Accounting Entries

Accounting Entries

In this chapter, the accounting entries created for accounting localization taxes are discussed. In the general ledger proper accounts need to be defined for accounting localization taxes. Accounting entries will be created on completion of the respective transaction and the same can be imported to General Journal.

Oracle India Localization User’s Reference Guide 530

Accounting entries in India Local Inventory The following Accounting Entries are passed in India Local Inventory.

On Receipt of Material Account Debit Credit

Inventory Receiving A/c PO price AP Accrual A/c PO price

On Claiming CENVAT credit Account Debit Credit

Inventory Receiving A/c Total tax amount AP Accrual A/c Taxes other than customs

duty & CVD BOE/ customs duty paid a/c Only customs duty and

CVD amount CENVATable tax amount * CENVAT percentage

Inventory Receiving A/c CENVATable tax amount * CENVAT percentage

CENVAT A/c

Creation of Invoice for accounting III rd party taxes Account Debit Credit

AP Accruals Tax amount of the respective tax

Tax amount of the respective tax

Supplier a/c


Delivery of Material For Average Costing Organization ( Bonded Warehouse Sub Inventory)

Account Debit Credit Sub inventory A/c All non-CENVATable taxes

+ Amount not loaded in CENVATable taxes

Inventory Receiving A/c All non-CENVATable taxes + Amount not loaded in CENVATable taxes

* In addition to passing these accounting entries, Item cost gets increased by the amount that is additionally loaded on to the inventory.

Delivery of Material For Standard Costing Organization ( Bonded Warehouse Sub Inventory)

Account Debit Credit Purchase Price Variance (PPV) A/c All non-CENVATable taxes

+ Amount not loaded in CENVATable taxes

Inventory Receiving A/c All non-CENVATable taxes + Amount not loaded in CENVATable taxes

Delivery of Material (Duty paid Sub Inventory-non bonded) For Average Costing Organization

Account Debit Credit All tax amounts both CENVATable/ non-CENVATable taxes except Individual taxes

All tax amounts both CENVATable/ non-CENVATable taxes except Individual taxes

Sub inventory A/c

Inventory Receiving A/c



For Standard Costing Organization Account Debit Credit

Purchase Price Variance (PPV) A/c All tax amounts both CENVATable/ non-CENVATable taxes except Individual taxes

Inventory Receiving A/c All tax amounts both CENVATable/ non-CENVATable taxes except Individual taxes

Delivery of Material (Bonded/Duty paid Sub Inventory) For All Other Taxes

Account Debit Credit Respective Tax A/c Tax amount * Tax credit

percentage

Inventory Receiving A/c Tax amount * Tax credit percentage

Delivery of expense item to Bonded/Duty paid Sub Inventory (Both Average and Standard Costing)

Account Debit Credit Expense A/c Note 1 Total Tax amount Inventory Receiving A/c Total Tax amount Note: 1. Where the delivery of an Inventory Item is made to an Expense Subinventory, the Expense Account is picked up from the Subinventory setup. Similarly, the same account would be considered for reversal entries created on Return to receiving.

Return to Vendors

Return to Receiving(Bonded Sub Inventory) On Return from Inventory to Receiving Inspection (By Base product)

Account Debit CreditReceiving Inspection A/c Item Purchase Price

Item Purchase Price

Inventory Receiving A/c


On Return from Inventory to Receiving Inspection (Localization entries)

Return to receiving for Average Costing Organization Account Debit Credit

Inventory Receiving A/c All Non-CENVATable taxes loaded to inventory for the delivery

Sub Inventory A/c All Non-CENVATable taxes loaded to inventory for the delivery

Return to receiving for Standard Costing Organization Account Debit Credit

Inventory Receiving A/c All Non-CENVATable taxes loaded to inventory for the delivery

Purchase Price Variance (PPV) A/c All Non-CENVATable taxes loaded to inventory for the delivery

Return to Receiving (Duty paid Sub Inventory) For Average Costing Organization

Account Debit Credit Inventory Receiving A/c All tax amounts both

CENVATable/ non-CENVATable taxes except Individual taxes

Sub Inventory A/c All tax amounts both CENVATable/ non-CENVATable taxes except Individual taxes


Return to Receiving (Duty paid Sub Inventory For Standard Costing Organization

Account Debit Credit Inventory Receiving A/c All tax amounts both

CENVATable/ non-CENVATable taxes except Individual taxes

Purchase Price Variance (PPV) A/c All tax amounts both CENVATable/ non-CENVATable taxes


except Individual taxes

On Return to Receiving Inspection to Vendor (by Base Product)

Account Debit Credit AP Accrual A/c Item Purchase Price Receiving Inspection A/c Item Purchase Price

On Return to Receiving Inspection to Vendor Account Debit Credit

AP Accrual A/c Total Tax Amount at the time of Receipt

Receiving Inspection A/c All taxes loaded to inventory for the Receipt

CENVAT A/c Amount of CENVAT Originally Claimed (Only on Generation of Excise Invoice on RTV)

Individual Tax A/c Taxes (except Excise & CVD) with CENVAT

On Return to Vendor in the year of Purchase In case a part of goods received are returned in the year of purchase, then following entries would be passed on RTV Dr. CENVAT Account Cr. CENVAT Receivable Account

For the balance amount (Balance credit for a Quantity returned)

Dr. Inventory Receiving Account Cr. CENVAT Account

100% of the credit for the Quantity Returned

On Return to Vendor a year after Purchase (After claim of 100% CENVAT Credit) Dr. Inventory Receiving Account Cr. CENVAT Account

100% of the credit for the Quantity Returned


Accounting entries on claiming CENVAT

Accounting entries on Claiming CENVAT on inputs Account Debit Credit

CENVAT Raw material A/c CENVATable tax amount * CENVAT percentage


Accounting entries on Claiming CENVAT on capital goods Account Debit Credit

CENVAT Capital goods A/c CENVATable tax amount * CENVAT percentage


CENVAT receivable Account Percentage of credit deferred for the next financial year

CENVAT Capital goods Account Percentage of credit deferred for the next financial year

Accounting entries on claiming the balance credit on capital goods Account Debit Credit

CENVAT Capital goods Account Amount of credit that is being availed

CENVAT receivable Account Amount of credit that is being availed


Accounting entries regarding OSP Transaction

While sending the material through 57 F (4) Challan Account Debit Credit

OSP Excise A/c With percentage of duty set up in the additional organization information screen

CENVAT / PLA A/c With percentage of duty set up in the additional organization information screen

On receipt of goods cleared under 57 F (4) Challan Account Debit Credit

CENVAT A/c Duty paid at the time of clearance

OSP Excise A/c Duty paid at the time of clearance

* According the current provisions of Excise Rules there is no need to pay duty while clearing the goods for sub contracting operations. User should take care to record zero percentage for OSP rate in the additional organization information


RMA Receipts

RMA Receipts into a Bonded Warehouse For the sale price amount with out excise duty.

Account Debit Credit Sub inventory a/c Sales Inventory Cost Cost of goods sold a/c Sales Inventory Cost

RMA Receipts considered as ‘Production Input’ CENVAT Credit For Excise and CVD Taxes

Account Debit Credit CENVAT RM/CG A/c Tax Amount Excise Paid Payable Account Tax Amount

RMA Receipts considered as ‘Finished Goods Return’ Localization accounting entry for Excise Tax treatment

Account Debit Credit CENVAT RM/CG A/c Excise Amount Excise Paid Payable Account Excise Amount

RMA Receipts considered as ‘Scrap’ Account Debit Credit

Scrap Cost a/c Item cost Sub Inventory a/c Item cost Localization accounting entry for Excise Tax treatment

Account Debit Credit Excise Expense a/c Excise Amount Excise Paid Payable Account Excise Amount (Excise duty paid will be written off as an expense account)


Accounting entries related to AP invoices

On Matching the Payable Invoice with PO/Receipt Localization Entry for Tax amounts

Account Debit Credit AP Accruals a/c Sum of Tax amount of the

respective tax + Line Amount

Vendor a/c Sum of Tax amount of the respective tax + Line Amount

On Creation of Credit Memo at the time of approving the created Regular Invoice for TDS Deduction

Account Debit Credit Vendor a/c Amount debited towards

TDS

TDS a/c Amount debited towards TDS

On Creation of TDS Invoice at the time of approving the created Regular Invoice for TDS deduction

Account Debit Credit TDS a/c Amount debited towards

TDS

TDS Tax Vendor a/c Amount debited towards TDS

*Same accounting entries will be passed for different type of withholding taxes.


Accounting entries related to Bill of Entry

On Approval of BOE Invoice

Account Debit Credit BOE/ customs duty paid A/c BOE Amount Customs authority - Vendor BOE Amount

On Payment of the BOE Invoice Account Debit Credit

Customs authority - Vendor BOE Amount Bank A/c BOE Amount

On writing of the customs duty paid

Account Debit Credit BOE & Customs duty written off a/c Write off Amount BOE & Customs duty paid a/c Write off Amount

Accounting entries for PLA Payments

On Approval of PLA Invoice Account Debit Credit

PLA A/c PLA invoice amount Excise authority - Vendor PLA invoice amount

On Payment of PLA Invoice Account Debit Credit

Excise authority - Vendor PLA payment amount Bank A/c PLA payment amount


Ship Confirmation Accounting entries on Ship Confirmation Base Application Accounting entries

Account Debit Credit Cost of Goods Sold a/c Sales Inventory Cost Sub Inventory a/c Sales Inventory Cost Accounting entries for updating the excise accounts

Account Debit Credit Excise Paid Payable a/c Total Excise Duty Payable CENVAT/ PLA a/c Total Excise Duty Payable


Accounting entries in AR

On Invoicing in AR Accounting entries for raising invoices for dispatches made from both a duty paid or Bonded warehouse (After running Receivable Interfaces in OM and moved to AR module)

Account Debit Credit Receivables a/c Sales Inventory Cost +

Total of all taxes

Revenue a/c Sales Inventory Cost Individual Excise Tax a/c Individual Excise Amounts Other Individual Tax a/c Individual Tax Amounts

On saving AR Transactions Account Debit Credit

Receivables a/c Sales Inventory Cost + Total of all taxes

Revenue a/c Sales Inventory Cost Individual Excise Tax a/c Individual Excise Amounts Other Individual Tax a/c Individual Tax Amounts

On completion of an AR Transaction Account Debit Credit

Excise Paid Payable a/c Total Excise Duty Payable CENVAT/ PLA a/c Total Excise Duty Payable

Raising Credit Memo from AR Transactions Account Debit Credit

Revenue a/c Sales Inventory Cost Excise Paid Payable a/c Excise Duty Paid Other Individual Tax a/c Individual Tax Amounts Receivables a/c Sales Inventory Cost +

Total of all taxes

For debiting duty under Rule 6 of The CENVAT Credit Rules (Old Rule 57 CC)

Account Debit Credit CENVAT Recovered a/c 8% on Selling Price (based

on Organization.


Parameters) CENVAT a/c-RG23A-Part II 8% on Selling Price (based

on Organization. Parameters)


Accounting entries for RG consolidation Transactions

On setting off the CENVAT credit with PLA Debits

Account Debit Credit PLA Account Total transfer amount from

CENVAT registers

CENVAT RM Account Amount set off from the CENVAT on input Account

CENVAT on Capital goods A/c Amount set off from the CENVAT on capital goods

On payment of excise duty (On approval of the PLA Invoice) Account Debit Credit

PLA Account Amount of the PLA invoice Excise Authority Account Amount of the PLA invoice


Accounting entries for Internal Sales Order Transactions The following Accounting Entries passed during an Internal Sales Order Transaction. .

Excise Invoice Generation Account Organization Debit Credit

Excise Paid/Payable account Sending EXCISE AMOUNT RG23 Register/ PLA Account Sending EXCISE AMOUNT

Issue Transaction (In Transit Transfer) FOB Point is set to Receipt:

Account Organization Debit Credit In-transit inventory account Sending EXCISE AMOUNT Excise Paid/Payable account Sending EXCISE AMOUNT FOB Point is set to Shipment:

Account Organization Debit Credit Inter-Organization Receivable Sending EXCISE AMOUNT Excise Paid/Payable account Sending EXCISE AMOUNT In-transit Inventory account Receiving EXCISE AMOUNT Inter-Organization Payable Receiving EXCISE AMOUNT

Receipt Transaction (In Transit Transfer) FOB Point is set to Receipt:

Account Organization Debit Credit Inter-Organization Receivable Sending EXCISE AMOUNT In-transit Inventory account Sending EXCISE AMOUNT Inventory Receiving account Receiving EXCISE AMOUNT Inter-Organization Payable Receiving EXCISE AMOUNT

FOB Point is set to Shipment: Account Organization Debit Credit

Inventory Receiving account Receiving EXCISE AMOUNT In-transit Inventory account Receiving EXCISE AMOUNT


Direct Transfer Account Organization Debit Credit

Inter-Organization Receivable Sending EXCISE AMOUNT Excise Paid/Payable account Sending EXCISE AMOUNT Inventory Receiving account Receiving EXCISE AMOUNT Inter-Organization Payable Receiving EXCISE AMOUNT

CENVAT Entries (If the Receiving Unit is Bonded) Account Organization Debit Credit

CENVAT Account Receiving EXCISE AMOUNT Receiving EXCISE AMOUNT Inventory Receiving Account

Delivery (If the Receiving Unit is Non-Bonded/ Trading)

Account Organization Debit Credit Inventory Valuation Account Receiving EXCISE AMOUNT

Receiving EXCISE AMOUNT Inventory Receiving Account


Process flow

To update the chapter number, press ALT F9. Update the sequence number as appropriate, for example 1, 2, etc. and press ALT F9 again. Highlight the chapter number and press F9 to update the number. This chapter contains a diagrammatic presentation of certain activities on how India Localization on Oracle Applications -Release11 addresses your business needs under Indian Laws.


Deduction of Tax at Source (TDS) Process

Enter IT registration Details and TDS Section & limit for Suppliers and at Supplier Site in Additional Vendor Info.

Define Tax with TDS type

Enter Invoice with applicable TDS Tax type matching with PO Approve

Enter Prepayment invoice with applicable TDS tax Approve Pay

Approve related TDS Invoices and pay in batch in batch

Apply Prepayment amount net of Tax

system will adjust proportionate TDS

Enter TDS tax Names and specify TDS section to which it belongs.

Define Income Tax as supplier of type Tax Authority

Enter IT registration Details For Organization

Generate TDS Certificate Print Original

Review Print Status of certificate to print Original again

Print reports on TDS at Concessional rates


Duty Drawback Process

User’s Reference Guide 549

Process

Material in Oracle BOM

Enter Bill Of Material in India Localization Inventory

Attach Order source or AR Invoice type to bond register or indicate it as for Export type

Invoice of Export Type

AR Invoice

Invoice created by Auto invoice Program Enter Proof of

Export

Manual Duty Drawback Process Specify the receipt selection method i.e. LIFO/FIFO

Automatic Duty Drawback Process Specify the receipt selection method i.e. LIFO/FIFO

Setup or Enter Bill Of

Oracle India Localization

Process continued …..

Automatic Duty Drawback Process Specify the receipt selection method i.e. LIFO/FIFO

If Bill Of Material defined in Oracle BOM module process will consider latest wrt. Removal date else latest Bill Of Material defined in Oracle Inventory module process will be considered.

Selected BOM will be exploded to the lowest level

Receipts will get selected based on receipt selection method selected

Process will calculate the claim amount for each receipt till amount against entire quantity is claimed

If MODVAT is claimed against selected receipt Process will reverse the MODVAT credit in RG 23 A part II and corresponding GL entry will be passed. If the balance in register is insufficient then process will stop.

Print Duty Drawback Claim Report

Manual Duty Drawback Process Specify the receipt selection method i.e. LIFO/FIFO

If Bill Of Material defined in Oracle BOM module process will consider latest wrt. Removal date else latest Bill Of Material defined in Oracle Inventory module process will be considered.

Selected BOM will be exploded to the lowest level and you can view that in Components Window

Receipts will get listed based on receipt selection method selected. Select Receipts against which Duty Drawback to be claimed

Process will calculate the claim amount for each selected receipt till amount against entire quantity is claimed

If MODVAT is claimed against selected receipt Process will reverse the MODVAT credit in RG 23 A part II and corresponding GL entry will be passed. If the balance in register is insufficient then process will stop.


Support for Trading Process

Define Trading Item by enabling Trading Flag to ‘Y’ in Item Definition

Enter Purchase Order for Trading Item with Ship to Organization being ‘Trading’

Report RG23D

Match Receipt While matching receipt for an invoice Excise Duty per unit will be defaulted from the receipt line. Excise Duty will be made Zero for a delivery to duty exempted customer.

Enter Receipt for Purchase Order and deliver them to Trading Sub Inventory

RG23D Register Updated during Receipts, Invoice, RTV and RMA

Enter Trading registration Details For Organization / Location (Additional organization information)

Sales Order For Trading Item

AR Transaction

for Trading Item


RMA Process

Enter Sales OrderIndia Localized &

Click On Open

Enter theBase Sales

OrderHeader

Enter LineDetails

Prepare RMA With orWithout Reference

RMA withReference

RMA withoutReference

LocalizationDFF with

India Invoice

LocalizationDFF NotRequired

Reference toOrder or Invoice

Invoice Order

LocalizationDFF with

India SalesOrder

AutomaticPopulation of

Delivery Detailid

Save RMA Order Save RMA Order

Return to IndiaLocalized SalesOrder Screen

Return to IndiaLocalized SalesOrder Screen

Taxes aredisplay modeonly based onthe Delivery

Detail id

Taxes aredefaultedbased on

setup & canbe modified

Return toBase AppsSales Order

Form

Book RMA Order

Book RMA Order withIndia Localization


Descriptive Flex fields used in India Localization

This document details Descriptive Flex fields being used/reserved for India Localization. The users are advised not to use these attributes while doing their In-house Customization. Any data present in these fields has to be migrated to attributes other than those used by Localization, failing which the data will be lost on application of Localization patch..


Details of attributes used / being used in DFF by Release. 11i Localization Sl. No

Title Attribute Application Context Segment Name Remarks

1 Oracle Inventory

Items India Items Attribute1 excise_flag

Attribute2 modvat_flag Attribute3

Attribute4 item_tariff Attribute5 item_folio

Attribute13 Future use Attribute14 Future use Attribute15 trading_flag 2 Oracle

Inventory India Other Transaction

Temp Transaction history

Attribute1 Non-Display

3 Oracle Human

Resources Additional Organization Unit Details

India Org Info Attribute1 Tan No.

Attribute2 Pan No. Attribute3 Ward No. Attribute4 OM Tax Source Attribute5 Future use 4 Oracle

Purchasing Excise Invoice No. Receiving

Transactions India Receipt Attribute1

Attribute2 Excise Invoice Date Attribute3 Claim CENVAT on

Receipt

India Return to Vendor

Attribute4 Generate Excise Invoice

Attribute5 Future use India RMA Receipt

Attribute1 Excise Invoice No


Receipt

Attribute4 RM_ITEM_NO Attribute5 RMA_Type 5 Oracle

Purchasing RCV_SHIPMENT_HEADERS

India Receipt Attribute1 Excise Invoice No.


Receipt

Attribute5 Paddr Transaction Type

India RMA Receipt

Attribute1 Excise Invoice No.

Attribute2 Excise Invoice Date

item_class_id


Attribute3 Claim CENVAT on Receipt

Attribute4 RM_ITEM_NO Attribute5 RMA_Type 6 Oracle

Payables Invoice Distribution

India Distributions

Attribute1 JA_IN_TDS_TAX_NAME_INV

Attribute2 JA_IN_WCT Attribute3 JA_IN_WCT1 Attribute4 Future use Non-

Display Attribute5 Future use Non-

Display 7 Application

Object Library Common Lookups

India Lookup Codes

Attribute1 Classification

Attribute2 TDS Limit Attribute3 Tax Type 8 Oracle Order

Management Additional Line Attribute Information

Invoice India Attribute2 Delivery Detail Id

Attribute3 Allow Excise Credit?

Allow Sales Tax Credit?

Attribute5 Excise Duty Rate per Unit

Excise Duty Rate (%)

Customer PO India

Delivery Detail Id


Attribute4 Allow Sales Tax Credit?


Attribute14 Excise Duty Rate (%)

Sales Order India

Attribute2 Delivery Detail Id


Attribute4 Allow Sales Tax Credit?


Attribute14 Excise Duty Rate (%)

9 Oracle

Receivables Line Transaction FlexField

SUPPLEMENT CM

INTERFACE_LINE_ATTRIBUTE2

Value2

Attribute4

Attribute14

Attribute2


SUPPLEMENT DM


Value2

SUPPLEMENT INVOICE


Value2

TDS CREDIT INTERFACE_LINE_ATTRIBUTE2

Value2

10 Oracle Assets Asset Category

India B Of Assets

Attribute1 Date of Acquisitions

Attribute2 Block of Assets 11 Oracle

Payables Payment Information

India Payment Information

Attribute1 Check Deposit date

Attribute2 Bank Name Attribute3 Challan No.

Oracle Payables

India Original Invoice for TDS

Attribute1 Original Invoice-TDS

India VAT Dynamic Registration

VAT Invoice Number

Dynamic Registration

VAT Invoice Date

13 Oracle Assets Mass

Additions India B Of Assets

Attribute1 Date of Acquisitions

Attribute2 Block of Assets 14 Oracle Order

Management Additional Line Return Information

LEGACY None None

12 Invoice

In addition to the above, we intend using First 5 attributes for all the remaining tables/ flex fields, in normal cases and/or Attribute 14,15 in special cases for future development, if required.


Accounting Entries

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