5OFI GST Functional P2P Flow Phase1 PDF

Pre-Release Document
Oracle Financials for India (OFI)

Goods and Services Tax (GST)
Procure to Pay Functional
Author: Vaishali and Somdeep

Creation Date: 21-Mar-2016
Last Updated: 05-Oct-2016
Document Ref:
Version: 1A
Organization: Oracle India Private Limited.
Vaishali and Somdeep OFI-GST Procure to Pay-Phase-1 1

Document Control
Change Record
Date Author Versio Change Reference

n
21-Mar-16 Vaishali and 1A Initial document

Somdeep
30-Sep-16 Vaishali and 1.0 Phase-I frozen document
Somdeep
Reviewers
Name Position
Rajnish Kumar Director, Financial Localizations

Development
V S Baburaj Director, Product Strategy
Audience
Name Position
12.2 Implementation team
12.2 Customers

Table of Contents
Document Control .................................................................................................................................. 2
1 – Introduction ........................................................................................................................................... 5
2 – Scope .................................................................................................................................................... 5
3 – Prerequisite Setups ............................................................................................................................. 5
4 – Functional Flow .................................................................................................................................... 6
5 – Requisition to Purchase Order (Pre-PO- PO Documents) ............................................................ 7
5.1 Flow Diagram ................................................................................................................................... 7
5.2 Create Requisition ........................................................................................................................... 7
5.3 India tax details form ..................................................................................................................... 10
5.4. Create RFQ (Request for Quotation) ........................................................................................ 11
5.5 Creating Quotation ........................................................................................................................ 14
5.6 Create Purchase Order from the approved Requisition .......................................................... 16
6 – Tax recalculation logic ...................................................................................................................... 19
7 – Tax on receipts................................................................................................................................... 19
7.1 Flow Diagram ................................................................................................................................. 19
7.2 Receipt Creation ............................................................................................................................ 19
8 – Tax Accounting on Receipts ............................................................................................................ 24
8.1 Accounting for Receipt Routing - Direct Delivery and Standard Routing ........................... 26
8.1.1 Flow Diagram .......................................................................................................................... 26
8.1.2 Direct Delivery – Recoverable Tax ...................................................................................... 28
8.1.3 Direct Delivery – Non-Recoverable Tax ............................................................................. 28
8.1.4 Standard Routing - Recoverable Tax .................................................................................. 29
8.1.5 Standard Routing - Non-Recoverable Tax ......................................................................... 29

9 – PO/Receipt Matched AP invoice ..................................................................................................... 30
9.1 Flow Diagram ................................................................................................................................. 30
9.2 Process and Accounting ............................................................................................................... 30
10 – ERS Invoice ...................................................................................................................................... 34
10.2 Process and Accounting............................................................................................................. 36
11 – Standalone AP Invoice ................................................................................................................... 39
11.1 Flow Diagram ............................................................................................................................... 39
12 –Tax Recovery Accounting (Interim) ............................................................................................... 41
12.1 Flow Diagram ............................................................................................................................... 41
13 – Third Party Invoices ........................................................................................................................ 48
13.1 Flow Diagram ............................................................................................................................... 49
14 – Costing Effect – Accounting Entries ............................................................................................. 54
14.1 Average Costing .............................................................................................................................. 54
14.2 Standard Costing ......................................................................................................................... 55
15 – Call to Action .................................................................................................................................... 57

1 – Introduction
The Procure to Pay cycle (P2P) is vital to an organization as in this process the organization buys and
receives goods or services from its vendors and makes necessary payments. This business process
covers the process of requesting, purchasing, receiving, paying for and accounting for goods and
services.
2 – Scope
This document provides the details of Functional flow for ‘Oracle Financials for India’ (OFI) Procure to
Pay cycle from GST point of view along with accounting entries.
Note: The current content has been compiled in reference to the frozen scope of the Phase-I
deliverables (Ref: GST Phase -1 Deliverables.docx)
3 – Prerequisite Setups
For the P2P cycle to work in the new GST architecture, the below setup needs to be defined
 Regime
 Tax types
 Tax rates
 Tax Categories
 Tax Rules
 Tax Defaulting basis
 Item Classification
 Claim term
 Common Configuration
 First and Third party Registration
Flow Diagram
To start with, this document facilitates with a flowchart which will allow the users to get an outline of the
setup flow for Procure to Pay Cycle. Some of the steps outlined in this flowchart are required and some
are Optional. Required step with Defaults means that the setup functionality comes with pre–seeded,
default values in the application. However, to ensure a successful setup, you need to review those
defaults and decide whether to change them to suit your business needs. If you need to change the
default values, you should perform the corresponding setup step. You need to perform Optional steps
only if you plan to use the related feature.

Regime Registration Tax types (R) Tax rates (R)
(R
Tax Defaulting Document sequence

basis (R) Tax Categories (R)
(O)
Define Item Define Claim Terms

Tax Rules (R)
Classification (R) (R)
Third Party First Party

Registration Common Configuration
Registration
(R) (R)
(R)
Note: - In The above flow diagram R standard for ‘Required’ and O stands for ‘Optional’
4 – Functional Flow
The P2P cycle comprises of the following steps,
Create Requisition Create RFQ Create Quotation

(Localization taxes – (Localization taxes – (Localization taxes –
applied) Applied) Not Applied)
Receipt creation (Localization taxes Create Purchase

–Applied) Taxes are freezed Once Order (Localization
receiving is done taxes – Applied)
Create Payable Invoice-

Localization taxes from receipts Invoice Payment
are copied to Invoice

5 – Requisition to Purchase Order (Pre-PO- PO Documents)
Every organization that operates a business has to purchase material such as row 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
5.1 Flow Diagram
Create Requisition Enter

Header/Line Info
Navigate to Tools India Tax Details. Tax category is

defaulted based on defaulting mechanism defined
Create RFQ  Tax category is defaulted from requisition
Create Purchase Order

and Approve

defaulted from requisition to Purchase order
5.2 Create Requisition

A purchase requisition is an internal request to purchase a material / service which will have details of
certain quantity of material or service on a certain date which is required by the organization. To create
requisition navigate to
Responsibility  Oracle Purchasing Requisitions  Requisitions

Enter Requisition Header:
The header holds the general information about the requisition that is related to all the lines. Choose the
requisition type (here it is purchase requisition). Preparer is the default person who is creating the
requisition and cannot be changed. You can give the description in the description field.
Enter Requisition Line:
In the requisition line, select the item that you wanted to purchase and enter the quantity and need by
date. In the Source details tab, you can input detailed information. You can give a specific note to the
buyer which might give particular information related to this purchase. RFQ required check box denotes
that the purchase of the item requires a request for quote.
Requisitions can be added in any currency set up in EBS by identifying the currency code and exchange
rate type on currency tab
Click on distribution button and enter the charge account

Close the form and save your work. Click the ‘Approve’ button to submit this requisition for approval.
Now navigate to Tools  India tax details form. The India tax details form will show the tax category
Defaulted.
For more information on the tax defaultation logic refer the ‘OFI-GST- Tax Defaultation flow’
document.

Tax
Category is
defaulted
Notes:-
 Unlike earlier we will no longer have Localized forms in the new GST solution and to view the tax
details the navigation is Tools India tax details
 Tax category defaulted based on tax defaultation logic can be manually Overridden at each document
level until the document is approved.
5.3 India tax details form
SL No Field Functional Description Query/Enabled
1 Organization Inventory Organization name No
2 Location Inventory Organization Location No
3 Document Number PO number No
4 Revision / release Number No
5 Currency PO currency No
6 Amount PO line amount No
7 Tax amount Total tax amount No

8 Total Amount Total PO amount No
9 Line Number Po Line number No
10 Item Item Code No
11 Item Description Descript of the item attached to PO No
12 Tax category Tax category Defaulted based on Yes

defaulting Mechanism
13 Tax rate name Tax type attached to the tax No

category
14 Tax type Tax type attached to tax category No
15 Tax point basis Determines the point in which tax No

accounting is done. Gets defaulted
from Tax type setup
16 Precedence Gets defaulted from tax category No

setup
17 Tax conversion date Date on which tax is calculated No
18 Tax rate Tax rate defined at tax rate setup No
19 Tax amount Amount calculated for each tax type No
20 Recoverable amount Tax amount which can be No

recovered. Get populated only if the
tax type is a recoverable
21 Recoverable Get populated only if the tax type is No

a recoverable
22 Inclusive Get populated only if the tax type is No

a inclusive
23 Self Assessed / reverse charge Gets defaulted from tax type No
24 Party name and Party type Gets defaulted from PO Yes
5.4. Create RFQ (Request for Quotation)

A Request for Quotation (RFQ) is a formal request sent to the suppliers to find the pricing and other
information for an item or items. Based on the information supplied, the supplier quotes a quotation
against the RFQ form.
In Oracle EBS, RFQ’s can be auto created from an existing Purchase Requisition or can be a fresh RFQ.

Navigation to Auto create the RFQ is
Responsibility  Oracle Purchasing (USA) Auto Create and then query the Requisition number
Your Requisition summary is shown in the next screen. Check box your Requisition line and in
the Document Type, select RFQ and click Automatic button to Auto Create RFQ.
It will navigate to a new window. Here the RFQ Type is Standard RFQ and click create button
Select the line

against which RFQ
needs to be Select
created the RFQ
type
In the next window, RFQ is auto created from an existing Purchase requisition.

Click Suppliers button and enter the details of the Suppliers to whom you want to send this RFQ.
Click on Terms button and add payment terms and freight terms. Click Price Breaks button for entering
pricing information for the RFQ.
Now from the Tools India tax details form, we can see that tax category is defaulted

Tax category is
defaulted
Save the transaction.
5.5 Creating Quotation

A quotation is a supplier’s response to RFQ. Now we will create quotations based on the response from
the suppliers with relevant to RFQ which we have created in step 5.4.
To create a quotation from the RFQ, first query the RFQ. The below picture shows the completed RFQ.
Tools
Copy
Document

In the next screen, enter the details of quotation sent by the supplier. Click OK button.
Repeat the same steps if you want to create multiple quotation for multiple suppliers.
Once the quotation is created, system will show the below message
Change the status of the quotation to Active and approve the quotation.

Change
status to
active
5.6 Create Purchase Order from the approved Requisition

Purchase Order (PO) is the formal request to a vendor to supply certain materials or services. A PO can
be created with reference to a requisition or RFQ or another PO.
Responsibility  Oracle Purchasing Auto Create and then query the Requisition number
Select Document
type as ‘Standard
PO’

Your Requisition summary is shown in the next screen. Check box your Requisition line and in
the Document Type, select standard PO and click Automatic button to Auto Create PO. By clicking
Automatic button, a standard PO is created based on the details provided in the Purchasing requisition.
You can select Supplier either in the New Document form or in the Purchase Order form
Click on ‘Create’
Button to confirm
the PO creation
After clicking on the Create button in the above screen a Standard PO is created as follows

In the shipment form, Shipment number, Org, Ship-to, UOM, Quantity and Need-by-date are shown by
default. These fields can be edited as needed.
Even in the more tab and distribution details tab, the default values will be populated from requisition.
Now, Navigate to Tools  India tax details.
The default tax category is automatically defaulted here
Tax category is
defaulted from
requisition level
Now approve the PO. No accounting entry happens when a PO is created.
Note:
Unlike earlier we will no longer have Localized forms in the new GST solution and to view the tax details
the navigation is Tools  India tax details

6 – 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.
7 – 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.
7.1 Flow Diagram
Select the PO lineEnter

Inventory details

defaulted from PO level
Check on ‘Confirm taxes’ Check box to freeze the tax

category and it is mandatory to check
Navigate to Receipt form

and Save the receipt
‘Receiving Transaction processor’ program will be fired and

it will process Base / Localization tax details
7.2 Receipt Creation

Navigation for creating a receipt is
Responsibility  Oracle Purchasing  Receiving  Receipts

Enter the PO number and click Find button
Select the line

against which
receipt needs to Shows the PO
be created details against
which receipt is
created
Check the Lines you want to receive and enter the sub inventory details
In the lower part of the screen, Purchasing displays the following detail information for the current
shipment line: Order Type, Order Number, Source, Due Date, Item Description, Hazard, Destination, UN
Number, Receiver Note, and Routing.
Now if we navigate to Tools  India tax details, we can see that tax category is defaulted here also.

Tax category
defaulted
Now we have to click on ‘confirm taxes’ check box to freeze the tax category. Once this check box is
checked, overriding the tax category is not possible.
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.
 In GST solution ‘India Receiving Transaction’ Processor program will not be triggered and has no
relevance.
 Unlike earlier we will no longer have Localized forms in the new GST solution and to view the tax
details the navigation is Tools India tax details
Once the check box is checked, below message will appear

‘Confirm Taxes’
check box
needs to be
checked to
freeze the taxes
before receipt
creation
Confirmation
message once
the taxes are
freezed
Click on Header and save the receipt to get the receipt number
Once the receipt is saved, system automatically triggers the “Receiving Transaction Processor” (RTP)
concurrent. Unlike earlier, now “India Receiving Transaction Processor program” will not be fired. The
base Receiving Transaction Processor concurrent itself will process the India localization tax details.

Receiving transaction
processor program is fired
after receipt creation and it
will create / process both
base receipt detail as well
as Localization tax details
Once the RTP concurrent is completed, in the Receiving transaction Window we can see that receipt
processing has already happened

8 – 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
Event Account Debit Credit
Receiving Inventory Line Amount

Receipt
Inventory AP Accrual Line Amount
For the India tax details, the below lines are inserted in GL_INTERFACE table after the Receiving
transaction processor program is completed.

The below script can be used extract data from GL_INTERFACE
Select gcc.segment1,
gcc.segment2,gcc.segment3,gcc.segment4,gcc.segment5,gi.code_
combination_id,gi.entered_dr,gi.entered_cr,gi.user_je_category_na
me,gi.reference10
from gl_code_combinations gcc, gl_interface gi
where gi.date_created like sysdate and gi.code_Combination_id =
gcc.code_Combination_id and reference10 like '%Receipt
number%';
Below accounting entry is generated for each tax type
Receiving Inventory Tax Amount

Receipt
Inventory AP Accrual Tax Amount

8.1 Accounting for Receipt Routing - Direct Delivery and Standard Routing
8.1.1 Flow Diagram
Create PO Receipt Routing set to
Direct Delivery Standard Routing
Navigate to Tools India Tax Details. Navigate to Tools India Tax Details.
Attach Category recoverable or Non- Attach Category recoverable or Non-
recoverable recoverable
Navigate to Receipt form and select Navigate to Receipt form and select
the PO line for receipt creation the PO line for receipt creation
Navigate to Tools India Tax Details. Navigate to Tools India Tax Details.
Check ‘Confirm taxes’ check box. Check ‘Confirm taxes’ check box.
‘Receiving Transaction processor’ program ‘Receiving Transaction processor’ program

will be fired and it will process Base / will be fired and it will process Base /
Localization tax details. Both Receiving and Localization tax details. Only Receiving
Delivery transaction will be created. transaction will be created.
Lines are inserted in GL_INTERFACE table Lines are inserted in GL_INTERFACE table
for tax accounting (refer query mentioned in for tax accounting (refer query mentioned in
Chapter 8 to extract the data) Chapter 8 to extract the data)
Perform the Receiving transaction by navigating to

Purchasing Receiving  Receiving transactions

When a recoverable tax category is attached, in India tax details form (both at PO and receipt level) the
Recoverable check box will be checked and recoverable amount will be populated.
Recoverable check box is

checked and Recoverable
amount is calculated.
Note:
 For a tax type to be recoverable, the below setup has to be in place
- Recoverable check box needs to be checked at Tax type Setup
- Recoverable option needs to be set to ‘Yes’ in item classification setup
- Claim term has to be defined for the Tax type.
If any of the above setup is missing, then the tax type will be treated as a non-recoverable tax.
When a non-recoverable tax category is attached, in India tax details form (both at PO and receipt level)
the Recoverable check box will be unchecked and recoverable amount will not be populated.

Recoverable check box is
unchecked and
Recoverable amount is not
calculated.
8.1.2 Direct Delivery – Recoverable Tax

The accounting entry generated in GL_INTERFACE is
Tax Interim Recovery Tax Amount

Receipt
Inventory AP Accrual A/c Tax Amount
8.1.3 Direct Delivery – Non-Recoverable Tax

Receiving Inventory Tax amount

Receipt
Inventory AP Accrual Tax amount

8.1.4 Standard Routing - Recoverable Tax

Receipt
8.1.5 Standard Routing - Non-Recoverable Tax


Receipt
Note:
 The non–recoverable tax amounts need to be added to item cost. So after delivery transaction, lines
are inserted in MTL_MATERIAL_TRANSACTIONS (MMT) and MTL_TRANSACTION_ACCOUNTS (MTA).
For more information on queries that can be used to find out the details of the lines inserted in the
MMT and MTA tables, refer document 1065343.1.
 Period End Accrual functionality which is not supported in current architecture will not be supported
even in GST solution.

9 – 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.
9.1 Flow Diagram
Create Invoice  Match

Action ‘Receipt’
Click on Match option Select receipt  Click on Match

button
Line / distribution details are defaulted from

Receipt level to Invoice
Navigate to Tools India Tax Details. The tax

category is defaulted from Receipt to invoice
Since Tax point basis was Delivery, the taxes are freezed in
India Tax Details form
Validate and Run Create accounting
9.2 Process and Accounting

Create Payables invoice
Responsibility: Payables responsibility to create an AP invoice
Navigation: Invoice Entry Invoices
Create an Invoice for supplier against whom PO /receipt is created.
Invoice Header
In invoice header level, select the operating Unit, invoice type and enter the PO number i.e. 65 in our
example. Once you select the PO number, supplier name and Site automatically gets defaulted from the
PO.

Matching Receipt to the invoice
To create a receipt matched invoice, the match type in Invoice header should be “Receipt”.
Match Action
is set to
‘Receipt’
We shall not enter the invoice line / distribution details as this will come automatically from matching the
invoice with Receipt.

The next step would be to Click on Match button in Invoice work bench and query for the Receipt which
we are intending to match to the invoice and click on find.
Query the
Receipt
Select the line which needs to be matched to the invoice and click on Match button
Click on ‘Match’ button to

default distribution details
from receipt to Invoice

Now we can see that the line details and Distribution details at invoice level is automatically populated
from PO / receipt.
Tax Defaultation
Now if we navigate to Tools  India tax details, we can see that Taxes which are defaulted at receipt are
defaulted at invoice level as well
Tax category
from Receipt
got defaulted to
Invoice
Tax Point basis is set

as ‘Delivery’
Now validate the invoice and run Create accounting. Accounting entry generated
The accounting class for the tax type

is set as ‘Miscellaneous’

10 – ERS Invoice
Payment on Receipt enables the user to automatically create standard, unapproved invoices for payment
of goods based on receipt transactions. Invoices are created using a combination of receipt and purchase
order information that eliminates duplicate manual data entry. It automatically creates invoices with
multiple items and distribution lines, and includes tax. Payment on Receipt is also known as Evaluated
Receipt Settlement (ERS).

10.1 Flow Diagram
Create PO for Supplier / Supplier site which has

ERS Invoice setup
Navigate to Terms  Set ‘Pay on’ option to

‘Receipt

defaulted based on defaulting mechanism defined
Create a receipt Check the ‘Confirm taxes’

check box
Three concurrent requests are triggered
 Receiving Transaction Processor

 ADS (Pay On Receipt AutoInvoice)
 Payables Open Interface Import
. Lines are inserted in

GL_INTERFACE table for tax
ERS invoice is imported to Payables
accounting (refer query
mentioned in Chapter 8 to extract
the data)
Validate the ERS invoice and run create
accounting

Create a purchase with Pay on option set to ‘Receipt’. Once the PO is approved, create a receipt. As
soon as you save the receipt transaction, in the background the below programs will be submitted:-
 Receiving Transaction Processor

 ADS (Pay On Receipt
AutoInvoice)
Once receiving transaction processor program is completed

Receipt
The output of payable Open interface program, the ERS invoice number which got created will be
displayed

ERS invoice number
which got imported
to payables
When we query the invoice number in invoice work bench and navigate to Tools  India tax details form,
the tax category has defaulted from receipt level.
Tax category is defaulted from

Receipt. Since confirm taxes
check box is checked at receipt
level, the fields are freezed at
invoice level
Once the invoice is validated and Accounted, the below accounting entry is generated by navigating to
Tools View accounting

11 – 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.
11.1 Flow Diagram
Enter the Header details like invoice

type, Supplier Name, site etc
Click on Line Items and fill the line

level and distribution details
Navigate back to Header. Tools -

India Tax details
Pick the Organization and location.

The same is required for adding
taxes/tax defaultation if any
Lines are inserted in

Validate and Account the invoice
the data)
Tax details can be viewed in India Tax
Details form / View accounting
(Accounting class ‘Miscellaneous
Expense’

Responsibility: Payables responsibility to create an AP invoice Navigation:
Invoice  Entry  Invoices
In invoice header level, select the operating Unit, invoice type, Supplier name and site details etc.
Now navigate to Line level details and enter the Line and distribution Details

Now navigate to Tools  India tax details
Enter the Organization

and Location details
Tax category
defaulted
The tax point basis is

‘Invoice’
Based on the tax default rule we have setup, the ‘P2P testing 2’ tax category is defaulted automatically.
Below we can also see the Taxes attached to the ‘P2P testing 2’ category.
Once the Organization and location details are entered, save the transaction and navigate back to invoice
work bench and validate and Account the invoice. The accounting entry generated at this stage is
Tax lines are generated

with accounting class as
‘Miscellaneous Expense’

12 –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
12.1 Flow Diagram
Create PO Enter header /

line details
Navigate to Tools India Tax Details. Attach tax category

with Recoverable tax type and TPB as Delivery
Navigate to Receipt form and select the PO

line for receipt creation
Navigate to Tools India Tax Details. Check

‘Confirm taxes’ check box.

‘Receiving Transaction processor’ program will be fired and
it will process Base / Localization tax details
the data)
Navigate to Tools India Tax Details. From Menu

select Tools Process Claims. Claim details form will
open
Enter the claim details and click on  populate

values

Select the lines which needs to be processed 
Enter claim term details click on Process option
the data)
The processed line status is changed from

‘Pending Recovery’ to ‘Recovered’

Once the receipt accounting is done, for a receipt with recoverable taxes,
The accounting entry is generated in GL_INTERFACE is

Receipt
Once the receipt accounting is done, to process recovery amount, navigate to

Now in India tax details form navigate to
Tools Process
Claims

In the Claim details form enter the tax invoice number and tax invoice date and enter the Action as
‘Recover’
Enter the tax

information Details
Once the above details are entered click on ‘Populate Values’ button which will populate the tax invoice
number and tax invoice date to all the tax lines
Click on ‘Populate
values’ button to
default the Tax invoice
information details to
each line level. Post
that each line will have
the tax invoice number,
date information
entered at header
level.
Now select the tax line which you want to process or you can also choose Select all option if you want to
process all the tax lines. Also before processing the field ‘Intended Use’ needs to be populated.

Enter Intended
use option
Manufacturing
or Non
Manufacturing
Once the above information’s are entered, click on ‘process’ button. Below confirmation message will be
shown
Confirmation
message for
Recovery
Processing
Now we can see that Status of the tax line is changed from Pending Recovery to Recovered

The line status is changed
from ‘Pending recovery’ to
‘Recovered’
In the above case, only 50% of the tax amount is recovered and other 50% is pending for recovery on
next month. That is because of the claim term ‘GST Claim Term’ Setup. As the setup of claim term GST
Claim Term’ is
Also, the once the recovery is processed,
The accounting entry is generated in GL_INTERFACE is

Tax Recovery Recovered

Amount
Recovery
Tax Interim Recovery Recovered Amount
Note:
 Interim recovery to recovery – currently recovery process is manually done via process recovery
option and this will be an Interim Solution. We are checking the feasibility to automate the entire
process.

13 – Third Party Invoices
Third party invoice functionality provides provision to pay to the Vendor other than the PO Vendor. This
will be required for paying the services offered by other Vendors related to that PO. An approved Invoice
for the Non-PO Vendor will be created automatically when the invoice is created via payable open
interface.
For using the third party invoice functionality, the tax type attached to the PO should have the
‘Update vendor on
transaction’ check box
should be checked at
tax type definition.

13.1 Flow Diagram
Create PO  Enter header
and line information
Navigate to Tools India Tax Details. Attach tax category

with ‘Update vendor on transaction’ check box checked
Navigate to Receipt form and select the PO line for receipt

creation
Navigate to Tools India Tax Details. Change the

party Name and party site at tax type level  Click
apply. Click on ‘Confirm taxes’ Check box
Four concurrent requests are triggered Lines are inserted in

 Receiving Transaction Processor accounting (refer query mentioned
 ADS (Pay On Receipt AutoInvoice) in Chapter 8 to extract the data)
 Third party Payables Open Interface Import
Payables Open Interface Import – Imports Invoice for

Item line for PO vendor and
Third party Payables Open Interface Import - Imports

Invoice for tax line for Non PO vendor
Validate and Account both Standard

Invoice and Third party Invoice

Create a purchase order with tax type which has ‘Update vendor on transaction’ check box checked at tax
type setup.
In Receipt form, before saving the receipt navigate to Tools  India tax details. Change the ‘Party Name’
and ‘Party site’ to a new vendor and click apply button to save the changes

Change the Party
Name and Party Site
to a Non PO vendor
Click Apply to
save the changes
Note:
The third party vendor details can also be updated at PO level and if it is updated at PO level, the same
gets defaulted to receipt level as well.
Now click on confirm taxes check box to freeze the tax details
Now once the receipt is saved, system automatically fired the below concurrent

Below concurrent
are fired
In the above request set, the program ‘Third party Invoices - Payables open interface Import (Payables
Open Interface Import)’ creates the Third party invoice against the Non –PO vendor and ‘Payables Open
Interface Import’ program creates the invoice against the vendor in the PO. The output of the ‘Third party
Invoices - Payables open interface Import’ shows invoice for tax amount has been created against the
third party vendor.
Invoice created
against Third party
vendor
The output of ‘Payables Open Interface Import’ program shows the invoice details created against the PO
vendor.

Invoice created
against PO vendor
Now in invoice work bench, when queried, the invoice created against PO vendor will show the Item + tax
amount in India tax details form even though invoice line level only item line amount is reflected.
Below accounting is created for the third party invoice

14 – Costing Effect – Accounting Entries
14.1 Average Costing
In a average costing organization, the below accounting is generated for
A. Recoverable Taxes
After receipt Accounting
Interim recovery A/c Tax Amount

Receipt
A/c
After Recovery
Tax Recovery Tax Amount

Receipt
In case of recoverable taxes, the MTL tables will not be impacted / hit with the tax amount.
B. Non Recoverable Taxes
After receipt Accounting

Receipt
Once the delivery transaction is done, MTL_TRANSACTIONS_INTERFACE table gets updated with non-
recoverable tax amount and the same gets added to item cost. Accounting entry at that stage will be
Receipt Material Tax Amount

Receiving inventory Tax Amount
14.2 Standard Costing

In a standard costing organization, the below accounting lines are inserted in GL_INTERFACE table once
the Receiving transaction is completed
A. Non-Recoverable taxes
Accounting entry for PO receiving

Receipt
Accounting entry for Delivery transaction is
Purchase Price Tax Amount

Variance
Receipt
Note:
In case of standard costing Organization, the MTL tables will not be impacted / hit with the tax amount.
B. Recoverable taxes
After receipt accounting, the accounting entry generated in GL_INTERFACE is
Interim Recovery Tax Amount

Receipt
Once the recovery is done, the accounting entry generated in GL_INTERFACE is
Receipt Recovery Tax Amount

Interim Recovery Tax Amount
Note:
 There is no relevance of PO destination in GST architecture. Whether the destination is ‘Expense’

or ‘Inventory’ the accounting treatment will be same.
 The accounting impacting on costing and OPM remains same as it is in current architecture.

15 – Call to Action
This is not the final document and further changes shall be incorporated as and when there are any
further updates from Product Management / Development teams in regards to the changed
features/functionality or pending product clarifications, if any.
For further reference, you can also refer the below Pre-Release documents released as a part of the
EBS GST Infrastructure Scope:
 OFI-GST-Functional Tax Computation for O2C – Phase1

 OFI-GST Configuration – Phase1
 OFI-GST- Tax Defaultation flow – Phase1
 OFI-GST-Functional O2C flow – Phase1

5OFI GST Functional P2P Flow Phase1 PDF

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Pre-Release Document

Oracle Financials for India (OFI)

Author: Vaishali and Somdeep

Organization: Oracle India Private Limited.

Vaishali and Somdeep OFI-GST Procure to Pay-Phase-1 1

Date Author Versio Change Reference

21-Mar-16 Vaishali and 1A Initial document

Rajnish Kumar Director, Financial Localizations

Vaishali and Somdeep OFI-GST Procure to Pay-Phase-1 2

Document Control .................................................................................................................................. 2

3 – Prerequisite Setups ............................................................................................................................. 5

4 – Functional Flow .................................................................................................................................... 6

5 – Requisition to Purchase Order (Pre-PO- PO Documents) ............................................................ 7

5.1 Flow Diagram ................................................................................................................................... 7

5.2 Create Requisition ........................................................................................................................... 7

5.3 India tax details form ..................................................................................................................... 10

5.4. Create RFQ (Request for Quotation) ........................................................................................ 11

5.5 Creating Quotation ........................................................................................................................ 14

5.6 Create Purchase Order from the approved Requisition .......................................................... 16

6 – Tax recalculation logic ...................................................................................................................... 19

7.1 Flow Diagram ................................................................................................................................. 19

7.2 Receipt Creation ............................................................................................................................ 19

8 – Tax Accounting on Receipts ............................................................................................................ 24

8.1.1 Flow Diagram .......................................................................................................................... 26

8.1.2 Direct Delivery – Recoverable Tax ...................................................................................... 28

8.1.3 Direct Delivery – Non-Recoverable Tax ............................................................................. 28

8.1.4 Standard Routing - Recoverable Tax .................................................................................. 29

8.1.5 Standard Routing - Non-Recoverable Tax ......................................................................... 29

Vaishali and Somdeep OFI-GST Procure to Pay-Phase-1 3

9.1 Flow Diagram ................................................................................................................................. 30

9.2 Process and Accounting ............................................................................................................... 30

10 – ERS Invoice ...................................................................................................................................... 34

10.2 Process and Accounting............................................................................................................. 36

11 – Standalone AP Invoice ................................................................................................................... 39

11.1 Flow Diagram ............................................................................................................................... 39

11.2 Process and Accounting............................................................................................................. 39

12 –Tax Recovery Accounting (Interim) ............................................................................................... 41

12.1 Flow Diagram ............................................................................................................................... 41

12.2 Process and Accounting............................................................................................................. 42

13 – Third Party Invoices ........................................................................................................................ 48

13.1 Flow Diagram ............................................................................................................................... 49

13.2 Process and Accounting............................................................................................................. 49

14 – Costing Effect – Accounting Entries ............................................................................................. 54

14.1 Average Costing .............................................................................................................................. 54

14.2 Standard Costing ......................................................................................................................... 55

15 – Call to Action .................................................................................................................................... 57

Vaishali and Somdeep OFI-GST Procure to Pay-Phase-1 4

 Tax Defaulting basis

 First and Third party Registration

Vaishali and Somdeep OFI-GST Procure to Pay-Phase-1 5

Tax Defaulting Document sequence

Define Item Define Claim Terms

Third Party First Party

Create Requisition Create RFQ Create Quotation

Receipt creation (Localization taxes Create Purchase

Create Payable Invoice-

Vaishali and Somdeep OFI-GST Procure to Pay-Phase-1 6

5.1 Flow Diagram

Create Requisition Enter

Navigate to Tools India Tax Details. Tax category is

Create RFQ  Tax category is defaulted from requisition

Create Purchase Order

Navigate to Tools India Tax Details. Tax category is