for Reverse charge type of taxes they need to be define 100%
Recoverable.
Service Tax Codes for Reverse Charge Service Tax:

7. TDS SETUP, REGISTRATION AND TDS TAX CODES:
TDS Localization in EBS has been enhanced and has undergone a structural
change from R12.2.2. Refer: 1222 Tax Deducted At Source (TDS)
Functionality Overview Document (Doc ID 1631223.1)
7.1 Define Accounting Calendar for TDS in the Base APPS
The period should start from 1-Apr and end to 31-Mar of next year. Period Type
should be Year. This calendar will be assigned to the Regime.
Purchasing > Setup > Financial > Accounting > Calendar

7.2 Define TDS Sections:
India Localization comes with pre-seeded, default TDS Sections in the database.
However, review these default sections and decide whether to change them to suit
business needs. To change them, query on the 'JAI_TDS_Sections' from the
Asia/Pacific Lookup Codes and add a new record, with the relevant descriptions and
the effective period.
India Local Purchasing > Asia Pacific Lookup
7.3 TDS Tax Codes
TDS Codes and TDS Category has to be defined before Regime creation. TDS Tax
Calculation is based on tax category in R12.2.x TDS Architecture. It is a Mandatory
setup required. PAN Not Available Category must be set up as it is required to be
given in the Regime Registration for TDS. The following are the changes:
a. For using TDS functionality defining Tax Category is mandatory.
b. Instead of user creating the same manually every time a tax code is defined,
“Auto Create” check box can be flagged at the time of Tax Code creation
and a tax category will be automatically created.
c. Section code not required at Tax Code level and will be disabled.
d. Invoice Section code info can be defaulted from Natural Account or Vendor
Site setup or can be overridden from TDS tax detail UI
e. TDS Education Cess, TDS Education SH Cess, TDS Surcharge fields are
disabled as they are now defined as tax types. Independent tax codes need
to be defined for these tax types.
India Local Purchasing > Setup > Tax Setup > Taxes

7.4 REGIME CREATIN
Points to be noted:
a. TDS financial year to be linked in the Regime Registration form. It
cannot be overridden at OU Level
b. Default TDS category for Pan Not available should be setup mandatory.
c. Contact details (email, landline, mobile phone) of the person deducting
should be provided
d. Use Vendor Default Section Code is optional (default N).
If set to Y, TDS defaultation package will firstly check natural
accounting mapping to default section code. If no value is
fetched by natural account mapping, then section code from
vendor site would be defaulted.
If set to N, defaultation package will only check natural account
mapping to default section code. No TDS tax will be deducted if
it has not fetched any value for this mapping.
For Prepayment invoice, it will always default from vendor site.
Also user can override from TDS Tax Detail UI manually.
e. Allow Manual Override can be opted as Yes or No. (Default is N). It
cannot be overridden at OU level.
The details required by eTDS return as per NSDL should be given.
Registration Type Registration Name Registration Value
Primary Registration Number TAN No AADCN1234K
Others Deductor Email Id test@oracleebs.com
Others Deductor STD-Phone No 044-29259009
Others Responsible Person Mobile No 9999912345
Others Name of Return Preparation Utility Oracle
Others TDS Financial Year 11062
Others Default Tax Category when PAN not Available 10065
Others Allow Manual Override Y
Others Use Vendor Default Section Code Y
Others PAN No CHNN12345K
Others Ward No 12343
Others TDS Invoice in Parent Batch N
Others Tax from OU of Order ? N

7.5 REGIME ASSIGNMENT
7.6 TDS ROUNDING FACTOR
It is mandatory to setup TDS Rounding Factor at Legal Entity Level.
India Local Payable > Setup > Others > TDS Rounding Setup

7.7 SECTION MAPPING
Section Mapping is used to generate TDS Invoice Number and eTDS output. Section
Code Revised column should contain only code provided for eTDS return by NSDL.
7.8 THRESHOLD SETUP:
When an AP Invoice is entered, TDS is calculated based on Threshold setups. The
Set up can be done for Single, Cumulative and Exception.
Threshold is defined for each section by TDS vendor type. Thresholds applicable to
specific vendors are defined as exception setups and vendors are assigned manually
to this setup.
There are two types of Thresholds
Single – Applicable to a Single transaction
Cumulative – In this case, TDS is applicable only when the cumulative purchases made
from the supplier in one financial year exceeds specified limit i.e, Cumulative threshold
amount.
Multiple thresholds with different tax rates may exist. For example, tax rate is 12
percent for the cumulative amount below 10L and tax rate of 12.24 percent for the
cumulative amount above 10L.
Before cumulative threshold is reached, single invoice amount greater than the
threshold limit for a single invoice attracts TDS at predefined rate
Threshold Amount = Total Invoice Amount – Total Invoice Cancelled Amount – Total
Invoice Apply Amount + Total Invoice Unapply Amount
Natural Account Mapping:
 Natural account section mapping definition is necessary when one vendor
provides multiple services. A Threshold can have multiple rates and rates will
be picked up on the basis of Natural Accounts. If for an invoice, natural account
is not available in the mapping, than the default threshold will be picked up.
 After defining natural account section mapping, the same can be assigned in
[Threshold Setup]/ [Assign Natural accounts] UI.

CUMULATIVE:

7.9 TDS CREDIT MEMO
For certain sales where Tax Deduction at Source is applicable, the customer would
deduct amount of TDS from the Invoice value and pay the balance. The Customer
would issue a TDS Deduction Certificate. The details of TDS Certificate needs to be
captured and a credit memo to be issued to customer to square of the TDS amount
outstanding against the Invoice.
In India Localization, the details of the Certificate received and the deduction details
can be captured. In addition, a Credit Memo can be created through Auto Invoice
giving Invoice source as TDS Credit Memo.
The following setups need to be done:
a. Customer Additional Information
b. Transaction Type
c. Source
The Transaction name has to be 'TDS Credit Memo'. The Name is case sensitive and
should match exactly.
Oracle Receivables > Setups > Transactions > Transaction Type

Oracle Receivables > Setups > Transactions > Sources
Uncheck Automatic Batch Numbering & Automatic Transaction Numbering.
Standard Transaction Type: Choose Credit Memo Type Defined for TDS
Auto Invoice Tab: Uncheck Allow Sales Credit and Create Clearing.

Customer Information: Sold to Customer and Ship to Customer should be “Value”
others ID
Accounting Tab: Invoicing Rule and Accounting Rule should be “None”

Other Information : Transaction Type should be Value
Sales Credit Validation: All should be ID

8. TCS SETUP, REGISTRATION AND TDS TAX CODES:
Value Description
2490 TCS Liability
2491 TCS Interim Liability
2492 TCS Edu Cess Liability
2493 TCS Edu Cess Interim Liability
2494 TCS SHE Cess Liability
2495 TCS SHE Cess Interim Liability
8.1 Define Advance Receipt Class
Define a Receipt class to be used for collecting advance money for sale of items that
attracts TCS. It has to be attached to the Regime Registration. The Receipt will collect
TCS amount and generate a TCS Credit Memo.
Receivable > Setup > Receipts > Receipt Class

8.2 Define TCS Debit Memo and TCS Credit Memo Transaction Type
Oracle Receivables -> Setup -> Transactions -> Transaction Types
For better control, separate Debit Memo and credit Memo Transaction type for use in
the TCS Transaction.
8.3 Define TCS Debit Memo and TCS Credit Memo Transaction Source
Oracle Receivables -> Setup -> Transactions -> Sources
Type: Imported, Automatic Batch Numbering & Automatic Transaction Numbering to
be unchecked. Standard Transaction Type: Credit Memo Transaction Type.
TCS Credit Memo:

Auto Invoice Tab: Allow Sales Credit to be unchecked.
Customer Information TAB: Sold to Customer & Ship to Customer to be ID.

Accounting Information Tab: Invoicing Rule & Accounting Rule to be “None”
Other Information Tab: Transaction Type should be Value

Sales Credit Validation Tab: Sales Person & Sales Credit Type to be ID.
TCS Debit Memo Source:

BUG: Service Tax Type not available in Regime Registration form
VAT Tax Types Not Available In List Of Values (LOV) In VAT Regime Registration (Doc
ID 2062431.1)
9. THIRD PARTY TAXES, FREIGHT, INSURANCE & DISCOUNTS
Third Party Taxes:
In the Procure to Pay Cycle, the functionality of third Party taxes to account for charges
that are incurred but not to be paid to the supplier or Tax Authorities. This can be
setup by specifying the Vendor Name and Vendor Site for the Tax Code. After receipt,
you have to run the Third party taxes concurrent to generate AP Invoices for all third
part taxes included in the Receipt. While computing the cost of the item, these costs
also will be considered.
While creating an Third Party Tax (that can be used in Procure to Pay Cycle), a Supplier
to whom the payment needs to be done on receipt of the goods, can be attached. For
example: for a 'Freight' type of tax, you attach Prakash Roadways (should have
defined this Vendor in the Supplier Master), and attach this tax to a PO. On receipt of
the goods, system by considering the values at the time of receipt creates an invoice
to Prakash Roadways automatically. At the same time, for costing purpose, the freight
will be considered.

Freight, Insurance and Any Other Tax:
Can be used for Accounting for any expense incidental to the Purchase transaction.
Any tax (cost component) defined under these categories will be taken into
consideration for the calculation item cost. However, it has to be ensured that no
credit percentage is specified.
Handling Discounts:
'Any other Tax' type of taxes with negative Percentage or Unit Rate can be used to
handle discounts. Oracle Financials for India will also handle any other debit/credit
that needs to be done for any transaction.
Before creating Tax Codes, it is necessary to create Supplier for Freight, Insurance
etc.
Third Party Tax Code:
Freight (ad hoc)
Insurance: 1%

Testing Null Vendor:
Update Vendor check box will enable changing of the vendor, when the Third party
tax codes is used.
10. TAX CATEGORIES:
A Tax Category is a grouping of Tax Codes with tax precedence and calculations as
applicable to a transactions of a particular nature. Defining Tax Category enables
users to choose a tax category instead of selecting individual taxes every time for a
routine transactions of a particular nature. It also enables defaulting of a tax category,
and the defaulted tax codes can be amended by the user, if necessary.
The Defaulting Logic for item based taxes works as follows:
Users can attach the tax category for an item in Item category form and that item
category has to be assigned in Supplier/Customer additional information form.
a) First level, system will check for item category attached at Supplier/Customer
+ Site level and tax category for that item category will get defaulted.

b) Second level, System will check for item category attached at
supplier/Customer + null site level and tax category for that item category will
get defaulted.
c) If both the above are not defined, then system will check for the item class
attached in the Tax category definition form and based on the item class, tax
category will get defaulted. For example, if tax category1 is defined for item
class raw materials, then for all the items falling under raw materials, this tax
category will be used.
Tax Precedence:
Tax Precedence defines how the taxable amount (Taxable basis) will be arrived at for
applying a particular tax rate.
The Tax Rate may be applied on the transaction base value or on another tax line or
compounding them or combination of all. The base amount or material sale value is
by default given a precedence value of '0'. The subsequent precedence are assigned
to the Tax Names' respective Line Numbers. A maximum of five levels of precedence
are permitted.
A tax cannot be dependent on itself. However, interdependent taxes can be set up in
precedence e.g. tax at line 1 can depend on tax at line 2. Similarly, tax on line 2 can
depend on tax at line 1.
If a tax name is defined as adhoc or as Amount Per Unit of measure then the
Precedence has no Relevance in tax computation of such tax, however, calculation of
other taxes can be based on this tax.
The Taxes included in Tax Category would default on a transaction line. But, you would
also have a provision to add new tax lines manually. Tax precedence for Additional
CVD Tax Type should be set to the Tax on which it is calculated.
TAX CATEGORY FOR ITEMS:
Local Purchase: Excise Duty+VAT (in this case, Excise will be calculated on material
value and VAT will be calculated on material value plus Excise duty)
Inter State Purchase against Form C

Local Sales VAT - Manufacturing
Local Sales VAT – Trading: Note Trading should not have precedence based Excise
Tax. It will default when match receipt is done at the time of shipping.
Interstate Sales: Form C - Manufacturing
Interstate Sales Form C - Trading
Inter State Sales – No Form
Inter State Sales – No Form Trading

Service Tax
Service Tax – Reverse Charge
Imports - Customs

R12.2.4 india localization setup

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