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June 12, 2017

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Goods and Services Tax (GST)

Goods and Services Tax (GST) – ORACLE FINANCIALS FOR INDIA (OFI) (INDIA LOCALIZATIONS)

GST is a destination-based tax that will replace the current Central taxes and duties such as Excise Duty, Service Tax, Counter Vailing Duty (CVD), Special Additional Duty of Customs (SAD), Central Charges & Cesses and Local State Taxes, like Value Added Tax (VAT), Central Sales Tax (CST), Octroi, Entry Tax, Purchase Tax, Luxury Tax, Taxes on lottery, betting and gambling, state cesses and surcharges and Entertainment tax (other than the tax levied by the local bodies).

It will be a dual levy with State/Union territory GST and Central GST. Moreover, inter–state supplies would attract an Integrated GST, which would be the sum total of CGST and SGST/UTGST.

Consensus between Central and state governments has been reached on four-tier rate structure as follows (published by GST Council):

rates

Following 3 new tax types got proposed in GST:

CGST (Central Goods and Services Tax)
SGST (State Goods and Services Tax)
IGST (Integrated Goods and Services Tax)

flow

GST Rates are based on Revenue Neutral Rates. Following are the proposed rate types and the rates are not yet finalized as on the blog posted date:

  1. Merit rate => For essential goods and services.
  2. Standard rate => For goods and services in general.
  3. Special rate => For precious metals and for specified goods and services.
  4. Zero rate => For exports, supply to EOU/SEZ etc.

Goods and Services outside the purview of GST:

  • Alcohol for Human consumption =>  will continue with State Excise and VAT
  • Electricity => will continue with Electricity Duty
  • Petroleum Products => will continue with the current tax structure, likely to be brought under GST regime later
  • Tobacco products expected to be taxed under the GST regime along with Excise dutyGoods and Service Tax
    flow2

As we nearing the implementation date of July 1st, 2017, it’s very critical for companies who have operations in India to accommodate GST changes in their Oracle ERP systems to be compliance.

Oracle provided phased approach for implementing GST

GST development execution is being phased to accelerate delivery and to enable early access

Phase 1 – GST infrastructure:  dev complete and available through early access program for customers and partners starting in November 2016.

Phase 2 – GST model law and transition capabilities: enhancements based on the draft GST Model Law published in June 2016 and updated in November 2016, and infrastructure to support the transition from the current tax regime to GST

Phase 3 – Final GST requirements: additional requirements that may come in final specifications published by the government that cannot be addressed by functionality delivered in phase 1 and 2. This phase may or may not be needed as it is entirely dependent on what late specification changes may or may not come from the Government of India.

The India GST patch will be available for EBS release version 12.1.1 onwards.  GST patch will work for all EBS versions that are on premier or extended support as of the date of the release of patch (e.g. 12.1.x and 12.2.x).  It will not be available for any release versions that are in sustaining support (e.g. 11.5.10).

There are major functional and design changes for the GST solution.  Some of that includes: unified regime to rate flow for every tax type with user configurable tax types, date effective tax computation logic, user configurable taxable events, tax defaulting logic based on user configurable rules, major process changes for input tax credit management, and unified tax repositories, etc.

Phase 3 (Final patches) – For DBA

GST: Phase 3 Approach to Final Release – Patch Details (Doc ID 2268465.1)

Strategy:

  1. India GST functional patch
  2. TDS migration patch(This patch will migrate the TDS setup to the new system) – Attached TDS Migration Steps Document(OFI-GST- TDS Migration.pdf)
  3. TCS Migration Patch
  4. GST Enablement  patch
  5. TDS Enablement patch + Concurrent Program for Migrating the TDS Transactions
  6. TCS Enablement patch
  7. RUP Patches

Steps to follow:

Step1 – Clone target environment from Prod
Step 2 – Apply India GST functional patch
Step 3 – Apply TDS Migration Patch
Step 4 – Apply TCS Migration Patch
Step 5 – Test for transaction with existing IL regime and do GST setups
Step 6 – Once Testing done, apply GST Enablement Patch
Step 7 – Apply TDS enablement Patch
Step 8) Apply TCS Enablement Patch
Step 9) Apply Rup7 -Note: GST: Oracle Financials for India (OFI) RUP Patches ( Doc ID 2253455.1 ).
Step 10 – Apply One – Off Patches

For Functional folks, below are GST Oracle Recordings which provides detailed step by step implementation details.

Knowledge Notes

Overview of India GST Knowledge Notes (Doc ID 2192611.1)
E-Business Suite Release 12: India Goods and Service Tax (GST) Info Center (Doc ID 2176820.2)
Oracle Financials for India (OFI) -Goods and Service Tax – Order to Cash Functional Flow (Doc ID 2169197.1)
Oracle Financials for India (OFI) -Goods and Service Tax -Regime to Rate Functional Flow (Doc ID 2189339.1)
India Localization – Oracle Financials for India (OFI) – Goods and Services Tax (GST) Configuration – EBS GST Infrastructure (Doc ID 2190026.1)
Oracle Financials for India (OFI) -Goods and Service Tax -Procure to Pay Functional Flow (Doc ID 2169236.1)
Overview of Tax Computation in Purchase to Pay Transactions with Goods & Service Regime – GST (Doc ID 2169321.1)
Overview of Tax Computation in Order To Cash Transactions with Goods & Service Regime – GST (Doc ID 2169215.1)
Oracle E-Business Suite Release 12: India Goods and Service Tax (GST), August 2016 (Doc ID 2170500.1)

 Oracle Roundtable Series: GST and Oracle E-Business Suite

 

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