Indirect Tax and ERP Notes SAP/Oracle Apps

Finance minister, Nirmala Sitharaman in her budget speech during February 2022 has announced some key changes to income tax rules. There has been a wide expectation to raise the income tax barrier from the current 2.5 lacs. Unfortunately, it wasn't a part of the this year's budget. Yet there was some key changes. Including the taxation of Crypto assets and PF. Let's look into these key changes?     1, 𝗣𝗙 𝗰𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻𝘀 𝗺𝗼𝗿𝗲 𝘁𝗵𝗮𝗻 𝟮.𝟱 𝗹𝗮𝗸𝗵𝘀 𝗽𝗲𝗿 𝘆𝗲𝗮𝗿 𝘄𝗶𝗹𝗹 𝗮𝘁𝘁𝗿𝗮𝗰𝘁 𝘁𝗮𝘅 𝗼𝗻 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁 also PF accounts are likely to be differentiated into two categories, taxable and non-taxable. Read more here In this any interest above a contribution of 2.5 Lac will be taxable by the government. Here the thing to note is only the interest is taxable not the contribution. Only the interest on the excess contribution above 2.5 lakhs. FM also mentioned this will only affect less than one percent of tax payers in India    2, 𝟯𝟬% 𝘁𝗮?...

  Quoting from my last post( which can be read here ) "𝐓𝐡𝐞𝐫𝐞 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐭𝐚𝐱 𝐨𝐧 𝐭𝐡𝐞𝐬𝐞 𝐢𝐧𝐯𝐨𝐢𝐜𝐞𝐬. 𝐖𝐞 𝐧𝐞𝐞𝐝 𝐭𝐨 𝐩𝐚𝐲 𝐭𝐚𝐱 𝐨𝐧 𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐞 𝐭𝐨 𝐯𝐞𝐧𝐝𝐨𝐫. Before paying the invoice with tax, there will be a validation phase during which, the tax vendor has put in, will be analysed. 𝐓𝐚𝐱𝐞𝐬 𝐯𝐚𝐫𝐲 𝐟𝐨𝐫 𝐧 𝐧𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐫𝐞𝐚𝐬𝐨𝐧𝐬. example invalid data, different place of usage etc." A funny take on this recently surfaced on the internet after a court order on tax on pizza toppings. Which is an interesting example of varying taxes depending on application, as below, Pizza sold and eaten within a restaurant - 5% GST Pizza base bought separately - 12% GST Pizza delivered at home - 18% GST Pizza toppings - 18% GST Read about the actual court order here: https://lnkd.in/gKknFv_M #oracle #tax #sap #taxes #sabrix #onesource #work #indirecttax

Lets talk about Tax Engines . Tax engines work coupled with ERP systems like SAP or Oracle Apps. If I really dilute it down, ERPs are used to manage purchases and sales of a company.  If we take the purchase side, companies need a lot of stuff for their daily operations. So they have to purchase those from various vendors. Along with the products or services they bought, vendors send an invoice for the same as well. There will be tax on these invoices. We need to pay tax on purchase to vendor. ( To know how indirect taxes work, refer to my previous post) Before paying the invoice with tax, there will be a validation phase during which, the tax vendor has put in, will be analysed. Taxes vary for n number of reasons. example invalid data, different place of usage etc.( More details read here ) Let's use a tax engine here Enter Tax Engine . It has its own vanilla set of rules provided by the tax reasearch team of the tax engine provider. In our case I work with Onesource indirect ta...

Read about types of purchase orders here   1.        Standard An invoice from a supplier representing an amount due for goods or services purchased. Standard invoices can be either matched to a purchase order or not matched and it should be a positive amount invoice. 2.        Credit Memo Credit Memos are memos from a supplier representing a credit amount toward goods or services. Credit memos are always negative amounts. That is, it’s a negative amount invoice created by a supplier and sent to you to notify you of a credit. 3.        Debit Memo An invoice you enter to record a credit for a supplier who does not send you a credit memo. It is the negative amount invoice created by you and sent to a supplier to notify the supplier of a credit you are recording. 4.        Mixed Mixed Invoices...

  " What is meant by Direct Tax? " I got this question during one of interviews 6,7 years back. I went blank for a minute. It was so obvious, yet I didn’t know the answer.   I am an indirect tax consultant. This is basic stuff. I should know these things.   The question before this one was "What is Indirect Tax?". Indirect Tax is the tax we pay on pretty much anything we buy. They have fancy names such as Sales tax, value added tax (VAT), or goods and services tax (GST). Usually, a merchant collects these taxes while we make a purchase and submits them to the government on our behalf. The maximum retail price tag (MRP) would be inclusive of this kind of tax. Here the vendor later files a tax return and submits the tax proceeds to the government. The tax burden is shifted from the consumer to the vendor. We are paying tax indirectly. Hence the name "Indirect Tax".   Now the baffling question "In that case what is meant by Direct Tax?"   I knew...