Oracle Financials of India (OFI)

Goods and Services Tax (GST) -

Process Claim Functionality

Author: Somdeep Talapatra & Souvik Mandal

Creation Date: 16-Dec-2017
Last Updated: 16-Dec-2017
Document Ref:
Version: 1.0

Organization: Oracle India Private Limited.

OFI-GST Process Claim Functional Flow 1

Document Control

Change Record
1
0

Date Author Version Change Reference

16-Dec-17 1.Somdeep Talapatra 1A Initial document

2.Souvik Mandal

Reviewers

Name Position

Rajnish Kumar Director, Tax Development

V S Baburaj Director, Product Strategy

Audience

Name Position
12.1 & 12.2 Implementation team
12.1 & 12.2 Customers

OFI-GST Process Claim Functional Flow 2

Table of Contents

Goods and Services Tax (GST) - ............................................................................................................ 1

Process Claim Functionality ..................................................................................................................... 1

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

1. Introduction.......................................................................................................................................... 4

2. Scope ................................................................................................................................................... 4

3. Definitions ............................................................................................................................................ 5

4. Overview .............................................................................................................................................. 5

5. Setups .................................................................................................................................................. 6

6. Process Claim Transaction Flow ..................................................................................................... 9

OFI-GST Process Claim Functional Flow 3

1. Introduction
GST is the most significant indirect tax reform in the history of India.

The "Constitution (122nd Amendment) Bill, 2014" was introduced in the Lok Sabha (House of People) by
Finance Minister Arun Jaitley on 19-Dec-2014, and passed by the House on 6-May-2015. In the Raja
Sabha (Council of States), the bill was referred to a Select Committee on 14-May-2015. The Select
Committee of the Rajya Sabha submitted its report on the bill on 22-Jul-2015. The bill was passed by the
Rajya Sabha on 3-Aug-2016, and the amended bill was passed by the Lok Sabha on 8-Aug-2016.

The bill needs to get ratified at least by 15 state assemblies, which is a mandatory pre-requisite for rolling
out the GST regime in India.

The main objective of GST implementation is to transform India into a uniform market by breaking the
current fiscal barrier between states and facilitate a uniform tax levied on goods and services across the
country.

2. Scope
This paper is intended for an audience familiar with Oracle Financials for India and seeking an insight
into how the functionality of Process Claim is built to cover the statutory requirement in India as per
GST Law.

The scope of this paper is limited to the basic set up and Transaction flow.

GST Structure

GST

CGST SGST/UTGST IGST

(Intrastate (Intrastate (Interstate, Imports &

transactions) Transactions) Exports)

OFI-GST Process Claim Functional Flow 4

3. Definitions

1. Process Claim: As per Section 41 of Central Goods and Services Act, 2017, every registered
person shall, subject to such conditions and restrictions as may be prescribed, be entitled to take
the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited
on a provisional basis to his electronic credit ledger.

The process of taking this eligible input credit is called Process Claim.

2. Ineligible for Process Claim: Section 17(5) of the Central Goods and Services Act, 2017
provides that input tax credit in respect of the few goods and services shall not be available. In
those cases, if recoverable tax already attached, then those transactions can be made ineligible
for process claim.

4. Overview
The main objective of this document is to help understand the procedure to be followed so to map the
Customer requirements in reference to the Goods and Services tax (GST) – Process Claim as per section
Section 41 of Central Goods and Services Act, 2017.

Every registered person pays indirect tax to its suppliers and is eligible to take this input tax credit from
the GST authority while making payment to the GST authority for the liability.

Net payable to the GST authority=Total Liability – Total input tax credit

4.1 Major Features:

Followings are major features would be provided in GST

A. Process Claim of multiple documents at the same time.

B. Making a transaction ineligible for process claim.

OFI-GST Process Claim Functional Flow 5

5. Setups
2.1 For Process Claim Functionality, following basic regime to rate flow
setup should be present.

2.1.1 Define Tax Type Classification:

(N) Oracle Financials of India > Tax Configuration > Define Tax Type

‘Tax Type India Localization’ form will open after following above navigation. Query for the
tax type for which you want to classify like the following:-

OFI-GST Process Claim Functional Flow 6

 You will get the details related to that tax type. Click ‘Reporting Codes’ tab.

Enter field details as follows:-

a. Reporting Type Name:- “GST Taxes”
b. Reporting Code:- CGST/SGST/IGST/CESS based on type of the tax
c. Reporting Code Description:- Will be automatically populated based on reporting
code
d. Start Date: - As required.

Save the details. This setup must be done for all tax types.

2.1.2 Tax Type Account Setup:

This setup is required to generate correct accounting for process claim event. Following are
the accounts to be setup for correct accounting.

(N) Oracle Financial Of India > Tax Configuration > Define Tax Type > Accounting
Tab

A> Interim Recovery Account

OFI-GST Process Claim Functional Flow 7

 B> Recovery Account

C> Liability Account

D> Tax Type Expense Account

2.1.3 Pre-requisite setup for a tax to be considered as recoverable:-

Following setups need to be in place in order to ensure that tax is recoverable:-

A> In ‘Tax Type’ setup, ‘Recoverable tax’ flag should be enabled.

B> In ‘Tax Rate’ setup, ‘Recovery Rate’ should be more than 0.

C> In ‘Item Classification’ Setup, value of ‘RECOVERABLE’ attribute name should be Y.

D> Claim Term Setup should be done and tax type with which transaction will be created
should be assigned to that claim term setup. Also,

a. Item classification in claim term assignment setup should be as same as that of

item classification setup.

b. ‘Intended Use’ in claim term assignment setup and in transaction should be

same. If it is blank in setup, then the same should be blank during transaction
creation as well.

OFI-GST Process Claim Functional Flow 8

 For details about navigation of these setups, please refer OFI GST Configuration
Functional Document.pdf present in documentation tab of note 2176820.2.

6. Process Claim Transaction Flow

Once the above setup is done for all tax types, we can progress for tax claim which is divided into
three parts:-

i. Tax Recovery
Recoverable Tax Amount paid to the vendor can be claimed from GST Tax authority using this
functionality.
ii. Making Tax Claim Ineligible
If user finds that there are transactions with which recoverable tax have been attached but tax
recovery is not required be done for those transactions as per section 17(5) of CGST
act,2017; user can make those transactions eligible for tax claim.

6.1 Tax Recovery

6.1.1 For Inventory Receipt Transactions

Pre-requisites for doing process claim:-

OFI-GST Process Claim Functional Flow 9

A> User MUST enter Supplier Invoice Number and Supplier Invoice Date and save the details by
navigating to tools > India Tax Details form before confirming the taxes.

Process Claim Triggering Event:-

 Process Claim can be done only after delivering the material to its destination.

Tax Recovery Steps:-

A> (N) Oracle Financials Of India Responsibility > Recovery Management > Process Recovery

B> ‘Find Claim Transactions’ window will open.

Here, we need to enter manadatory and optional details based on which system will find
transactions for process claim.

Field Description Type Action Description

Tax Regime Code Mandatory Select from LOV Select Tax Regime
from LOV for which
you want to do

OFI-GST Process Claim Functional Flow 10

 process claim

Tax Registration Mandatory Select from LOV Select the tax

Num registration number
from LOV for which
you want to do
process claim

Document Type Mandatory Select from LOV Select type of

transaction from LOV
to find transactions
for process claim

Document Number Optional Select from LOV Select transaction

number from LOV if
you want to do
process claim for any
specific transaction

Document From Defaulted Select from LOV Select date from

Date LOV from which you
want to find the
transaction for
process claim. By
default, this field will
have system date.

Document To Date Optional Select from LOV Select date from

LOV till which you
want to find the
transaction for
process claim.

Organization Type Optional Select from LOV Select type of

organization for
which you want
system to find the
transactions for
process claim. It has
two values i.e

1. Inventory
Organization

2. Operating Unit.

Organization Optional Select from LOV Based on

organization type
selected, select
organization from

OFI-GST Process Claim Functional Flow 11

 LOV.

Location Optional Select from LOV If organization type is

Inventory
organization, then
system will make this
field enterable.
Please select a value
from LOV.
rd
Party Optional Select from LOV Select the 3 party
name from LOV for
which you want to do
process claim.

Party Site Optional Select from LOV Select the party site
name from LOV for
which you want to do
process claim.

Status Optional Select from LOV Select the status

from LOV for which
you want to view the
transaction.

Show Reverse Optional Enable the If you are going to

Charge Transaction checkbox claim for reverse
charge transaction,
then only you need
to enable this flag.

Find Button Click Click this button after

entering fields to
view the
transactions.

Once I click ‘Find’ button, following Tax Claim window opens up.

OFI-GST Process Claim Functional Flow 12

This screen is tax claim form where you can process claim and recover the amount which
you have paid to the supplier.

Field Type Action Description

Description

Tax Regime Display only View Tax regime code populated from
Code the regime name for which this
transaction has been queried.

Process Date Defaulted Select from Date on which process claim is

LOV being processed. By default,
system date will be populated.

Document Type Display only View Document type populated from

the regime name for which this
transaction has been queried.

Action Defaulted Select from By default this will be ‘Recover’.

LOV Please DO NOT select ‘Reversal’
from LOV since Process claim
reversal feature will be obsolete
in future.

Reason Mandatory if Select from Ignore this field since reversal

action is LOV functionality will be obsolete in
‘Reversal’ future.

Line Level

Party Name Display only View Party populated from the regime
name for which this transaction
has been queried.

Party Site Display only View Party Site of the transaction.

Document Display only View Transaction Number

Number

OFI-GST Process Claim Functional Flow 13

Document Date Display only View Transaction Date

Status Display only View Status of process claim

Tax Invoice Defaulted, View Supplier Tax Invoice Number

Number consider this populated during transaction
field as Display creation
Only since any
change done will
not get reflected

Tax Invoice Date Defaulted, View Supplier Tax Invoice Date

consider this populated during transaction
field as Display creation
Only since any
change done will
not get reflected

Recoverable Display only View Recoverable Tax Amount

Amount

Recovered Display Only View Amount recovered.

Amount

Ineligible Check Box Enable If you want to make one

transaction ineligible for process
as per Sec. 17(5), you need to
enable this flag.

Select All Button Click If there are more than one

document for which you want to
do process claim and you want to
select all documents for process
claim, click this button.

Claim Details Button Click Click this button to see the claim
details after process claim.

Process Button Click Click this button to do process

claim or to make a transaction
ineligible for process claim.

Tax Type Details

Tax Type Display only View Type of Tax i.e.

CGST/SGST/UTGST/IGST/CESS

Recoverable Display only View Recoverable Tax Amount

Amount

OFI-GST Process Claim Functional Flow 14

Recovered Display Only View Amount recovered.
Amount

Select the row(s) for which you want to do process claim and then click ‘Process’ button.

Once ‘Process’ button will be clicked, system will throw success message if process claim is
successful.

Click ‘OK’ on the success note and query the transaction again.

Recovered amount will be shown now and status will get modified from ‘Pending
Recovery’ to ‘Recovered’.

Click ‘Claim Details’ button to view the recovery details.

OFI-GST Process Claim Functional Flow 15

Field Description Type Action Description

Tax Regime Code Display Only Field View Tax Regime for
which claim has
been done.

Line Num Display Only Field View Transaction Line

Number

Item Display Only Field View Item Name

Description Display Only Field View Item Description

Item Class Display Only Field View Item Class setup at

Item Classification
Setup

HSN Code Display Only Field View HSN Code

HSN Code Desc Display Only Field View HSN Code

Description

SAC Code Display Only Field View SAC Code

SAC Code Desc Display Only Field View SAC Code

Description

Tax Type Display Only Field View Tax Type name of

tax rate which is
attached to the
transaction

Intended Use Display Only Field View Intended Use

mentioned during
transaction creation

Claim Term Display Only Field View Name of Claim Term

Setup based on
which tax recovery is
happening.

OFI-GST Process Claim Functional Flow 16

Ineligible Display Only Field View If transaction has
been made ineligible,
then this checkbox
will be enabled.

Claim Installment
Details

Installment Number Display Only Field View Installment number

Installment Date Display Only Field View Date of installment

on which tax has
been recovered

Event Display Only Field View Taxable Event during

Tax has been
recovered

Entry Type Display Only Field View Type Of Installment

entry

Amount Display Only Field View Claim Amount

Status Display Only Field View Status of installment

entry

Processed Date Display Only Field View Date on which

installment entry has
been processed

Accounting Entry:-

Tax Recovery A/C ---------------------Dr

Tax Interim Recovery A/C----------------------Cr

6.1.2 For Standard Invoice

Process Claim Triggering Event:-

o Process Claim can be done only after invoice validation.

Steps to do process claim:-

OFI-GST Process Claim Functional Flow 17

1. Query the transaction:-

2. Select the line to be processed and click ‘Process’ button.

3. System will show success message if claim has been done. Click OK.

4. Again queried the invoice. Found that the status has been modified to ‘Recovered’
and recovered amount has become equal to recoverable amount.

Accounting Entry:-

OFI-GST Process Claim Functional Flow 18

 Tax Recovery A/C ---------------------Dr

Tax Interim Recovery A/C----------------------Cr

6.1.3 For AP Invoice with reverse charge transaction

Process Claim Triggering Event:-

o Process Claim can be done only after invoice validation and then after execution of
‘India – Period Ending Process’ concurrent program since this program generates
the self-invoice number.

Steps to do process claim:-

1. Query the transaction in tax recovery form:-

2. Select the transaction and click ‘Process’ button.

3. System will show success message if claim has been done. Click OK.

OFI-GST Process Claim Functional Flow 19

 4. Again queried the invoice. Found that the status has been modified to ‘Recovered’
and recovered amount has become equal to recoverable amount.

Accounting Entry:-

Tax Recovery A/C ---------------------Dr

Tax Interim Recovery A/C----------------------Cr

6.2 Process Claim Ineligible Functionality

Section 17(5) of the Central Goods and Services Act, 2017 provides that input tax credit in
respect of the few goods and services shall not be available. In those cases, if recoverable
tax already attached, then those transactions can be made ineligible for process claim by
using below functionality.

How to make transaction ineligible for process claim:-

i. Go to ‘Oracle Financials Of India’ responsibility.

ii. Navigate to Recovery Management: Process Recovery.

iii. Enter all mandatory fields like the following:-

OFI-GST Process Claim Functional Flow 20

iv. Click ‘Find’ button.

v. Select the record and enable ‘Ineligible’ flag; then click ‘Process’ button.

vi. Once ‘Process’ button will be clicked, system will provide message like the
following:-

OFI-GST Process Claim Functional Flow 21

 vii. Click ‘OK’ button.

viii. Once ‘OK’ button will be clicked, that transaction will not appear anymore in tax
claim form.

Accounting Entry:-

Tax Type Expense A/C ---------------------Dr

Tax Interim Recovery A/C--------------------------Cr

7 - Summary:
The above document will provide the following benefits to the user:

 Required setup to achieve Process Claim Functionality in GST

 Pre-requisites for doing process claim

 How to do process claim for various type of transactions

 How to make transaction ineligible for process claim

 Accounting entry for each type of transactions during process claim

OFI-GST Process Claim Functional Flow 22