GST

GST is the most significant indirect tax reform in the history of India.
The main objective of GST implementation is to transform India into a uniform market by breaking the
current fiscal barrier between states and facilitate a uniform tax levied on goods and services across the
country.
Scope of supply

the expression “supply” includes––

• all forms of supply of goods or services or both such as sale, transfer, barter,exchange,licence, rental, lease
or disposal made or agreed to be made for a consideration by a person in the course or furtherance of
business;
• import of services for a consideration whether or not in the course or furtherance of
business;
• the activities specified in Schedule I, made or agreed to be made without a consideration;
• Permanent transfer or disposal of business assets where input tax credit has been
availed on such assets.
• Supply of goods or services or both between related persons or between distinct
persons as specified in section 25, when made in the course or furtherance of business:
• Supply of goods—
(a) by a principal to his agent where the agent undertakes to supply such goods on
behalf of the principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on
behalf of the principal.
• Import of services by a taxable person from a related person or from any of his other
establishments outside India, in the course or furtherance of business.
Scope of supply

the expression “supply” includes––

• the activities to be treated as supply of goods or supply of services as referred to in

Schedule II.
• Transfer
• Land and Building
• Treatment or process
• Transfer of business assets
• Supply of services
• Composite supply
• Supply of Goods
The following shall be treated as supply of goods, namely:—
• Supply of goods by any unincorporated association or body of persons to a member
thereof for cash, deferred payment or other valuable consideration.
Levy and Collection of Tax

• Every supply will be liable to tax. The nature of tax would depend upon the
nature of supply, viz., inter-State supplies will be liable to IGST and intra-State supplies will be
liable to CGST and SGST (UTGST).

• Article 265 of the Constitution of India mandates that no tax shall be levied or collected
except by the authority of law.

• Under the GST law, the levy of tax is as follows:

• In the hands of the supplier - on the supply of goods and / or services (referred to
as tax under forward charge mechanism);
• In the hands of the recipient – on receipt of goods and / or services (referred to
as tax under reverse charge mechanism)

• When the goods/ services are supplied by a supplier, who is un-registered person to a receiver, who is registered
person, the liability to pay tax on such supplies will be on recipient under reverse charge basis.

• Additionally, where any supply of services is effected through e-commerce operators (commonly known as
services Provided by aggregators), the law provides that the Central / State Government may on
recommendation of the Council specify (notify) that the e-commerce operator will be liable to discharge the tax
on such supplies.
Time of supply of goods

• The time of supply of goods shall be the earlier of the following dates, namely: —
• the date of issue of invoice by the supplier or the last date on which he is required, to issue the invoice
with respect to the supply; or
• the date on which the supplier receives the payment with respect to the supply:

• In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply
shall be the earliest of the following dates, namely: —
• the date of the receipt of goods; or
• the date of payment as entered in the books of account of the recipient or the date on which the payment
is debited in his bank account, whichever is earlier; or
• the date immediately following thirty days from the date of issue of invoice or any other document, by
whatever name called, in lieu thereof by the supplier:

• In case of supply of vouchers by a supplier, the time of supply shall be—

• the date of issue of voucher, if the supply is identifiable at that point; or
• the date of redemption of voucher, in all other cases.
Input Tax Credit

Input Tax Credit is the backbone of the GST regime. GST is nothing but a value-added tax on goods & services
combined. It is these provisions of Input Tax Credit that make GST a value added tax i.e., collection of tax at all
points in the supply chain after allowing credit for the inputs/input services and capital goods. The invoice method
of value added taxation will be followed in the GST too, viz., the tax paid at the time of receipt of goods or services
or both will be eligible for set-off against the tax payable on supply of goods or services or both, based on the
invoices with a special emphasis on actual payment of tax by the supplier.

Eligibility and conditions for taking input tax credit

(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the
manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or
both to him which are used or intended to be used in the course or furtherance of his business and the said
amount shall be credited to the electronic credit ledger of such person
(2) Notwithstanding anything contained in this section, no registered person shall be
entitled to the credit of any input tax in respect of any supply of goods or services or
both to him unless, -
(a) he is in possession of a tax invoice or debit note issued by a supplier
(b) he has received the goods or services or both
(c) the tax charged in respect of such supply has been actually paid to the Government, either in cash or
through utilization of input tax credit admissible in respect of the said supply; and
(d) he has furnished the return under section 39:
Input Tax Credit

(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and
plant and machinery under the provisions of the Income Tax Act, 1961, the input tax credit on the said tax
component shall not be allowed.
(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply
of goods or services or both after the due date of furnishing of the return under section 39 for the month of
September following the end of financial year to which such invoice or invoice relating to such debit note pertains
or furnishing ofthe relevant annual return, whichever is earlier.
Registration

Registration of a business with the tax authorities implies obtaining a unique identification code from the
concerned tax authorities so that all the operations of, and data relating to the business can be agglomerated and
correlated. In any tax system, this is the most fundamental requirement for identification of the business for tax
purposes and for having any compliance verification mechanism. A registration from the concerned tax authorities
will confer among others the following advantages to the registrant.
— Legally recognized as a supplier of Goods and/or Services;
— Proper accounting of taxes paid on the input goods and / or services;
— Utilization of input taxes for payment of GST due on supply of goods and / or services or both;
— Pass on the credit of the taxes paid on the goods and / or services supplied to purchasers or recipients.

Persons liable for registration

• Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special
category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in
a financial year exceeds twenty lakh rupees or ten lakh rupees for special category states:
• Every person who, on the day immediately preceding the appointed day, is registered or holds a license under
an existing law, shall be liable to be registered under this Act with effect from the appointed day.
• Where a business carried on by a taxable person registered under this Act is transferred, whether on account of
succession or otherwise, to another person as a going concern, the transferee or the successor, as the case may
be, shall be liable to be registered with effect from the date of such transfer or succession.
Tax invoice
(1) A registered person supplying taxable goods shall, before or at the time of,
(a) removal of goods for supply to the recipient, where the supply involves movement of goods; or
(b) delivery of goods or making available thereof to the recipient, in any other case, issue a tax invoice showing
the description, quantity and value of goods, the tax charged thereon and such other particulars as may be
prescribed:
(2) A registered person supplying taxable services shall, before or after the provision of service but within a
prescribed period, issue a tax invoice, showing the description, value, the tax charged thereon and such other
particulars as may be prescribed:
(4) In case of continuous supply of goods, where successive statements of accounts or successive payments are
involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be,
each such payment is received.
(6) In a case where the supply of services ceases under a contract before the completion of the supply, the invoice
shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply
made before such cessation.
Accounts and other records
(1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in the
certificate of registration, a true and correct account of—
(a) production or manufacture of goods;
(b) inward and outward supply of goods or services or both;
(c) stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid; and
(f) such other particulars as may be prescribed:
(2) Every owner or operator of warehouse or godown or any other place used for storage of goods and every
transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner,
consignee and other relevant details of the goods in such manner as may be prescribed.
(3) The Commissioner may notify a class of taxable persons to maintain additional accounts or documents for such
purpose as may be specified therein.
(5) Every registered person whose turnover during a financial year exceeds the prescribed
limit shall get his accounts audited by a chartered accountant or a cost accountant Accounts and other records and
shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44
and such other documents in such form and manner as may be prescribed.
Payment of Tax, Interest, Penalty and other Amounts
(1) Every deposit made towards tax, interest, penalty, fee or any other amount by a person by internet banking or
by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by such other
mode and subject to such conditions and restrictions as may be prescribed, shall be credited to the electronic
cash ledger of such person to be maintained in such manner as may be prescribed.
(2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit
ledger,
(3) The amount available in the electronic cash ledger may be used for making any payment towards tax, interest,
penalty, fees or any other amount payable under the provisions of the Act or the rules made thereunder in such
manner and subject to such conditions and within such time as may be prescribed.
(4) The amount available in the electronic credit ledger may be used for making any payment towards output tax
under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions
and within such time as may be prescribed.
(7) All liabilities of a taxable person under this Act shall be recorded and maintained in an electronic liability register
as may be prescribed.
(8) Every taxable person shall discharge his tax and other dues under this Act or the rules made thereunder in the
following order, namely:
(a) self –assessed tax, and other dues related to returns of previous tax periods;
(b) self-assessed tax, and other dues related to the return of current tax period;
(c) any other amount payable under the Act or the rules
(9) Every person who has paid the tax on goods and /or services under this Act shall,
unless the contrary is proved by him, be deemed to have passed on the full incidence of
such tax to the recipient of such goods or services or both.
54. Refund of tax
(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him,
may make an application before the expiry of two years from relevant date in such form and manner as may be
prescribed::
(2) A specialized agency of United Nations Organization or any Multilateral Financial Institution and Organization
notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries
or any other person or class of persons as notified under section 55, entitled to a refund of tax paid by it on
inward supplies of goods or services or both, may make an application for such refund, in such form and manner
prescribed, before the expiry of sixth months from the last day of the quarter in which such supply was received
(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilized input tax
credit at the end of any tax period:
(4) The application shall be accompanied by—
(a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and
(b) such documentary or other evidence as the applicant may furnish to establish that the amount of tax and
interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was
collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other
person:
59. Self-assessment
Every registered taxable person shall himself assess the taxes payable under this Act and
furnish a return for each tax period as specified under Section 39.
Self-assessment means an assessment by the tax payer himself and not an assessment by
the Proper Officer. The GST regime continues to promote the scheme of self-assessment.
Hence, every registered taxable person would be required to assess his tax dues in
accordance with the provisions of GST Act and report the basis of calculation of tax dues to
the tax administrations, by filing periodic tax returns.
Setup Flowchart
Find below the snapshot, which gives a quick understanding of the setups to be performed for configuring the India
GST solution in Oracle EBS:
6.1. Define Reporting Types
User would be able to define different reporting code values using (N) Oracle Financials for India  Reporting 
Define Reporting Types form. Any business would have the requirement of storing business specific details or
attributes based on various business needs. For example, the Organization or the Supplier PAN#, other contact
details need to be stored and this requirement can be mapped by using the Reporting feature of OFI.
In addition, there can be a requirement of tracking the service type values of the suppliers, which can be mapped
by using this feature.

7.1. Regime
User can configure any new tax regime introduced by the statute by using the Regime definition form. For example,
in the current context of GST tax, user can define a new tax regime called India GST and configure the system so to
handle the transactions that have the GST applicability.
(N) Oracle Financials for India  Tax Configuration  Define Regime

7.2. Tax Types

User can define any new tax type as such introduced by Statute using the tax type definition form. For example, in
the current context, user can define the tax types: CSGT, SGST, and IGST using this form. These tax type codes can
further be attached to the transaction flows as applicable.
(N) Oracle Financials for India  Tax Configuration  Define Tax Type
7.3. Tax Rates
User can define a valid tax rate code with an applicable rate percentage using this form. This tax rate code can be
attached in the tax category definition so that a group of taxes can be attached to the transactions during the
transaction flow.
(N) Oracle Financials for India  Tax Configuration  Define Tax Rate

7.4. Tax Categories

A Group of different tax codes having applicable tax rates belonging to different Regime codes can be defined in Tax
categories.
(N) Oracle Financials for India  Tax Configuration  Define Tax Categories

7.5. Tax Rules

(N) Oracle Financials for India  Tax Configuration  Define Tax Rules
Tax Determination basis can be defined by using the Tax Rules feature. A Tax rule code can be defined in which, the
user can attach the tax category. The tax defaulting will be done based on the setup combination defined in the Tax
determination rule details.

8. Common Configuration
Using this form, the user can configure the tax defaulting basis for a specific Operating Unit. This is one of the
important setups, which drive the tax defaulting mechanism for GST.
(N) Oracle Financials for India  Tax Configuration  Define Common Configuration
9. Define GST Tax Authority
User has to define a GST Tax authority in the system so to settle the tax liability. This is a base apps setup and user
should define this setup before doing the GST transactions.
(N) India Local Purchasing  Supply Base  Suppliers.

10.1. Define First Party Registration

User can define all the relevant attributes of the Business unit (e.g. Manufacturing Unit / Service provider etc.)
using this form. Important attributes like GST Registration number, PAN# etc. can be defined using this form.
(N) Oracle Financials for India  Party Registrations  Define First Party Registration

10.2. Define Third Party Registration

User can define all the relevant attributes of the supplier / customer (e.g. dealer, Service provider, end customer
etc…) using this form. Important attributes like GST Registration number, PAN# etc. can be defined using this form.
(N) Oracle Financials for India  Party Registrations  Define Third Party Registration
11. Item Definition
Item classification can be defined using this form. For example, different Item attributes (e.g. Recoverable, Item
tariff etc…) can be defined for a particular template using this form. Following functions can be performed:
 Define the Item Classification Template.
 Assign the Template to the Inventory Organization.
 Assign Template to different regime codes.
 Associate different reporting type codes to the Item classification. This feature will play a vital role in the tax rules
definition, wherein the tax defaulting mechanism can be enabled by setting the value for TDB ‘Item Classification’.
11.1. Define Item Classification
(N) Oracle Financials for India  Item Definition  Define Item Classification

Item/Template Attribute Registration:

Step No.1.New Template Definition:
Pavan Raparla OFI-GST Configuration 56
Step No.2. Template Assignment
Step No.3. Item Attribute Details
Step No.4: Reporting Codes

11.2. Define Item Categories

User can define the association of the item and the tax category using this form.
(N) Oracle Financials for India  Item Definition  Define Item Categories
12. Define Document Sequencing:
Users can define the Document sequence / Tax Invoice generation setup using this form.
(N) Oracle Financials for India  Tax Configuration  Define Document Sequencing

13. Define Claim Terms:

User can define the recovery claim terms using this form. This setup will play a vital role in the Recovery
Management process, wherein any tax rate code is treated as a Recoverable tax, provided the relevant recovery
claim terms are defined here in this form.
(N) Oracle Financials for India  Recovery Management  Define Claim Terms

14. Define Specific Functionality:

The tax amount treatment for a specified list of tax type codes can be determined by doing this specific setup. For
example, for any Import Purchases, which would attract Basic Customs duty and IGST taxes, users need to attach
these tax type codes here. These tax amounts will be paid to the Customs Authority and shall not be charged to the
end supplier.
This setup plays a significant role in mapping the Import Purchases scenario.
Note:
It is highly recommended to define a separate regime code for mapping the Customs Duty, as these taxes need to
be adjusted against the BOE Invoice and would not be charged to the end supplier.
(N) Oracle Financials for India  Tax Configuration  Define Specific Functionality
15. Define BOE Agent:
This form is used to define the BOE Agent code, the details of which are required for processing the BOE Invoice.
(N)  India Local Payables  India Localization  Setup  Others BOE Agent

User needs to key in the values in all the fields: Agent Code, Agent Name etc… and once saved, system generates
the value of Agent Id, which gets stored in the field: ‘Agent Id’.
 P2P – GST Functional Flow:

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.
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
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.

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.
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

Accounting Entry generated for Non-Recoverable tax:

Accounting Entry generated for Recoverable tax:
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.:
Functional Flow for 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.
Reverse Charge:
“Reverse charge’’ means the liability to pay tax by the recipient of supply of goods or services instead of the
supplier. 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’
GST Functionality of Reverse Charge:
Reverse Charge on application of Prepayment to Standard invoice:
 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.
 There is no need for the HSN/SAC codes to match between Prepayment and standard Invoice for getting
the offset entries to get created
Functional Flow for Reverse Charge:
Accounting Entries for Reverse Charge:
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
Once the receipt accounting is done, for a receipt with recoverable taxes ,

once the recovery is processed, The accounting entry is generated in

GL_INTERFACE is
Sales Order to AR Invoice Flow:
A seller-generated document that authorizes sale of the specified item(s), issued after receipt of a customer's
purchase order. A sales order may be for products and/or services. Please Note in that GST Solution the significant
change is such that there is no specific form by name Sales Order (Localized)
Users have to create sales orders directly from base form and attach taxes using “Tools-> India Tax Details”.

During ship confirm, the Sales Order Taxes would be copied on to the shipment, provided “Copy Tax From Source”
setup is done at OU level, in common Configuration setup of GST.
- Otherwise, the shipment taxes recalculated based on the Rule Basis setup done in common configuration
setup.

During processing for OM Interface, India Tax Invoice Number will be generated for both shippable and non-
shippable lines.
i) Delivery errors will be populated into JAI_WSH_EXCEPTIONS_T, and details can be output by Concurrent Process
‘India – Check Delivery OM/INV Interface ’ output.
j) Run the “India – Process Delivery OM/INV Interface” for the failed Delivery ID. It would generate Tax invoice and
create the accounting.
Functional Flow:
Accounting Entries :
Flow Diagram for Internal Requisition-Internal Sales Order (IR-ISO) Transaction:
Accounting Entries:
IR-ISO accounting depends on the FOB point selected in the shipping network. There are 2 type of FOB:
- Shipping
- Receipt
Accounting Entries:
IR-ISO accounting depends on the FOB point selected in the shipping network. There are 2 type of FOB:
- Shipping
- Receipt
Oracle Financials for India (OFI) GST Transactional Reporting Framework (Doc ID 2478819.1)

1
India - GST Tax Liability Report This Report shows the total liability booked in the system for given period (i.e for the transactions related SO delivery , AR
Invoice, AR Debit/Credit memo, RCM and Manual transactions)
2
India GST Recovery Details Report Reports shows the details of Pending Recovery or Recovered claim details for given criteria ( i.e transactions related to AP
Invoices ,PO Receipts and Manual transactions)
3
India - GST RCM Pending Liability Report Reports to provide the List of RCM transactions which are booked but No Liability is generated. Having data in this report
indicates the India Period end concurrent need to be run for this cases and book the liability for RCM Invoices.
4
India OSP GST Challan Report Report to show the OSP challans , E-way bill details for given set of criteria
5
India BOE Details and Applications Report Report gives complete BOE details i.e BOE Headers , Lines , Taxes , BOE Applications to Receipts, Write Off information for
given criteria.

Oracle E-Business Suite Advisor Webcast (Doc ID 1455369.1)

Accounting Entries:
IR-ISO accounting depends on the FOB point selected in the shipping network. There are 2 type of FOB:
- Shipping
- Receipt