India Taxes Implementation

A Multinational event management company had decided to rollout Oracle R12.1.3 for their India entity. Infidox Technologies was engaged to implement India Localization Taxes to streamline the business process and meeting taxation compliance. We have completed the project within the project timeline and with 100% customer satisfaction.

 

India Goods and Services Tax (GST):

 

A Goods and Services Tax in a federal structure by very nature is complex. The GST system in India tries to minimize the complexity by applying a common base and rate across the country. However, the multiple rate structure and an enforcement framework using onerous reporting requirements for businesses places a huge compliance burden on businesses

 

Our Approach:

 

Infidox Tax implementation approach considers the impacts within the below five boundaries.

1. Master Data
2. Tax rules (defaulting tax on business transactions)
3. Cutover Impacts
4. Business documents
5. Reporting and Accounting

 

1. Master Data

Master data like supplier master, customer master, legal entity setups, General Ledger accounts and Part master needs to be enriched with the new tax registration details and exemption details to meet the GST law requirements.

 

2. Tax Rules (defaulting tax on business transactions)

The tax rules default the tax rates on different transactions – P2P transactions and O2C transactions.  Our team expertise in capturing all the tax rules in a single matrix, considering all the tax determining factors like party, place, product and process.

GST Requirements impacting tax rules:

• GST is based on supply of goods or services against the present concept of tax on the manufacture of goods or on sale of goods or on provision of services.
• GST is a Destination based tax against the present concept of origin based tax.
• Local Transactions – attract Dual GST With the Centre (CGST) and the States (SGST) simultaneously levying it on a common base
• Interstate Transactions – attract Integrated GST (IGST) would be levied on inter-State supply (including stock transfers)
• Import Transactions – attract IGST would be treated as inter-State supplies.
• Multiple rate based on the type of item

 

3. Cutover

The cutover from an old solution to a new solution is likely to impact the transactions which are mid-way in the end to end process. For example, a PO created under an old tax regime might have old tax related data. When an invoice is created by matching the invoice to the PO, it might result in multiple taxes – one with old tax rates, statuses and the other with new tax rates, statuses.

Our solution is able to identify the potential areas of impacts and leverage pre-built solutions to quickly identify and resolve such issues.

 

4. Business Document –

Tax related information for e.g. tax registration details are usually printed on business documents like shipping documents, bill of lading, AR Invoices, purchase orders. Considering the refund / credit balance, the GST TIN of the buyer and seller should be printed on the AR invoices.

 

5. Reporting and Accounting

The monthly, quarterly, yearly, ad-hoc reporting requirements are captured as part of this step. The reports used for reconciliation with the general ledger and the number of GL accounts needed for reconciliation and reporting.  Companies may want separate accounts for Input IGST, Input SGST, Input CGST, Output IGST, Output SGST and Output CGST for easy reconciliation and credit tracking.