Oracle Fusion Tax setups

Oracle Fusion Tax setups

Hi friends, we are going to discuss about Oracle Fusion Tax setups. We will share the complete steps to implement the tax in oracle fusion. If you want to learn the complete tax module in oracle fusion, then this post will really help you to learn and understand the tax setups in oracle fusion. We are going to share the Oracle Fusion tax implementation series. In this series , we have shared the step by step to learn and implement the fusion taxes. You can learn the Oracle fusion tax setups from scratch using this series. The good part of this tax series is , We have share the detail screen shots to explain each and every step about tax setups. Please find below the complete detail about tax setups in oracle fusion.

Important Steps to Complete the Tax setups in Oracle Fusion 

1.India GST Tax Hierarchy

2Ana.lyzing Your Tax Requirements

3.Implementation of Transaction Tax (GST) in Oracle Fusion 

4.India GST Transaction Tax Rates

5.Role of Tax Classification codes in Oracle Fusion

6.Defining Tax Classification codes for GST Transaction Tax in Oracle Fusion.

7.Intra States Tax Classification codes

8.Inter States Tax Classification codes

9.Tax Rates Code for India GST Implementation

10.Started India GST Implementation in Oracle Fusion

11.Creating Tax Regime for GST

12.Creating Transaction Taxes Under Tax Regime

13.Types of Taxes under GST Tax Regime

14.Creating CGST Tax in GST Regime

21. Creating SGST Tax in GST Regime

22. Creating IGST Tax in GST Regime

23. Creating Tax Jurisdictions for transaction Taxes under Tax Regime

24. Creating Tax Jurisdiction for SGST Tax under Tax Regime

25. Creating Tax Jurisdiction for CGST Tax under Tax Regime

26. Creating Tax Jurisdiction for IGST Tax under Tax Regime

27. Creating Tax Status for all GST Taxes under Tax Regime

28. Creating Tax Status for CGST Tax under GST Tax Regime

29. Creating Tax Status for IGST Tax under GST Tax Regime

30. Creating Tax Status for SGST Tax under GST Tax Regime

31. Creating Tax Rates for Transaction Taxes under Tax Regime

32. Creating ‘2.5% SGST’ Tax rate for SGST Tax

33. Creating ‘6% SGST’ Tax rate for SGST Tax

34. Creating ‘9% SGST’ Tax rate for SGST Tax

35. Creating ‘14% SGST’ Tax rate for SGST Tax

36. Creating ‘2.5% CGST’ Tax rate for CGST Tax

37. Creating ‘6% CGST’ Tax rate for SGST Tax

38. Creating ‘9% CGST’ Tax rate for SGST Tax

39. Creating ‘14% CGST’ Tax rate for SGST Tax

40. Creating ‘5% IGST’ Tax rate for IGST Tax

41. Creating ‘12% IGST’ Tax rate for IGST Tax

42. Creating ‘18% IGST’ Tax rate for IGST Tax

43. Creating ‘28% IGST’ Tax rate for IGST Tax

44. Creating Tax Classification codes for GST Transaction Taxes

45. Creating Tax Determining Factor Sets for each Tax Classification Code

46. Creating Tax Determining Factors for Tax Classification Code ‘Local 5%

47. Creating Tax Determining Factors for Tax Classification Code ‘Local 12%’

48. Creating Tax Determining Factors for Tax Classification Code ‘Local 18%’

49. Creating Tax Determining Factors for Tax Classification Code ‘Local 28%’

50. Creating Tax Determining Factors for Tax Classification Code ‘Other State Purchase 5%’

51. Creating Tax Determining Factors for Tax Classification Code ‘Other State Purchase 12%’

52. Creating Tax Determining Factors for Tax Classification Code ‘Other State Purchase 18%’

53. Creating Tax Determining Factors for Tax Classification Code ‘Other State Purchase 28%’

54. Creating Tax Conditions Sets for each Transaction Tax Classification Code

55. Creating Tax Condition Set for Tax Classification Code ‘Local 5%’

56. Creating Tax Condition Set for Tax Classification Code ‘Local 12%’

57. Creating Tax Condition Set for Tax Classification Code ‘Local 18%’

58. Creating Tax Condition Set for Tax Classification Code ‘Local 28%’

59. Creating Tax Condition Set for Tax Classification Code ‘Other State Purchase 5%’

60. Creating Tax Condition Set for Tax Classification Code ‘Other State Purchase 12%’

61. Creating Tax Condition Set for Tax Classification Code ‘Other State Purchase 18%’

62. Creating Tax Condition Set for Tax Classification Code ‘Other State Purchase 28%’

63. Creating Tax Rule for each Tax Classification Code under Each GST Taxes

64. Creating Tax Rule for Tax Classification Code ‘Local 5%’ under SGST Tax.

65. Creating Tax Rule for Tax Classification Code ‘Local 5%’ under CGST Tax.

66. Creating Tax Rule for Tax Classification Code ‘Local 12%’ under SGST Tax.

67. Creating Tax Rule for Tax Classification Code ‘Local 12%’ under CGST Tax.

68. Creating Tax Rule for Tax Classification Code ‘Local 18%’ under SGST Tax.

69. Creating Tax Rule for Tax Classification Code ‘Local 18%’ under CGST Tax.

70. Creating Tax Rule for Tax Classification Code ‘Local 28%’ under SGST Tax.

71. Creating Tax Rule for Tax Classification Code ‘Local 28%’ under CGST Tax.

72. Creating Tax Rule for Tax Classification Code ‘Other State Purchase 5%’ under IGST Tax.

73. Creating Tax Rule for Tax Classification Code ‘Other State Purchase 12%’ under IGST Tax.

74. Creating Tax Rule for Tax Classification Code ‘Other State Purchase 18%’ under IGST Tax.

75. Creating Tax Rule for Tax Classification Code ‘Other State Purchase 28%’ under IGST Tax.

76. Creating Tax Rate Rule for each Tax Classification Code under each GST Taxes

77. Creating Tax Rate Rule for Tax Classification Code ‘Local 5%’ under SGST Tax

78. Creating Tax Rate Rule for Tax Classification Code ‘Local 5%’ under CGST Tax

79. Creating Tax Rate Rule for Tax Classification Code ‘Local 12%’ under SGST Tax

80. Creating Tax Rate Rule for Tax Classification Code ‘Local 12%’ under CGST Tax

81. Creating Tax Rate Rule for Tax Classification Code ‘Local 18%’ under SGST Tax

82. Creating Tax Rate Rule for Tax Classification Code ‘Local 18%’ under CGST Tax

83. Creating Tax Rate Rule for Tax Classification Code ‘Local 28%’ under SGST Tax

84. Creating Tax Rate Rule for Tax Classification Code ‘Local 28%’ under CGST Tax

85. Creating Tax Rate Rule for Tax Classification Code ‘Other State Purc 5%’ under IGST Tax

86. Creating Tax Rate Rule for Tax Classification Code ‘Other State Purc 12%’ under IGST Tax

87. Creating Tax Rate Rule for Tax Classification Code ‘Other State Purc 18%’ under IGST Tax

88. Creating Tax Rate Rule for Tax Classification Code ‘Other State Purc 28%’ under IGST Tax

89. Defining Default Taxes Rates for Each Transaction (GST) Taxes

90. Defining Default Taxes Rates for CGST Tax

91. Defining Default Taxes Rates for SGST Tax

92. Defining Default Taxes Rates for IGST Tax

93. Creating AP Invoice and Applying the Transaction Tax (CGST&IGST) for Testing.

94. Second AP Invoice and Applying the Transaction Tax (IGST) for Testing.

95. Withholding Tax Implementation in Oracle Fusion

96. Creating Tax Regime for Withholding Tax

97. Creating Withholding Taxes Under Withholding Tax Regime

98. Types of Taxes under Withholding Tax Regime

99. Creating 194C Section Withholding Tax in Withholding Tax Regime

100. Creating 194H Section Withholding Tax in Withholding Tax Regime

Tax setups in oracle fusions Started...

2 Types of Taxes in Oracle Fusion

1.Transaction Tax.

2.Withholdion Tax.

Overview of Transaction Tax:

A tax, that you pay when you buy or sell something in any country that is called the Transaction Tax. As per the Country rule regulation, if we are doing some businesses in that country either doing some sell or purchase something, then we must pay some amount of tax to the country as per the transaction amount and that is called the transaction tax. The amount of Transaction tax on Bill Payments is usually a fixed percentage. Every country has setup their own rates for Transaction Tax. Transaction Tax may vary country to country. Even for Country, there are multiple Transaction tax rates/percentage as pee the Goods and service category.

Overview of Withholding Tax:

A withholding tax , is an income tax to be paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient. In most jurisdictions, withholding tax applies to employment income. Many jurisdictions also require withholding tax on the payments of Suppliers Invoice Bill’s. In most jurisdictions, there are additional withholding tax obligations if the recipient of the income is resident in a different jurisdiction, and in those circumstances withholding tax sometimes applies to royalties, rent or even the sale of real estate.

Typically, the withholding tax is treated as a payment on account of the recipient's final tax liability, when the withholding is made in advance. It may be refunded if it is determined, when a tax return is filed, that the recipient's tax liability to the government which received the withholding tax is less than the tax withheld, or additional tax may be due if it is determined that the recipient's tax liability is more than the withholding tax. In some cases, the withholding tax is treated as discharging the recipient's tax liability, and no tax return or additional tax is required. Such withholding is known as final withholding.

The amount of withholding tax on income payments other than employment income is usually a fixed percentage.

Oracle Fusion Tax setups

Complete Introduction of India GST Transaction Tax in Tax setups in oracle fusion

Unlike earlier when there were multiple taxes such as Central Excise, Service Tax and State VAT etc., under GST, there is just one tax. GST is categorized into CGST, SGST or IGST depending on whether the transaction is Intra-State or Inter-State.

To determine whether Central Goods & Services Tax (CGST), State Goods & Services Tax (SGST) or Integrated Goods & Services Tax (IGST) will be applicable in a taxable transaction, it is important to first know if the transaction is an Intra State or an Inter-State supply.

GST Transaction Tax Types: -

• Intra-State supply of goods or services is when the location of the supplier and the place of supply i.e., location of the buyer are in the same state. In Intra-State transactions, a seller has to collect both CGST and SGST from the buyer. The CGST gets deposited with Central Government and SGST gets deposited with State Government.

• Inter-State supply of goods or services is when the location of the supplier and the place of supply are in different states. Also, in cases of export or import of goods or services or when the supply of goods or services is made to or by a SEZ unit, the transaction is assumed to be Inter-State. In an Inter-State transaction, a seller must collect IGST from the buyer.

Oracle Fusion Tax setups

 

Working Example for CGST and SGST:

·      Let’s suppose Ravi is a dealer in Maharashtra who sold goods to Rakesh in Maharashtra worth Rs. 10,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%. In such case, the dealer collects Rs. 1800 of which Rs. 900 will go to the Central Government and Rs. 900 will go to the Maharashtra Government.

Working Example for IGST:

Consider that a businessman Rajesh from Maharashtra had sold goods to Anand from Gujarat worth Rs. 1,00,000. The GST rate is 18% comprised of 18% IGST. In such case, the dealer has to charge Rs. 18,000 as IGST. This IGST will go to the Centre.

India GST Tax Hierarchy: - 

Tax setups in oracle fusion

Analyzing Your Tax Requirements

The following table represents key decisions that you must make when you analyze your tax requirements and use Oracle Fusion Tax and other Oracle Fusion applications to implement a solution

 

Question	Consideration	Impact to Tax Configuration
Who am I?	You must first answer questions about yourself and your relationship to the legal and regulatory agencies that enable you to operate in one or more counties.
Where do I have operations and businesses?	Identify the countries in which you operate. You will need to identify the country where you are legally registered and the countries where you have subsidiary companies that are legally registered or have a legal presence.	Use Oracle Fusion Legal Entity Configurator to capture information about your legal entities and legal registration.
What taxes am I subject to?	Analyze your tax environment for each of the countries in which you operate.	Set up your tax regimes, taxes, and tax jurisdictions according to the tax requirements for each country.
What are the operations and businesses that I have?	Consider the types of operations and businesses in which you are engaged and the countries where you have legal entities or reporting units. The type of industries that you work under (for example, mining,   telecommunications, and pharmaceuticals), the kind of operations in which you engage (for example, trading, manufacturing, and services), and the scale of your operations (for example, your turnover, company size, and growth) may all impact your taxability.	Use the classifications feature to categorize or classify your first parties under various classification schemes. In analyzing your operations, you can associate the three main classifications of a transaction to: What you do: Use transaction fiscal classifications. What products you buy or sell: Use product fiscal classifications. Who your customers and suppliers are: Use party fiscal classifications.
What do I do?	Identify and classify the transactions that you enter into. For example, do you primarily sell physical goods? If you do, do you manufacture them, or do you buy and sell them without additional manufacturing? Do you sell these goods in another state or province? Do you export these goods? Do you provide or use services?	Use Oracle Fusion Tax to create fiscal classifications to classify and categorize your transactions in a common manner across your organization. Use these fiscal classifications in tax rules to obtain the appropriate tax result.
What products do I buy or sell?	Determine the products that you buy and sell as they impact the taxes to which you are subject. For example, you must register for, and therefore collect and remit, service taxes only if you provide taxable services. If you manufacture goods for export, you may not be subject to taxes on the purchases that go into the manufacture of such goods.	Where Oracle Fusion Inventory is installed use the Inventory Catalog feature with Oracle Fusion Tax product fiscal classifications and intended use functionality to classify the taxable nature and intended use of the items. You can then define tax rules using these classifications to obtain the appropriate tax result. Define product category and noninventory-based intended use fiscal classifications to address classification needs for transactions that do not use inventory items.
Who are my customers and suppliers?	Determine the types of customers and suppliers with whom you do business, as they can impact the taxes to which you are subject or the tax status or tax rate that applies. For example, let's say that you are a company in the UK that supplies physical goods to another country that is also a member of the European Union. The transaction rate for UK VAT is dependent on whether the customer is registered for VAT in the country to which the supply is made.	Use the party classifications feature to categorize or classify your customers and suppliers. You can use these classifications in your tax rules to derive the appropriate tax result. You create a party fiscal classification by assigning an Oracle Fusion Trading Community Model class category to a party fiscal classification type code that you define. The Trading Community Model class codes defined under the class category become fiscal classification codes belonging to the party fiscal classification type. You can create a hierarchy of party fiscal classification types to reflect the levels of codes and subcodes within the Trading Community Model classification.

Implementation of Transaction Tax (GST) in Oracle Fusion

Tax setups in oracle fusion

India GST Transaction Tax Rates

Here below are the Rates of India GST Transaction Tax, which we do apply in Buy and Sell transaction. In this Implementation we will configure these below tax rates in Oracle Fusion.

1.       5%

2.       12%

3.       18%

4.       28%

 

Role of Tax Classification codes in Oracle Fusion:

To Apply any type of Transaction Tax in oracle Fusion, we must apply in the form of Tax Classification code. We cannot apply the tax rates directly in AP Invoice or AR Invoice Transactions. We must create the Tax Classification code and under the Tax Classification code, we do attach the tax rates which will be applied for Tax classifications. For in the Transactions, we just apply the tax Classification code for the Tax and automatically tax rates do attach automatically.

Defining Tax Classification codes for GST Transaction Tax in Oracle Fusion

For All Local Purchases/Intra States in one State, we will be creating these below Tax Classification codes. We can give any name as per our business Requirement and for easy identification. These are tax classification codes will be show in the Transaction Tax Window for apply.

Tax setups in oracle fusion

Question

Consideration

Impact to Tax Configuration

Who am I?

You must first answer questions about yourself and your relationship to the legal and regulatory agencies that enable you to operate in one or more counties.

 

Where do I have operations and businesses?

Identify the countries in which you operate. You will need to identify the country where you are legally registered and the countries where you have subsidiary companies that are legally registered or have a legal presence.

Use Oracle Fusion Legal Entity Configurator to capture information about your legal entities and legal registration.

What taxes am I subject to?

Analyze your tax environment for each of the countries in which you operate.

Set up your tax regimes, taxes, and tax jurisdictions according to the tax requirements for each country.

What are the operations and businesses that I have?

Consider the types of operations and businesses in which you are engaged and the countries where you have legal entities or reporting units. The type of industries that you work under (for example, mining,   telecommunications, and pharmaceuticals), the kind of operations in which you engage (for example, trading, manufacturing, and services), and the scale of your operations (for example, your turnover, company size, and growth) may all impact your taxability.

Use the classifications feature to categorize or classify your first parties under various classification schemes.

In analyzing your operations, you can associate the three main classifications of a transaction to:

What you do: Use transaction fiscal classifications.

What products you buy or sell: Use product fiscal classifications.

Who your customers and suppliers are: Use party fiscal classifications.

What do I do?

Identify and classify the transactions that you enter into. For example, do you primarily sell physical goods? If you do, do you manufacture them, or do you buy and sell them without additional manufacturing? Do you sell these goods in another state or province? Do you export these goods? Do you provide or use services?

Use Oracle Fusion Tax to create fiscal classifications to classify and categorize your transactions in a common manner across your organization. Use these fiscal classifications in tax rules to obtain the appropriate tax result.

What products do I buy or sell?

Determine the products that you buy and sell as they impact the taxes to which you are subject. For example, you must register for, and therefore collect and remit, service taxes only if you provide taxable services. If you manufacture goods for export, you may not be subject to taxes on the purchases that go into the manufacture of such goods.

Where Oracle Fusion Inventory is installed use the Inventory Catalog feature with Oracle Fusion Tax product fiscal classifications and intended use functionality to classify the taxable nature and intended use of the items. You can then define tax rules using these classifications to obtain the appropriate tax result.

Define product category and noninventory-based intended use fiscal classifications to address classification needs for transactions that do not use inventory items.

Who are my customers and suppliers?

Determine the types of customers and suppliers with whom you do business, as they can impact the taxes to which you are subject or the tax status or tax rate that applies. For example, let's say that you are a company in the UK that supplies physical goods to another country that is also a member of the European Union. The transaction rate for UK VAT is dependent on whether the customer is registered for VAT in the country to which the supply is made.

Use the party classifications feature to categorize or classify your customers and suppliers. You can use these classifications in your tax rules to derive the appropriate tax result.

You create a party fiscal classification by assigning an Oracle Fusion Trading Community Model class category to a party fiscal classification type code that you define. The Trading Community Model class codes defined under the class category become fiscal classification codes belonging to the party fiscal classification type. You can create a hierarchy of party fiscal classification types to reflect the levels of codes and subcodes within the Trading Community Model classification.