11i and R12 Difference for India Localization

India Localization and Major Changes in R12 Compare to 11i

Introduction: 

India Localization is complying with the India Specific Tax Requirements. India Localization Patch set has to be applied for India Localization over and above the standard R12 implementation. India Localization provides some seeded responsibilities like India Local Purchasing, India Local Inventory, India Local Order Management, India Local Payables, and India Local Receivables etc. Also it provides India related menus, functions, reports etc.Localization provides provision for defining of taxes, defaulting of taxes, recording of taxes, calculation of taxes, and reporting of taxes.

Taxes Like Central Excise ,Sales Tax ,Income Tax ,VAT ,Customs Duty, Service Tax

 Central Excise Applied to both manufacturing and trading Orgs when the organization is excise registered. It is a federal tax controlled by the central excise department. A CE registration called ECC is required for each physical location. If there are two inventory orgs at the same location, they will share a common.

Sales Tax Sales Tax is administered by States The Tax is applied at the time the product is sold to the end customer There are 2 components for Sales tax– Central Sales Tax and Local Sales Tax. Different tax registration is required for both of them. The head office would be responsible for tax settlement and accounting for all the tax registered orgs. Each state will have a separate LST and CST registration numbers. These are defined at each inventory Org. If multiple Inventory orgs fall under one state, they all will use the same CST and LST registrations.

Income Tax Head office is normally registered with the Income Tax at the LE level. PAN (Permanent account number) will be allocated for the head office, defined at the LE. TAN (Tax Deduction Account Number) is allocated by the local Income Tax jurisdiction office for the income tax under local jurisdiction at the OU level. A separate TAN Number is required for each OU that fall under different states .A common TAN can be used for multiple OUs if they are all under the same State.

VAT Value Added Tax (VAT) is a tax levied on the value added to a product at different stages. VAT is a tax levied at each of the stages in a multi point entry in the supply chain with the facility of set-off of input tax. It is levied by States in the place of Sales Tax. A manufacturer may pay VAT on input raw materials and recovers that tax when he sells the finished goods to a dealer. The difference of tax collected from the dealer and the tax paid for the raw materials is paid to the tax authority. Similarly, a dealer may pay VAT on the finished Goods and recovers that tax when he sells it to a retailer. The tax after recovery is paid to the tax authority. Finally the end customer pays the VAT to the retailer. The retailer recovers his portion of the tax he paid and pays the balance to the tax authorities. CENVAT is a Central VAT. You have the provision to claim this tax at the time of receipt. The RG registers are updated with the CENVAT entries at the time of receipt.

Customs Duty Customs Duty is paid on goods when goods are imported into India It is paid in INR as a % of the duty over the value of goods received in foreign Currency. In Oracle, provision is made to pay this duty as a prepayment before receiving the materials and it is adjusted against BOE given by Customs. When goods are received into the inventory org, they should be associated with the BOE Tax amount paid on them at the time of import. These Entries are registered in a Tax Register called RG23D While Shipping the goods on a sales order, the deliveries are associated with these registry entries.

Service Tax Service tax is paid for the services rendered. Examples are telecom service, tax services, consulting services Etc. You can define Tax regime for Service tax and have service tax registration.

11i and R12 Difference for India Localization

Module	Header	Changes in R12
IL	Tax Deducted at Source (TDS) Thresholds	The Maintaining TDS Threshold feature has been extended to uptake tracking requirement based on multiple thresholds.
	Value Added Tax (VAT)	• Provision to generate VAT Invoices on Sale transactions
		• Repository to record Input/output VAT Tax details for each transaction
		• Feature to create VAT adjustment entries
		• Feature to settle VAT Taxes
	EB Tax	E-Business Tax for ‘Order to Cash’ flow and Receivables transactions.
	Service Tax	Manual Service tax entry
		Tax defaulted to Manual invoices
	India Local Inclusive Tax	The Inclusive tax feature of Oracle Financials for India supports tax inclusive computations in the 'Order to Cash' and 'Procure to Pay' cycles.
	Tax Definition Window	In this window, a new check box, Inclusive Tax Flag, is introduced. This check box is editable only for new tax codes. For existing tax codes, this check box would be read only.
	RG Consolidation	RG Consolidation
	Allow Negative Balance	You can enable update of PLA with debit transactions even when the PLA balance is negative.
	Create PLA Payment and AP Invoice	On saving the changes in RG Consolidation, based on the intended balance of PLA a PLA Payment and AP Invoice are created. However, the PLA Register will not be updated with this transaction until the Invoice is paid and the PLA Payment is acknowledged.
	Account Payables Standalone Invoice	The standalone AP invoice is an invoice created manually by a user in Oracle Account Payables module that does not matches either to a purchase order or a receipt. The support for standalone AP Invoice functionality allows the India localization users to compute taxes such as service tax on standalone AP invoices. Primarily standalone AP invoices are raised for non-item based expense or service activities. Value Added Tax (VAT) or Sales Tax (ST) can now be attached to invoices where item information is not critical. You can also add non-recoverable taxes of 'Any Other' type to standalone invoices. You can also use the non-recoverable tax type to add other miscellaneous charges to the invoice.
	Item Classification	Item classification was attaching at Item level But in R12 Its having Separate Form to define.
	System option in AR	Tax and default tab is not avail in R12

Dillip Kumar Jena