India Localization means complying with India Specific Tax reqirement .

Localization provides provision for: Defining of taxes

Defaulting of taxes

Recording of taxes

Calculation of taxes

Reporting of taxes

Taxes : Central Excise

Sales Tax

Income Tax

VAT

Custom Duty

Service Tax

Central Excise :Applied to both MFG and Trading Orgs when the Org is excise registered.

Federal Tax Controlled by the central excise dept.

A CE registration called ECC# is reqd for each physical location.

Sales Tax :It is administered by States .

Tax is applied at the time when product is sold to the end customer .

Two components for Sales Tax - Central Sales Tax(CST) and Local Sales Tax (LST).Different tax registration is required for both of them.

The Head office would be responsible for tax settlement and accounting for all the tax registered orgs.

Each state will have a separate LST and CST registraion numbers. These are defined at each Inv Org.

If multi Inv Orgs fall under one single state , they all will use the same CST and LST registrations.

Income Tax :Head Office is normally registered with Income Tax at LE level.

PAN (Permanent Account Number) will be allocated for head office, defined at the LE.

TAN (Tax Deduction Account Number) is allocated by the local Income Tax jurisdiction office for the income tax under local jurisdiction at the OU Level.

A seperate TAN number is reqd for each OU that fall under different states.

A common TAN can be used for multiple OU's if they are all under the same state.

VAT :VAT is tax levied on the value added to a product at different stages.

VAT is a tax levied at each of the stages in a multi point entry in the supply chain with the facility of set-off of input tax. It is levied by states in the place of Sales Tax.

A manufacturer may pay VAT on input raw materials and recovers that tax when he sells the finished goods to a dealer. The difference of tax collected from the dealer and the tax paid for the raw materials is paid to the tax authority.

Similarly, a dealer may pay VAT on the finished Goods and recovers that tax when he sells it to a retailer. The tax after recovery is paid to the tax authority.

Finally the end customer pays the VAT to the retailer. The retailer recovers his portion of the tax he paid and pays the balance to the tax authorities.

CENVAT is a Central VAT. You have the provision to claim this tax at the time of receipt. The RG registers are updated with the CENVAT entries at the time of receipt.

Customs Duty :Customs Duty is paid on goods when goods are imported into India

It is paid in INR as a % of the duty over the value of goods received in foreign Currency.

In Oracle, provision is made to pay this duty as a prepayment before receiving the materials and it is adjusted against BOE given by Customs.

When goods are received into the inventory org, they should be associated with the BOE Tax amount paid on them at the time of import.

These Entries are registered in a Tax Register called RG23D . While Shipping the goods on a sales order, the deliveries are associated with these registry entries.

Service TaxService tax is paid for the services rendered. Examples are

telecom service, tax services, consulting services Etc.

You can define Tax regime for Service tax and have service tax

registration.

Setup steps :

Additional Organization Information - Tax Information , Accounting Info and Trading Info

Eg Suppose we created a new Org named OOS (Old Org Service) , after creating this org ,

we have to go to Additional Organization Information form and give the following information :

=> Tax Info

=> Accounting Info

=> Preferences

=> Trading InfoUnder the Tax Info Tab :

We give the Excise Information , Sales Tax Information , Income Tax information ,VAT information for this particular Organization .

The Excise , Sales Tax , Income Tax and Vat info that we give in this form is used to Print on their respective documents eg Sales Tax doc , Income Tax doc etc ...

Once we give the EXCISE info under the Tax Info tab then this Organization is considered as a MANUFACTURING Org .

And when we give the EXCISE Information under the TRADING INFO Tab then this Organization is

considered as a TRADING Organization .

An Organization can be either a Manufacturing Org or a Tading

Org , but not both .

Associate Sub Inv's with India Localization :Check the Trading flag for Trading Org

Check the Bonded flag for Excise releted Sub inv's .

Setup "Item Templates" for India Localization and apply the templates to items .

We can define Item Templates for Excise and VAT.

Setup Tax Calender :

Tax period in India is from 1 April to 31 March

If ENCISE INVOICE has to be generated with a specific prefix, then we complete the setups under EXCISE GENERATION

Define Tax Authorities as VENDORS :

Define Customs Duty Authority, Excise Authority, VAT Authority, Service Tax Authority as VENDORS.

Appropriate VENDOR TYPE has to be selected while defining these vendors .

Eg While defining Customs Authority , we have to select 'Vendor Type' as "India Customs Authority"

Some other Vendor Type exmaples are :

-> India custom Authority

-> India Excise Authority

-> India VAT Authortty

We will cut the Payables Invoices to these authorities for the taxes to be paid .Regime Registration :

Set up VAT and SERVICE TAX Regime Registrations

Use the Regime Registration screen to capture the PAN and TAN applicable to the Organization.

Payables uses this information to enable calculation of TDS for the Invoices created from the Organization, calculate Threshold Limits and generate TDS Certificate Numbers.

User should enter the values for the field 'Registration Value' against respective attributes i.e. TAN # , PAN # Etc.

Similarly , you can also create Regime for VALUE ADDED TAX (VAT)

You can give the TAN and PAN #s corresponsing to "VAT" Tax.Define BOND REGISTERS :

Setups in Bond Register are required to generate Excise Invoice numbers and updation of excise registers

We specify the Order Type from OM in Bond Register to associate the related excise transactions

Excise transactions related to MFG and Trading need to be associated with the BondRegister

By associating the order types to the excise transactions for Inv Org and location ,excise records will be passed bases on nature of goods cleared

Some exmaples of Register Types are :

Export with Excise

Domestic with Exicse

Domestic without excise

Defaulting of taxes :

The item category will list items and associated tax category.

When POs are created , taxes are defaulted from Item category specified on SUpplier and Supplier Sites in Additional Supplier Info

When Sales Orders are created , taxes are defaulted on SO from Item Category specified on the CUSTOMERS and Customer site in Assitional Customer Info.

Go to Customer Tax Information form

Under the customer give the Excise , Service Tax , Sales Tax and VAT info fopr that Customer .

Below is the CUSTOMER :

Set up Tax and Tax Categories for India Define Taxes sepearetly and group them together into Tax

Categories

TAxes are OU specific

Flow of Trx on a SO in a Trading Org Create a tax category for SO

Enter SO and Apply tax category to a SO and Book the order

Pick Relase

March delivery with Receipt

Ship confirm

Generate Excise Invoice

Steps :

Create SO the normal way

Query the SO from India Localization screen

For each SO Line , specify a Tax CAtegory

All the taxes under the Tax Category will apply to the SO Line.

Save .

Open the SO thru the regular OM Screen and Book the order

Pick Release SO

March delviery with Reciept , it allows to pass ensice credit to your customers .

Before confirming the shipment , the org needs to allocate the exice duty involved during receipt of the exciseable goods.

While shipping from the trading org , you are required to track the exact amount of duty paid by original manufacturer for passing down the credit under CENVAT procedures

We can seethe tax details from Ship Confirm screen .

Ship confirm the SO

RG23D will be updated with the quantity matched