GST Functional P2P Flow

Pre-Release Document
Oracle Financials for India (OFI)

Goods and Services Tax (GST)
Procure to Pay Functional
Author: Vaishali and Somdeep (P2P)

Somdeep (Reverse Charge and ERS Invoice)
Creation Date: 21-Mar-2016
Last Updated: 02-Mar-2017
Document Ref:
Version: 1A
Organization: Oracle India Private Limited.
OFI-GST Procure to Pay Flow 1

Document Control
Change Record
Date Author Versio Change Reference

n
21-Mar-16 Vaishali and 1A Initial document

Somdeep
30-Sep-16 Vaishali and 1.0 Phase-I frozen document
Somdeep
30-Dec-16 Vaishali and 1.1 Modified the ERS invoice flow chart to
Somdeep include running ADS (Pay On Receipt
AutoInvoice) Program separately
02-Mar-17 Somdeep 2.0 Reverse Charge Process and ERS
Invoice
Reviewers
Name Position
Rajnish Kumar Director, Tax Development

V S Baburaj Director, Product Strategy
Audience
Name Position
12.1 & 12.2 Implementation team
12.1 & 12.2 Customers

Table of Contents
Pre-Release Document .............................................................................................................. 1
Document Control .................................................................................................................. 2
Phase1 ...................................................................................................................................... 6
1 Introduction .......................................................................................................................... 6
2 Scope................................................................................................................................... 6
3 Prerequisite Setups .............................................................................................................. 6
4 Functional Flow .................................................................................................................... 7
5 Requisition to Purchase Order (Pre-PO- PO Documents) .................................................... 8
5.1 Flow Diagram ................................................................................................................... 8
5.2 Create Requisition ............................................................................................................ 9
5.3 India tax details form .......................................................................................................11
5.4. Create RFQ (Request for Quotation) ..............................................................................13
5.5 Creating Quotation ..........................................................................................................15
5.6 Create Purchase Order from the approved Requisition....................................................17
6 Tax recalculation logic .........................................................................................................20
7 Tax on receipts ...................................................................................................................20
7.1 Flow Diagram ..................................................................................................................20
7.2 Receipt Creation ..............................................................................................................21
8 Tax Accounting on Receipts ................................................................................................25
8.1 Accounting for Receipt Routing - Direct Delivery and Standard Routing ........................27
8.1.1 Flow Diagram ............................................................................................................27
8.1.2 Direct Delivery Recoverable Tax ............................................................................29
8.1.3 Direct Delivery Non-Recoverable Tax ....................................................................29
8.1.4 Standard Routing - Recoverable Tax ........................................................................30

8.1.5 Standard Routing - Non-Recoverable Tax .................................................................30
9 PO/Receipt Matched AP invoice .........................................................................................31
9.1 Flow Diagram ..................................................................................................................31
9.2 Process and Accounting ..................................................................................................31
10 Standalone AP Invoice ......................................................................................................35
10.1 Flow Diagram ................................................................................................................35
10.2 Process and Accounting ................................................................................................35
11 Tax Recovery Accounting (Interim) ....................................................................................37
11.1 Flow Diagram ................................................................................................................37
12 Third Party Invoices ..........................................................................................................44
12.1 Flow Diagram ................................................................................................................45
13 Costing Effect Accounting Entries ..................................................................................50
13.1 Average Costing................................................................................................................50
13.2 Standard Costing ...........................................................................................................51
Phase2 .....................................................................................................................................53
14 Introduction .......................................................................................................................53
15 Scope................................................................................................................................53
16 Reverse Charge ................................................................................................................53
16.1 Model Law.........................................................................................................................53
16.2 GST Functionality of Reverse Charge ...............................................................................54
Flow Diagram ........................................................................................................................55
16.4 Configuration:....................................................................................................................56
16.5 HSN/SAC Code:................................................................................................................60
16.6 Linking of Reporting Code value to 3rd party Registration: ................................................61

16.7 Prepayment:......................................................................................................................62
16.8 Standard Invoice ...............................................................................................................64
16.10 Period Ending Process: ...................................................................................................66
16.11 Accounting ...................................................................................................................69
17 ERS Invoice ......................................................................................................................69
16 Summary...........................................................................................................................73
17 Call to Action .....................................................................................................................74

Phase1
1 Introduction
The Procure to Pay cycle (P2P) is vital to an organization as in this process the organization buys and
receives goods or services from its vendors and makes necessary payments. This business process
covers the process of requesting, purchasing, receiving, paying for and accounting for goods and
services.
2 Scope
This document provides the details of Functional flow for Oracle Financials for India (OFI) Procure to
Pay cycle from GST point of view along with accounting entries.
Note: This document provides the details of Functional flow for Oracle Financials for India (OFI)
Procure To Pay cycle from GST point of view along with accounting entries. Note: The current
content has been compiled in reference to the frozen scope of the Phase-I deliverables (Ref: GST
Phase -1 Deliverables.docx)
3 Prerequisite Setups
For the P2P cycle to work in the new GST architecture, the below setup needs to be defined
Regime
Tax types
Tax rates
Tax Categories
Tax Rules
Tax Defaulting basis
Item Classification
Claim term
Common Configuration
First and Third party Registration

Flow Diagram
To start with, this document facilitates with a flowchart which will allow the users to get an outline of the
setup flow for Procure to Pay Cycle. Some of the steps outlined in this flowchart are required and some
are Optional. Required step with Defaults means that the setup functionality comes with preseeded,
default values in the application. However, to ensure a successful setup, you need to review those
defaults and decide whether to change them to suit your business needs. If you need to change the
default values, you should perform the corresponding setup step. You need to perform Optional steps
only if you plan to use the related feature.
Regime Registration Tax types (R) Tax rates (R)

(R
Tax Defaulting Document sequence

basis (R) Tax Categories (R)
(O)
Define Item Define Claim Terms

Tax Rules (R)
Classification (R) (R)
Third Party First Party

Registration Common Configuration
Registration
(R) (R)
(R)
Note: - In The above flow diagram R standard for Required and O stands for Optional
4 Functional Flow
The P2P cycle comprises of the following steps,
Create Requisition Create RFQ Create Quotation

(Localization taxes (Localization taxes (Localization taxes
applied) Applied) Not Applied)
Receipt creation (Localization taxes Create Purchase

Applied) Taxes are freezed Once Order (Localization
receiving is done taxes Applied)
Create Payable Invoice-

Localization taxes from receipts Invoice Payment
are copied to Invoice

5 Requisition to Purchase Order (Pre-PO- PO Documents)
Every organization that operates a business has to purchase material such as raw materials services etc.
The procurement process of any organization consists of many steps like material requirement planning,
creation of purchase requisition, receiving quotations from various suppliers etc. Please refer to the
following section for details
5.1 Flow Diagram
Create Requisition Enter

Header/Line Info
Navigate to Tools India Tax Details. Tax category is

defaulted based on defaulting mechanism defined
Create RFQ Tax category is defaulted from requisition
Create Purchase Order

and Approve

defaulted from requisition to Purchase order

5.2 Create Requisition
A purchase requisition is an internal request to purchase a material / service which will have details of
certain quantity of material or service on a certain date which is required by the organization. To create
requisition navigate to
Responsibility Oracle Purchasing Requisitions Requisitions
Enter Requisition Header:
The header holds the general information about the requisition that is related to all the lines. Choose the
requisition type (here it is purchase requisition). Preparer is the default person who is creating the
requisition and cannot be changed. You can give the description in the description field.
Enter Requisition Line:
In the requisition line, select the item that you wanted to purchase and enter the quantity and need by
date. In the Source details tab, you can input detailed information. You can give a specific note to the
buyer which might give particular information related to this purchase. RFQ required check box denotes
that the purchase of the item requires a request for quote.
Requisitions can be added in any currency set up in EBS by identifying the currency code and exchange
rate type on currency tab

Click on distribution button and enter the charge account
Close the form and save your work. Click the Approve button to submit this requisition for approval.
Now navigate to Tools India tax details form. The India tax details form will show the tax category
Defaulted.
For more information on the tax defaultation logic refer the OFI-GST- Tax Defaultation flow
document.

Tax
Category is
defaulted
Notes:-
Unlike earlier we will no longer have Localized forms in the new GST solution and to view the tax
details the navigation is Tools India tax details
Tax category defaulted based on tax defaultation logic can be manually Overridden at each document
level until the document is approved.
5.3 India tax details form
SL No Field Functional Description Query/Enabled
1 Organization Inventory Organization name No
2 Location Inventory Organization Location No
3 Document Number PO number No
4 Revision / release Number No
5 Currency PO currency No
6 Amount PO line amount No
7 Tax amount Total tax amount No

8 Total Amount Total PO amount No
9 Line Number Po Line number No
10 Item Item Code No
11 Item Description Descript of the item attached to PO No
12 Tax category Tax category Defaulted based on Yes

defaulting Mechanism
13 Tax rate name Tax type attached to the tax No

category
14 Tax type Tax type attached to tax category No
15 Tax point basis Determines the point in which tax No

accounting is done. Gets defaulted
from Tax type setup
16 Precedence Gets defaulted from tax category No

setup
17 Tax conversion date Date on which tax is calculated No
18 Tax rate Tax rate defined at tax rate setup No
19 Tax amount Amount calculated for each tax type No
20 Recoverable amount Tax amount which can be No

recovered. Get populated only if the
tax type is a recoverable
21 Recoverable Get populated only if the tax type is No

a recoverable
22 Inclusive Get populated only if the tax type is No

a inclusive
23 Self Assessed / reverse charge Gets defaulted from tax type No
24 Party name and Party type Gets defaulted from PO Yes

5.4. Create RFQ (Request for Quotation)
A Request for Quotation (RFQ) is a formal request sent to the suppliers to find the pricing and other
information for an item or items. Based on the information supplied, the supplier quotes a quotation
against the RFQ form.
In Oracle EBS, RFQs can be auto created from an existing Purchase Requisition or can be a fresh RFQ.
Navigation to Auto create the RFQ is
Responsibility Oracle Purchasing (USA) Auto Create and then query the Requisition number
Your Requisition summary is shown in the next screen. Check box your Requisition line and in
the Document Type, select RFQ and click Automatic button to Auto Create RFQ.
It will navigate to a new window. Here the RFQ Type is Standard RFQ and click create button
Select the line

against which RFQ
needs to be Select
created the RFQ
type
In the next window, RFQ is auto created from an existing Purchase requisition.

Click Suppliers button and enter the details of the Suppliers to whom you want to send this RFQ.
Click on Terms button and add payment terms and freight terms. Click Price Breaks button for entering
pricing information for the RFQ.
Now from the Tools India tax details form, we can see that tax category is defaulted

Tax category is
defaulted
Save the transaction.
5.5 Creating Quotation

A quotation is a suppliers response to RFQ. Now we will create quotations based on the response from
the suppliers with relevant to RFQ which we have created in step 5.4.
To create a quotation from the RFQ, first query the RFQ. The below picture shows the completed RFQ.
Tools
Copy
Document

In the next screen, enter the details of quotation sent by the supplier. Click OK button.
Repeat the same steps if you want to create multiple quotation for multiple suppliers.
Once the quotation is created, system will show the below message
Change the status of the quotation to Active and approve the quotation.

Change
status to
active
5.6 Create Purchase Order from the approved Requisition

Purchase Order (PO) is the formal request to a vendor to supply certain materials or services. A PO can
be created with reference to a requisition or RFQ or another PO.
Responsibility Oracle Purchasing Auto Create and then query the Requisition number
Select Document
type as Standard
PO

Your Requisition summary is shown in the next screen. Check box your Requisition line and in
the Document Type, select standard PO and click Automatic button to Auto Create PO. By clicking
Automatic button, a standard PO is created based on the details provided in the Purchasing requisition.
You can select Supplier either in the New Document form or in the Purchase Order form
Click on Create
Button to confirm
the PO creation
After clicking on the Create button in the above screen a Standard PO is created as follows

In the shipment form, Shipment number, Org, Ship-to, UOM, Quantity and Need-by-date are shown by
default. These fields can be edited as needed.
Even in the more tab and distribution details tab, the default values will be populated from requisition.
Now, Navigate to Tools India tax details.
The default tax category is automatically defaulted here
Tax category is
defaulted from
requisition level
Now approve the PO. No accounting entry happens when a PO is created.
Note:
Unlike earlier we will no longer have Localized forms in the new GST solution and to view the tax details
the navigation is Tools India tax details

6 Tax recalculation logic
As per the current architecture, the tax defaultation engine should recalculate the taxes at every
document level. However if the tax is already defaulted / manually overridden at parent document level,
then the same tax category gets defaulted for further documents until unless there is some change. If the
master document does not have the tax category attached, then based on the tax defaultation logic the
tax category will get defaulted at each document level.
7 Tax on receipts
Once the PO is sent to the supplier, the supplier sends the goods to the organization. The goods now
have to be received in Oracle.
7.1 Flow Diagram
Select the PO lineEnter

Inventory details

defaulted from PO level
Check on Confirm taxes Check box to freeze the tax

category and it is mandatory to check
Navigate to Receipt form

and Save the receipt
Receiving Transaction processor program will be fired and

it will process Base / Localization tax details

7.2 Receipt Creation
Navigation for creating a receipt is
Responsibility Oracle Purchasing Receiving Receipts
Enter the PO number and click Find button
Select the line

against which
receipt needs to Shows the PO
be created details against
which receipt is
created
Check the Lines you want to receive and enter the sub inventory details
In the lower part of the screen, Purchasing displays the following detail information for the current
shipment line: Order Type, Order Number, Source, Due Date, Item Description, Hazard, Destination, UN
Number, Receiver Note, and Routing.
Now if we navigate to Tools India tax details, we can see that tax category is defaulted here also.

Tax category
defaulted
Now we have to click on confirm taxes check box to freeze the tax category. Once this check box is
checked, overriding the tax category is not possible.
Note:
If a receipt is saved without checking the Confirm Taxes check box, the Receiving Transaction
Processor program will end in error and no receipts will be created.
In GST solution India Receiving Transaction Processor program will not be triggered and has no
relevance.
Unlike earlier we will no longer have Localized forms in the new GST solution and to view the tax
details the navigation is Tools India tax details
Once the check box is checked, below message will appear

Confirm Taxes
check box
needs to be
checked to
freeze the taxes
before receipt
creation
Confirmation
message once
the taxes are
freezed
Click on Header and save the receipt to get the receipt number
Once the receipt is saved, system automatically triggers the Receiving Transaction Processor (RTP)
concurrent. Unlike earlier, now India Receiving Transaction Processor program will not be fired. The
base Receiving Transaction Processor concurrent itself will process the India localization tax details.

Receiving transaction
processor program is fired
after receipt creation and it
will create / process both
base receipt detail as well
as Localization tax details
Once the RTP concurrent is completed, in the Receiving transaction Window we can see that receipt
processing has already happened

8 Tax Accounting on Receipts
Based on the tax point basis, tax types like recoverable / non-recoverable, different routing method
adopted, different accounting entries will get generated at different stages.
The accounting entry generated after the receipt creation and this is the core accounting
Event Account Debit Credit
Receiving Inventory Line Amount

Receipt
Inventory AP Accrual Line Amount
For the India tax details, the below lines are inserted in GL_INTERFACE table after the Receiving
transaction processor program is completed.

The below script can be used extract data from GL_INTERFACE
Select gcc.segment1,
gcc.segment2,gcc.segment3,gcc.segment4,gcc.segment5,gi.code_
combination_id,gi.entered_dr,gi.entered_cr,gi.user_je_category_na
me,gi.reference10
from gl_code_combinations gcc, gl_interface gi
where gi.date_created like sysdate and gi.code_Combination_id =
gcc.code_Combination_id and reference10 like '%Receipt
number%';
Below accounting entry is generated for each tax type
Receiving Inventory Tax Amount

Receipt
Inventory AP Accrual Tax Amount

8.1 Accounting for Receipt Routing - Direct Delivery and Standard Routing
8.1.1 Flow Diagram
Create PO Receipt Routing set to
Direct Delivery Standard Routing
Navigate to Tools India Tax Details. Navigate to Tools India Tax Details.
Attach Category recoverable or Non- Attach Category recoverable or Non-
recoverable recoverable
Navigate to Receipt form and select Navigate to Receipt form and select
the PO line for receipt creation the PO line for receipt creation
Navigate to Tools India Tax Details. Navigate to Tools India Tax Details.
Check Confirm taxes check box. Check Confirm taxes check box.
Receiving Transaction processor program Receiving Transaction processor program

will be fired and it will process Base / will be fired and it will process Base /
Localization tax details. Both Receiving and Localization tax details. Only Receiving
Delivery transaction will be created. transaction will be created.
Lines are inserted in GL_INTERFACE table Lines are inserted in GL_INTERFACE table
for tax accounting (refer query mentioned in for tax accounting (refer query mentioned in
Chapter 8 to extract the data) Chapter 8 to extract the data)
Perform the Receiving transaction by navigating to

Purchasing Receiving Receiving transactions

When a recoverable tax category is attached, in India tax details form (both at PO and receipt level) the
Recoverable check box will be checked and recoverable amount will be populated.
Recoverable check box is

checked and Recoverable
amount is calculated.
Note:
For a tax type to be recoverable, the below setup has to be in place
- Recoverable check box needs to be checked at Tax type Setup
- Recoverable option needs to be set to Yes in item classification setup
- Claim term has to be defined for the Tax type.
If any of the above setup is missing, then the tax type will be treated as a non-recoverable tax.
When a non-recoverable tax category is attached, in India tax details form (both at PO and receipt level)
the Recoverable check box will be unchecked and recoverable amount will not be populated.

Recoverable check box is
unchecked and
Recoverable amount is not
calculated.
8.1.2 Direct Delivery Recoverable Tax

The accounting entry generated in GL_INTERFACE is
Tax Interim Recovery Tax Amount

Receipt
Inventory AP Accrual A/c Tax Amount
8.1.3 Direct Delivery Non-Recoverable Tax

Receiving Inventory Tax amount

Receipt
Inventory AP Accrual Tax amount

8.1.4 Standard Routing - Recoverable Tax

Receipt
8.1.5 Standard Routing - Non-Recoverable Tax


Receipt
Note:
The nonrecoverable tax amounts need to be added to item cost. So after delivery transaction, lines
are inserted in MTL_MATERIAL_TRANSACTIONS (MMT) and MTL_TRANSACTION_ACCOUNTS (MTA).
For more information on queries that can be used to find out the details of the lines inserted in the
MMT and MTA tables, refer document 1065343.1.
Period End Accrual functionality which is not supported in current architecture will not be supported
even in GST solution.

9 PO/Receipt Matched AP invoice
In oracle payables an invoice can be created by using the purchase order / receipt information from
purchasing system to enable online matching with invoices. Invoiced or billed items are matched to the
original purchase orders / receipt created to ensure that invoice is created only for goods or services you
ordered and/or received.
9.1 Flow Diagram
Create Invoice Match

Action Receipt
Click on Match option Select receipt Click on Match

button
Line / distribution details are defaulted from

Receipt level to Invoice
Navigate to Tools India Tax Details. The tax

category is defaulted from Receipt to invoice
Since Tax point basis was Delivery, the taxes are freezed in
India Tax Details form
Validate and Run Create accounting
9.2 Process and Accounting

Create Payables invoice
Responsibility: Payables responsibility to create an AP invoice
Navigation: Invoice Entry Invoices
Create an Invoice for supplier against whom PO /receipt is created.
Invoice Header
In invoice header level, select the operating Unit, invoice type and enter the PO number i.e. 65 in our
example. Once you select the PO number, supplier name and Site automatically gets defaulted from the
PO.

Matching Receipt to the invoice
To create a receipt matched invoice, the match type in Invoice header should be Receipt.
Match Action
is set to
Receipt
We shall not enter the invoice line / distribution details as this will come automatically from matching the
invoice with Receipt.

The next step would be to Click on Match button in Invoice work bench and query for the Receipt which
we are intending to match to the invoice and click on find.
Query the
Receipt
Select the line which needs to be matched to the invoice and click on Match button
Click on Match button to

default distribution details
from receipt to Invoice

Now we can see that the line details and Distribution details at invoice level is automatically populated
from PO / receipt.
Tax Defaultation
Now if we navigate to Tools India tax details, we can see that Taxes which are defaulted at receipt are
defaulted at invoice level as well
Tax category
from Receipt
got defaulted to
Invoice
Tax Point basis is set

as Delivery
Now validate the invoice and run Create accounting. Accounting entry generated
The accounting class for the tax type

is set as Miscellaneous

10 Standalone AP Invoice
Standalone AP Invoices will be raised for non-item based expense or service activities and they will not
have any reference to any purchasing documents like PO, receipt etc. These invoices are directly created
in invoice work bench by manually entering the supplier details and distribution details.
As Item information is not available for such invoices, Item-based taxes will not be applicable for
standalone invoice.
10.1 Flow Diagram
Enter the Header details like invoice

type, Supplier Name, site etc
Click on Line Items and fill the line

level and distribution details
Navigate back to Header. Tools -

India Tax details
Pick the Organization and location.

The same is required for adding
taxes/tax defaultation if any
Lines are inserted in

GL_INTERFACE table for tax
Validate and Account the invoice
accounting (refer query
mentioned in Chapter 8 to extract
the data)
Tax details can be viewed in India Tax
Details form / View accounting
(Accounting class Miscellaneous
Expense

Responsibility: Payables responsibility to create an AP invoice Navigation:
Invoice Entry Invoices
In invoice header level, select the operating Unit, invoice type, Supplier name and site details etc.
Now navigate to Line level details and enter the Line and distribution Details

Now navigate to Tools India tax details
Enter the Organization

and Location details
Tax category
defaulted
The tax point basis is

Invoice
Based on the tax default rule we have setup, the P2P testing 2 tax category is defaulted automatically.
Below we can also see the Taxes attached to the P2P testing 2 category.
Once the Organization and location details are entered, save the transaction and navigate back to invoice
work bench and validate and Account the invoice. The accounting entry generated at this stage is
Tax lines are generated

with accounting class as
Miscellaneous Expense

11 Tax Recovery Accounting (Interim)
Users have the flexibility of selecting the Tax Point Basis (TPB) while defining the Tax Types
based on which the accounting will happen at differently. In the same way the recovery process
can also be done at different stages based on the Tax Point Basis. They are
11.1 Flow Diagram
Create PO Enter header /

line details
Navigate to Tools India Tax Details. Attach tax category

with Recoverable tax type and TPB as Delivery
Navigate to Receipt form and select the PO

line for receipt creation
Navigate to Tools India Tax Details. Check

Confirm taxes check box.

Receiving Transaction processor program will be fired and
it will process Base / Localization tax details
the data)
Navigate to Tools India Tax Details. From Menu
open
Enter the claim details and click on populate

values

Select the lines which needs to be processed
Enter claim term details click on Process option
the data)
The processed line status is changed from

Pending Recovery to Recovered

Once the receipt accounting is done, for a receipt with recoverable taxes,
The accounting entry is generated in GL_INTERFACE is

Receipt
Once the receipt accounting is done, to process recovery amount, navigate to

Now in India tax details form navigate to
Tools Process
Claims

In the Claim details form enter the tax invoice number and tax invoice date and enter the Action as
Recover
Enter the tax

information Details
Once the above details are entered click on Populate Values button which will populate the tax invoice
number and tax invoice date to all the tax lines
Click on Populate
values button to
default the Tax invoice
information details to
each line level. Post
that each line will have
the tax invoice number,
date information
entered at header
level.
Now select the tax line which you want to process or you can also choose Select all option if you want to
process all the tax lines. Also before processing the field Intended Use needs to be populated.

Enter Intended
use option
Manufacturing
or Non
Manufacturing
Once the above informations are entered, click on process button. Below confirmation message will be
shown
Confirmation
message for
Recovery
Processing
Now we can see that Status of the tax line is changed from Pending Recovery to Recovered

The line status is changed
from Pending recovery to
Recovered
In the above case, only 50% of the tax amount is recovered and other 50% is pending for recovery on
next month. That is because of the claim term GST Claim Term Setup. As the setup of claim term GST
Claim Term is
Also, the once the recovery is processed,
The accounting entry is generated in GL_INTERFACE is

Tax Recovery Recovered

Amount
Recovery
Tax Interim Recovery Recovered Amount
Note:
Interim recovery to recovery currently recovery process is manually done via process recovery
option and this will be an Interim Solution. We are checking the feasibility to automate the entire
process.

12 Third Party Invoices
Third party invoice functionality provides provision to pay to the Vendor other than the PO Vendor. This
will be required for paying the services offered by other Vendors related to that PO. An approved Invoice
for the Non-PO Vendor will be created automatically when the invoice is created via payable open
interface.
For using the third party invoice functionality, the tax type attached to the PO should have the
Update vendor on
transaction check box
should be checked at
tax type definition.

12.1 Flow Diagram
Create PO Enter header
and line information
Navigate to Tools India Tax Details. Attach tax category

with Update vendor on transaction check box checked
Navigate to Receipt form and select the PO line for receipt

creation
Navigate to Tools India Tax Details. Change the

party Name and party site at tax type level Click
apply. Click on Confirm taxes Check box
Four concurrent requests are triggered Lines are inserted in

Receiving Transaction Processor accounting (refer query mentioned
ADS (Pay On Receipt AutoInvoice) in Chapter 8 to extract the data)
Third party Payables Open Interface Import
Payables Open Interface Import
Payables Open Interface Import Imports Invoice for

Item line for PO vendor and
Third party Payables Open Interface Import - Imports

Invoice for tax line for Non PO vendor
Validate and Account both Standard

Invoice and Third party Invoice

Create a purchase order with tax type which has Update vendor on transaction check box checked at tax
type setup.
In Receipt form, before saving the receipt navigate to Tools India tax details. Change the Party Name
and Party site to a new vendor and click apply button to save the changes
Change the Party

Name and Party Site
to a Non PO vendor
Click Apply to
save the changes
Note:
The third party vendor details can also be updated at PO level and if it is updated at PO level, the same
gets defaulted to receipt level as well.
Now click on confirm taxes check box to freeze the tax details

Now once the receipt is saved, system automatically fired the below concurrent
Below concurrent
are fired
In the above request set, the program Third party Invoices - Payables open interface Import (Payables
Open Interface Import) creates the Third party invoice against the Non PO vendor and Payables Open
Interface Import program creates the invoice against the vendor in the PO. The output of the Third party
Invoices - Payables open interface Import shows invoice for tax amount has been created against the
third party vendor.

Invoice created
against Third party
vendor
The output of Payables Open Interface Import program shows the invoice details created against the PO
vendor.
Invoice created
against PO vendor
Now in invoice work bench, when queried, the invoice created against PO vendor will show the Item + tax
amount in India tax details form even though invoice line level only item line amount is reflected.

Below accounting is created for the third party invoice

13 Costing Effect Accounting Entries
13.1 Average Costing
In a average costing organization, the below accounting is generated for
A. Recoverable Taxes
After receipt Accounting
Interim recovery A/c Tax Amount

Receipt
A/c
After Recovery
Tax Recovery Tax Amount

Receipt
In case of recoverable taxes, the MTL tables will not be impacted / hit with the tax amount.
B. Non Recoverable Taxes
After receipt Accounting

Receipt

Once the delivery transaction is done, MTL_TRANSACTIONS_INTERFACE table gets updated with non-
recoverable tax amount and the same gets added to item cost. Accounting entry at that stage will be
Material Tax Amount

Receipt
Receiving inventory Tax Amount
13.2 Standard Costing

In a standard costing organization, the below accounting lines are inserted in GL_INTERFACE table once
the Receiving transaction is completed
A. Non-Recoverable taxes
Accounting entry for PO receiving

Receipt
Accounting entry for Delivery transaction is
Purchase Price Tax Amount

Variance
Receipt
Note:
In case of standard costing Organization, the MTL tables will not be impacted / hit with the tax amount.

B. Recoverable taxes
After receipt accounting, the accounting entry generated in GL_INTERFACE is
Interim Recovery Tax Amount

Receipt
Once the recovery is done, the accounting entry generated in GL_INTERFACE is
Recovery Tax Amount

Receipt
Interim Recovery Tax Amount
Note:
There is no relevance of PO destination in GST architecture. Whether the destination is Expense

or Inventory the accounting treatment will be same.
The accounting impacting on costing and OPM remains same as it is in current architecture.

Phase2
14 Introduction
The Procure to Pay cycle (P2P) is vital to an organization as in this process the organization buys and
receives goods or services from its vendors and makes necessary payments. This business process
covers the process of requesting, purchasing, receiving, paying for and accounting for goods and
services.
The OFI functionality lets you satisfy all business needs related to Tax calculation required for a Reverse
Charge Transaction and ERS Invoice.
15 Scope
This document provides the details of Functional flow for Oracle Financials for India (OFI) Procure to
Pay cycle from GST point of view along with accounting entries.
Note: This document provides the details of Functional flow for Oracle Financials for India (OFI)
Reverse Charge and Pay On Receipt (ERS) cycles from GST point of view along with accounting
entries. Note: The current content has been compiled in reference to the frozen scope of the
Phase-2 deliverables (Ref: GST Phase -2 Deliverables.docx)
16 Reverse Charge
16.1 Model Law
Reverse charge means the liability to pay tax by the recipient of supply of goods or
services instead of the supplier of such goods or services in respect of such categories of supplies as
notified under sub-section (3) of Section 8. The concept of Reverse Charge existed earlier under the
Service Tax provisions for services like Works Contract, Manpower, Goods transport Agencies, Legal
services etc., However, under the GST, Reverse charge mechanism has been introduced both for
Goods and Services. Accordingly, all other provisions of this Act and CGST Act, as applicable, will apply
to the recipient of such goods and / or services, as if the recipient is the supplier of such goods and / or
services i.e. for the limited purpose of such transactions, the recipient would be deemed to be the
supplier
Section 12(3) talks about Time of supply of Goods, wherein for Reverse Charge cases, the time of
supply would be the earliest of the following dates:
(a) The date of the receipt of goods, or
(b) The date on which the payment is made, or
(c) The date immediately following thirty days from the date of issue of invoice by the supplier:

While the above said concept is already prevalent under the Service Tax regulations, the concept is
altogether new under the Excise and especially VAT, where predominantly the point of determinants were
removal from factory and sale.
Section 13 (3) talks about Time of Supply of Services, wherein for Reverse Charge cases, the time of
supply would be the earliest of the following dates
(a) The date on which the payment is made, or
(b) The date immediately following sixty days from the date of issue of invoice by the supplier
In case, it is not possible to determine the time of supply of services under the above said options,
the time of supply shall be the date of entry in the books of account of the recipient of supply.
16.2 GST Functionality of Reverse Charge

As per the Model law requirement, we need to capture the Reverse Charge on Prepayment. Below are
the salient features of the Reverse Charge functionality on Prepayment:
We need to calculate the tax as Self Assessed on Prepayment.

There is the requirement to capture the HSN (Goods) or SAC (Services) codes in Prepayment.
Also, we need to account the liability of Reverse Charge on Prepayment. GST laws specify that it
should be Reversal entry instead of Net Off entry on Prepayment application to standard
invoice with Reverse charge taxes.
Need to have the Repository update on the Reverse Charge taxes of Prepayment as well as the
accounting.
The Accounting of Reverse Charge taxes to the Period End Processing Concurrent which
has been introduced as a part of Model law feature. This will avoid multiple accounting
adjustments happening in the invoice life cycle and will consider the net consolidated value in the
period end process.

Flow Diagram
Configure HSN/SAC Code in the

seeded Reporting Type
Create a Prepayment Invoice having Reverse Charge

Taxes attached to it and HSN/SAC code attached
Validate and Pay the Prepayment Invoice
Create a Standard Invoice having Reverse Charge Taxes attached to it

and same HSN/SAC code attached as well
Validate the Standard Invoice
Apply the Prepayment to Standard Invoice based on

lines having same HSN and SAC codes
Repository will get updated

Run the Period End Process in Save and then in
liability accounting
Final modes

16.4 Configuration:
Regime:
Regime Type: Transaction Tax

Tax Authority: GST Tax Authority
Tax Type:
Self Assessed/Reverse Charge: 'Y'
Mandatory
checkbox for
Reverse
Charge Taxes

Tax Rate:

Tax Category:
Third party Registration:

Tax Rule: Define the Tax Rule based on business requirement
Claim Term:

16.5 HSN/SAC Code:
1. HSN Code is meant for Goods. For inventory item(reporting code only for item)
2. SAC Code is meant for Services. For non inventory item(reporting code for both 3rd party and
item)
3. New seeded Reporting Types are introduced to capture the details. These Reporting Types are
User configurable.
4. At transaction level we have the flexibility to modify the HSN/SAC code defaulted from 3rd Party
Registration or Item Classification
Seeded Reporting Types for HSN and SAC codes.

Entity is 3rd party which means we will
1. SAC Code for Non Inventory Item: GST_SAC_CODE_ITEM have to attach the Reporting Code
2. SAC Code for 3rd Party: GST_SAC_CODE_TP value to the 3rd party Registration.
3. HSN Code for Item: GST_HSN_CODE Likewise, if Entity is Item then the
Reporting Code value to be attached to
Item Classification.

Attached the Reporting
Code value to the Third
16.6 Linking of Reporting Code value to 3rd party Registration: party Registrations

16.7 Prepayment:
In prepayment we have the provision to attach the Reverse Charge taxes unlike the current architecture.
In the current architecture the

India Tax Details UI was not
Defaulted from Third Party Registration
enabled but here its enabled
though the field has the flexibility to
change the value
Organization and Location

is mandatory
Defaulted from Tax

Type setup

Validate and Pay the Prepayment:

16.8 Standard Invoice
Mandatory
SAC Code should be

same as that of PP
invoice

Note:
When you are going to create a Reverse Charge for a Prepayment you are accounting the tax
liability. Again when you create the AP invoice for which the TPB is set, you are going to
calculate for the full value and when the Prepayment is applied, the system will check if the
SAC/HSN codes are same in both documents and if those are same then it will allow you to
trigger an offset entry for the Reverse Charge which is calculated on PP.
If SAC code is entered, HSN code will be disabled. So both SAC and HSN codes are mutually
exclusive.
Prepayment can have 2 lines having multiple HSN/SAC codes, only the adjustment will be by
grouping of HSN/SAC codes. Application will be done at line level by grouping of HSN/SAC
codes. So the system will allow to apply those lines of prepayment where HSN/SAC codes are
same.
Prepayment VALIDATE, Standard Invoice VALIDATE and Prepayment APPLICATION does not
create any accounting. Only period Ending process will create accounting and update the
repository.
16.9 Prepayment Application

16.10 Period Ending Process:
Data should get populated into the Repository(table jai_rgm_recovery_lines) once the
prepayment is applied to the Standard invoice
Based on the data populated, the Period Ending Process shall create the accounting
in GL
For Standard invoice there will be a record inserted into the repository table with
liability account and for Prepayment also there will be a liability account. Once the
Prepayment is applied to Standard Invoice, there will be a negative Reversal entry
against liability to adjust the prepayment application.

A new concurrent program: India - Period Ending Process is introduced for the period ending
process. There are 2 valid modes of running the period end process
a. Save - In this mode, the invoices will be prepared for GSTN and the user can view those
details and they can upload the information to the GSTR
b. Final - In this mode all the records will be locked and the accounting will get created in GL
Running the program in Save mode:
The status of the Repository against the transaction can be found out by the column:
REPORTING_STATUS_FLAG which will be marked as S when the program is run in Save mode

Running the program in Final mode:
The status of the Repository against the transaction can be found out by the column:
REPORTING_STATUS_FLAG which will be marked as RF (Ready to File) when the program is run in
Final mode. Once its filed, the system will not allow any adjustment to the invoice. So the user can
go and take the data and file it to GSTN
At this point of time the LIABILITY Accounting will get generated. So with the Period end Process
in Final mode the system will generate Liability accounting and Adjustment accounting in GL

16.11 Accounting
Once Period End Process Program is completed
Liability Tax Amount

Period End
Process
Suspense Tax Amount
17 ERS Invoice
Payment on Receipt enables the user to automatically create standard, unapproved invoices for payment
of goods based on receipt transactions. Invoices are created using a combination of receipt and purchase
order information that eliminates duplicate manual data entry. It automatically creates invoices with
multiple items and distribution lines, and includes tax. Payment on Receipt is also known as Evaluated
Receipt Settlement (ERS).

17.1 Flow Diagram
Create PO for Supplier / Supplier site which has

ERS Invoice setup
Navigate to Terms Set Pay on option to

Receipt

defaulted based on defaulting mechanism defined
Create a receipt Check the Confirm taxes

check box

Receiving Transaction Processor program GL_INTERFACE table for tax
will be triggered accounting (refer query
. the data)
Run the ADS (Pay On Receipt

AutoInvoice) Program
ERS invoice is imported to Payables
Validate the ERS invoice and run create

accounting

Create a purchase with Pay on option set to Receipt. Once the PO is approved, create a receipt. Once
the receipt is saved, Receiving Transaction Processor program will be triggered automatically. After
successful completion of Receiving Transaction Processor program, run the ADS (Pay On Receipt
Autoinvoice) program:-
Receiving Transaction Processor

ADS (Pay On Receipt
AutoInvoice)
Once receiving transaction processor program is completed

Receipt
The output of payable Open interface program, the ERS invoice number which got created will be
displayed

ERS invoice number
which got imported
to payables
When we query the invoice number in invoice work bench and navigate to Tools India tax details form,
the tax category has defaulted from receipt level.
Tax category is defaulted from

Receipt. Since confirm taxes
check box is checked at receipt
level, the fields are freezed at
invoice level

Once the invoice is validated and Accounted, the below accounting entry is generated by navigating to
Tools
Notes:
1. For both Recoverable and Non recoverable taxes, the tax lines will hit the AP Accrual Expense
Account
2. For ERS invoices, the TPB should always be set at DELIVERY
16 Summary
The above document will provide the below benefits:
Transaction flow in different stages of P2P in Oracle GST solution.

Summary accounting entries generated at each stage
Major difference between the current India Localization structure and the GST solution.
This document will help you understand the different scenarios / transaction flows in P2P cycle
Reverse Charge Process
ERS Invoice

17 Call to Action
This is not the final document and further changes shall be incorporated as and when there are any
further updates from Product Management / Development teams in regards to the changed
features/functionality or pending product clarifications, if any.
You can also refer the documents in GST Info Center (Documentation Tab) released as part of
Phase2 deliverables.
E-Business Suite Release 12: India Goods and Service Tax (GST) Info Center (Doc ID 2176820.2)

GST Functional P2P Flow

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Pre-Release Document

Oracle Financials for India (OFI)

Author: Vaishali and Somdeep (P2P)

Organization: Oracle India Private Limited.

OFI-GST Procure to Pay Flow 1

Date Author Versio Change Reference

21-Mar-16 Vaishali and 1A Initial document

Rajnish Kumar Director, Tax Development

OFI-GST Procure to Pay Flow 2

Pre-Release Document .............................................................................................................. 1

Document Control .................................................................................................................. 2

3 Prerequisite Setups .............................................................................................................. 6

4 Functional Flow .................................................................................................................... 7

5 Requisition to Purchase Order (Pre-PO- PO Documents) .................................................... 8

5.1 Flow Diagram ................................................................................................................... 8

5.2 Create Requisition ............................................................................................................ 9

5.3 India tax details form .......................................................................................................11

5.4. Create RFQ (Request for Quotation) ..............................................................................13

5.5 Creating Quotation ..........................................................................................................15

5.6 Create Purchase Order from the approved Requisition....................................................17

6 Tax recalculation logic .........................................................................................................20

7 Tax on receipts ...................................................................................................................20

7.1 Flow Diagram ..................................................................................................................20

7.2 Receipt Creation ..............................................................................................................21

8 Tax Accounting on Receipts ................................................................................................25

8.1.1 Flow Diagram ............................................................................................................27

8.1.2 Direct Delivery Recoverable Tax ............................................................................29

8.1.3 Direct Delivery Non-Recoverable Tax ....................................................................29

8.1.4 Standard Routing - Recoverable Tax ........................................................................30

OFI-GST Procure to Pay Flow 3

9 PO/Receipt Matched AP invoice .........................................................................................31

9.1 Flow Diagram ..................................................................................................................31

9.2 Process and Accounting ..................................................................................................31

10 Standalone AP Invoice ......................................................................................................35

10.1 Flow Diagram ................................................................................................................35

10.2 Process and Accounting ................................................................................................35

11 Tax Recovery Accounting (Interim) ....................................................................................37

11.1 Flow Diagram ................................................................................................................37

11.2 Process and Accounting ................................................................................................38

12 Third Party Invoices ..........................................................................................................44

12.1 Flow Diagram ................................................................................................................45

12.2 Process and Accounting ................................................................................................46

13 Costing Effect Accounting Entries ..................................................................................50

13.1 Average Costing................................................................................................................50

13.2 Standard Costing ...........................................................................................................51

16 Reverse Charge ................................................................................................................53

16.1 Model Law.........................................................................................................................53

16.2 GST Functionality of Reverse Charge ...............................................................................54

Flow Diagram ........................................................................................................................55

16.5 HSN/SAC Code:................................................................................................................60

16.6 Linking of Reporting Code value to 3rd party Registration: ................................................61

OFI-GST Procure to Pay Flow 4

16.8 Standard Invoice ...............................................................................................................64

16.10 Period Ending Process: ...................................................................................................66

16.11 Accounting ...................................................................................................................69

17 ERS Invoice ......................................................................................................................69

17.2 Process and Accounting ................................................................................................71

17 Call to Action .....................................................................................................................74

OFI-GST Procure to Pay Flow 5

Tax Defaulting basis

First and Third party Registration

OFI-GST Procure to Pay Flow 6

Regime Registration Tax types (R) Tax rates (R)

Tax Defaulting Document sequence