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 Claim ing 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
CENVAT A/c CENVATable tax amount *
CENVAT percentage
Inventory Receiving A/c CENVATable tax amount *
CENVAT percentage

Creation of Invoice for accounting IIIrd party taxes

Account Debit Credit
AP Accruals Tax amount of the
respective tax
Supplier a/c Tax amount of the
respective tax

Oracle India Localization User’s Reference Guide 531

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

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

Oracle India Localization User’s Reference Guide 532

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. W here 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 Credit
Receiving Inspection A/c Item Purchase Price
Inventory Receiving A/c Item Purchase Price

Oracle India Localization User’s Reference Guide 533

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

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

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

Oracle India Localization User’s Reference Guide 534

 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 Exci se &
CVD) withCENVAT

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 For the balance amount (Balance credit for a
Cr. CENVAT Receivable Account Quantity returned)

Dr. Inventory Receiving Account 100% of the credit for the Quantity Returned
Cr. CENVAT Account

On Return to Vendor a year after Purchase (After claim of 100%

CENVAT Credit)

Dr. Inventory Receiving Account 100% of the credit for the Quantity Returned
Cr. CENVAT Account

Oracle India Localization User’s Reference Guide 535

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
Inventory Receiving 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
Inventory Receiving 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

Oracle India Localization User’s Reference Guide 536

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

Oracle India Localization User’s Reference Guide 537

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)

Oracle India Localization User’s Reference Guide 538

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.

Oracle India Localization User’s Reference Guide 539

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

Oracle India Localization User’s Reference Guide 540

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

Oracle India Localization User’s Reference Guide 541

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.

Oracle India Localization User’s Reference Guide 542

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

Oracle India Localization User’s Reference Guide 543

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

Oracle India Localization User’s Reference Guide 544

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

Oracle India Localization User’s Reference Guide 545

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
Inventory Receiving Account Receiving EXCISE AMOUNT

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

Account Organization Debit Credit

Inventory Valuation Account Receiving EXCISE AMOUNT
Inventory Receiving Account Receiving EXCISE AMOUNT

Oracle India Localization User’s Reference Guide 546

 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.

Oracle India Localization User’s Reference Guide 547

Deduction of Tax at Source (TDS) Process

Enter IT registration Details

and TDS Section & limit for
Define Tax with Suppliers and at Supplier
TDS type Enter IT registration
Details For Site in Additional Vendor
Organization Info.

Enter Prepayment invoice Enter TDS tax Names Define Income Tax
with applicable TDS tax Æ and specify TDS as supplier of type
Approve Æ Pay section to which it Tax Authority
belongs.

Approve related
Enter Invoice with applicable Apply Prepayment TDS Invoices and
TDS Tax typeÆ matching amount net of Tax pay in batch in
with POÆ Approve Æ system will adj
ust batch
proportionate TDS

Review Print Status of Generate TDS

certificate to print Original Certificate Æ Print
again Original

Print reports on TDS

at Concessional rates

Oracle India Localization User’s Reference Guide 548

Duty Drawback Process

Setup

Enter Bill Of or Enter Bill Of Material

Material in in India Localization
Oracle BOM Inventory

Attach Order source or AR

Invoice type to bond
register or indicate it as for
Process
Export type

AR Invoice

Invoice of
Export Type

Invoice created by
Auto invoice
Program
Enter Proof of
Export

Automatic Duty Drawback Manual Duty Drawback

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

Oracle India Localization User’s Reference Guide 549

Process continued … ..

If Bill Of Material defined in Oracle BOM

Automatic Duty module process will consider latest wrt.
Drawback Process Removal date else latest Bill Of Material Selected BOM will
Specify the receipt defined in Oracle Inventory module be exploded to the
selection method i.e. process will be considered. lowest level
LIFO/FIFO

If MODVAT is claimed against

Process will selected receipt Process will reverse Receipts will get
calculate the claim the MODVAT credit in RG 23 A part II selected based on
amount for each and corresponding GL entry will be receipt selection
receipt till amount passed. If the balance in register is method selected
against entire insufficient then process will stop.
quantity is claimed

Print Duty
Drawback
Claim Report

Receipts will get

Process will
calculate the claim
amount for each
selected receipt till
amount against
entire quantity is
claimed
If MODVAT is claimed against listed based on
selected receipt Process will receipt selection
reverse the MODVAT credit in RG method selected.
23 A part II and corresponding GL Select Receipts
entry will be passed. If the balance against which Duty
in register is insufficient then Drawback to be
process will stop. claimed

Manual Duty If Bill Of Material defined in Oracle BOM

Drawback Process module process will consider latest wrt. Selected BOM will be
Specify the receipt Removal date else latest Bill Of Material exploded to the lowest
selection method defined in Oracle Inventory module process level and you can view
i.e. LIFO/FIFO will be considered. that in Components
Window

Oracle India Localization User’s Reference Guide 550

Support for Trading Process

Enter Trading registration Details

Define Trading Item by enabling For Organization / Location
Trading Flag to ‘Y’ in Item Definition (Additional organization
information)

Enter Purchase Order for Enter Receipt for

Trading Item with Ship to Purchase Order and
Organization being ‘Trading’ deliver them to
Trading Sub Inventory

Sales Order For Match Receipt

Trading Item While matching receipt for an RG23D Register
invoice Excise Duty per unit will be Updated during
defaulted from the receipt line. Receipts, Invoice,
AR Transaction Excise Duty will be made Zero for a RTV and RMA
for Trading Item delivery to duty exempted
customer.

Report RG23D

Oracle India Localization User’s Reference Guide 551

RMA Process

Book RMA Order with

India Localization

Enter the
Enter Sales Order
Base Sales Enter Line Prepare RMA W ith or
India Localized &
Order Details W ithout Reference
Click On Open
Header

RMA with RMA without

Reference Reference

Reference to
Order or Invoice

Invoice Order

Localization
Localization Localization
DFF with
DFF with DFF Not
India Sales
India Invoice Required
Order

Automatic
Population of
Delivery Detail
id

Save RMA Order Save RMA Order

Return to India Return to India

Localized Sales Localized Sales
Order Screen Order Screen

Taxes are Taxes are

display mode defaulted
only based on based on
the Delivery setup & can
Detail id be modified

Return to
Base Apps
Sales Order
Form

Book RMA Order

Oracle India Localization User’s Reference Guide 552

 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..

Oracle India Localization User’s Reference Guide 553

Details of attributes used / being used in DFF by Release. 11i Localization
Sl. Application Title Context Attribute Segment Name Remarks
No
1 Oracle Items India Items Attribute1 excise_flag
Inventory
Attribute2 modvat_flag
Attribute3 item_class_id
Attribute4 item_tariff
Attribute5 item_folio
Attribute13 Future use
Attribute14 Future use
Attribute15 trading_flag

2 Oracle Transaction India Other Attribute1 Temp Non-

Inventory history Transaction Display

3 Oracle Human Additional India Org Info Attribute1 Tan No.

Resources Organization
Unit Details
Attribute2 Pan No.
Attribute3 Ward No.
Attribute4 OM Tax Source
Attribute5 Future use

4 Oracle Receiving India Receipt Attribute1 Excise Invoice No.

Purchasing Transactions
Attribute2 Excise Invoice Date
Attribute3 Claim CENVAT on
Receipt
India Return to Attribute4 Generate Excise
Vendor Invoice
Attribute5 Future use
India RMA Attribute1 Excise Invoice No
Receipt
Attribute2 Excise Invoice Date
Attribute3 Claim CENVAT on
Receipt
Attribute4 RM_ITEM_NO
Attribute5 RMA_Type

5 Oracle RCV_SHIPM India Receipt Attribute1 Excise Invoice No.

Purchasing ENT_HEADE
RS
Attribute2 Excise Invoice Date
Attribute3 Claim CENVAT on
Receipt
Attribute5 Paddr Transacti
on Type
India RMA Attribute1 Excise Invoice No.
Receipt
Attribute2 Excise Invoice Date

Oracle India Localization User’s Reference Guide 554

 Attribute3 Claim CENVAT on
Receipt
Attribute4 RM_ITEM_NO
Attribute5 RMA_Type

6 Oracle Invoice India Attribute1 JA_IN_TDS_TAX_

Payables Distribution Distributions NAME_INV
Attribute2 JA_IN_WCT
Attribute3 JA_IN_WCT1
Attribute4 Future use Non-
Display
Attribute5 Future use Non-
Display

7 Application Common India Lookup Attribute1 Classification

Object Library Lookups Codes
Attribute2 TDS Limit
Attribute3 Tax Type

8 Oracle Order Additional Invoice India Attribute2 Delivery Detail Id

Management Line Attribute
Information
Attribute3 Allow Excise
Credit?
Attribute4 Allow Sales Tax
Credit?
Attribute5 Excise Duty Rate
per Unit
Attribute14 Excise Duty Rate
(%)
Customer PO Attribute2 Delivery Detail Id
India
Attribute3 Allow Excise
Credit?
Attribute4 Allow Sales Tax
Credit?
Attribute5 Excise Duty Rate
per Unit
Attribute14 Excise Duty Rate
(%)
Sales Order Attribute2 Delivery Detail Id
India
Attribute3 Allow Excise
Credit?
Attribute4 Allow Sales Tax
Credit?
Attribute5 Excise Duty Rate
per Unit
Attribute14 Excise Duty Rate
(%)

9 Oracle Line SUPPLEMENT INTERFACE_ Value2

Receivables Transaction CM LINE_ATTRIB
FlexField UTE2

Oracle India Localization User’s Reference Guide 555

 SUPPLEMENT INTERFACE_ Value2
DM LINE_ATTRIB
UTE2
SUPPLEMENT INTERFACE_ Value2
INVOICE LINE_ATTRIB
UTE2
TDS CREDIT INTERFACE_ Value2
LINE_ATTRIB
UTE2
10 Oracle Assets Asset India B Of Attribute1 Date of Acquisitions
Category Assets
Attribute2 Block of Assets

11 Oracle Payment India Payment Attribute1 Check Deposit date

Payables Information Information
Attribute2 Bank Name
Attribute3 Challan No.

12 Oracle Invoice India Original Attribute1 Original Invoice-

Payables Invoice for TDS
TDS
India VAT Dynamic VAT Invoice
Registration Number
Dynamic VAT Invoice Date
Registration

13 Oracle Assets Mass India B Of Attribute1 Date of Acquisitions

Additions Assets
Attribute2 Block of Assets

14 Oracle Order Additional LEGACY None None

Management Line Return
Information

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.

Oracle India Localization User’s Reference Guide 556