Yahoo Service Tax

8/9/2019 Yahoo Service Tax

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India OAUG Webinar Series 1

22-May-2008Ramkishore/Balaranjith, Yahoo! India R&D


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• As a result of this session you will be able to:

– Create non PO based AP invoices with servicetax.

– Import AR invoices with service tax usingAutoinvoice from external systems.


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• Ram Kishore is a Business Analyst Manager with Corporate

Applications Group, Yahoo! India.

• Balaranjith is a Solution Architect with CorporateApplications Group, Yahoo! India.


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• Brief overview of Yahoo

• Service Tax in AP(P2P)

• Service Tax in AR

• Settlement Process• How we did it?

• Conclusion• Q&A


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• Yahoo! (Nasdaq : YHOO) provides Internet services

to users, advertisers, publishers, and developersworldwide.

• Yahoo! uses Oracle Applications for their financial

processes and reporting.• Yahoo! has implemented Financial modules in11.5.9 and HRMS modules in 11.5.10.

• India implementation went live with Financialmodules (GL, AR, AP, PO, FA & CM) and selfservice module (iProcurement & iExpenses) in Feb-08.


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• Yahoo! Has two Legal Entities. They are:

– Yahoo! Web Services India Pvt Ltd.

– Yahoo! Software Development Center.

• Web Services caters to the India Business. It uses

AR extensively for invoicing customers. It also usesP2P, but not on the same scale as AR.

• Software Development caters to Development

centers in Bangalore. It predominantly uses P2Pand iExpenses.


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Background:

• Indirect tax imposed on specified services is called "taxableservices”.

• Objective is to gradually increase the list of taxable servicesuntil most services fall within the scope of service tax.

• From 2006-2007, service tax has been increased from 10%to 12%

• Services sector contributes to more than 50% of GDP.

• When Yahoo! invoices its customers based in India, theamount is inclusive of service tax.

• Vendors of Yahoo! India also include service tax in theirinvoices to Yahoo!.


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Benefits of India Localizations:

• India Localization is completely integratedwith base applications

• Localizations has Tax solution that is criticalto the success of Oracle applicationsimplementation


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• Helps in estimating the service tax on purchase ofservices when the Order is placed with the supplier

• Automatic offset of purchase tax against sales tax

• Easy transfer from interim recovery to Recoveryaccount up on payment

• Inbuilt settlement process

• Report to list the service tax recovered

– Eg: India Service Tax Credit register


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Business challenges:

• Not all invoices originate from Purchase Order.

• Service tax needs to be calculated even onrequisitions created from iProcurement.

• Service tax needs to be calculated even on certainAP invoices without a PO/Receipt matching.

• Some suppliers even provide service tax onlyinvoice (invoice amount zero) at a later date for anearlier invoice.


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Limitations of India Localizations:

• 11.5.9 version cannot calculate service tax onrequisitions created from iProcurement module

• All invoices which needs service tax has to havematching with a PO/Receipt.

• Service tax amount is always calculated on invoiceamount and it would be zero if invoice amount iszero.


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Custom solutions:

• Making iProcurement requisition compatible – DFF in Categories to control Service Tax computation

– Modified the Requisition approval workflow to populateIndia Local PO service tax tables with service tax detailsonce the Requisition gets approved.

– Once converted to PO, it follows the normal Service tax

computation process.


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• Creation of Service Tax invoice without PO/Receipt

Matching – Enabled VAT Tax computation in India Org.

– Defined a VAT Tax Code like Service Tax 12.36%.

– User creates Invoice lines in regular way with the taxcode Service Tax 12.36% and clicks on Compute Taxbutton.

– Oracle calculates tax on the line amount and inserts anew line with Line Type ‘Tax’ with the tax amount of12.36%.


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• Creation of Service Tax invoice without PO/Receipt

Matching (Contd…) – Once the Invoice is validated, run a custom request

‘Custom India AP service tax update’, which would insert

the tax details into India Local service tax tables (withoutPO information).

– The custom program would also change the Line Type oftax line from ‘Tax’ to ‘Miscellaneous’.

– ‘India – Service Tax Processing’ request was slightlymodified to populate Service tax settlement tables theabove invoices.


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• Yahoo! India uses Oracle AR for billing all

customers for the following services – Search customers

– Media customers (advertise on properties)

– Mobile customers (Mobile sms queries like cricket scores)• 90% customer based in India and require service

tax computation on AR Invoice.

• Invoice creation is done through data file uploadusing Auto invoice interface.


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• Helps in capturing the service tax on sale ofservices when the invoice is created against thecustomer

• Automatic offset of purchase tax against sales tax• Easy transfer from interim liability to Liability

account up on receipt

• Inbuilt settlement process• Report to list the service tax payment – Eg: India Service Tax Register


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Limitations of India Localizations:

- Auto invoice doesn’t support service tax oninvoices other than those generated from

Order Management.- Service tax cannot be computed on advance

collected from customers


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Custom solution:

• Populate service tax lines also in auto invoiceinterface tables.

• Interim liability account is populated in distribution

lines interface for the tax lines.• Auto invoice creates the invoices in Oracle base

tables without data in India localization tables.

• A post processing custom request is run after eachauto invoice run to populate the service tax data inIndia localization tables.


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• India – Service Tax processing request

– AP Processing looks for data from Purchaseorder for fetching Location details.

– AR Processing looks for source as ‘Order Entry’ if

the invoice is created through Auto invoiceinterface


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0! ! )

• Created transactions in AP and AR manually

following normal service tax cycle.• Decoded what all localization tables are getting

populated with service tax details.

• Using post processing custom request populatedthe localization tables with service tax details.

• For settlement process, decoded what “India – Service Tax processing” request does.

• Where ever required we modified the code toprocess our transactions also.


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• Settlement process is stable and unaffected by all

our changes.• Easier processes for finance business users

• Easier maintenance of custom code as it is based

on seeded Oracle code.

• Solution can be easily ported to other OUs(Operating Units).


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• Email :

– [email protected] – [email protected]

• Phone : +91 – 80 - 30774444

Yahoo Service Tax

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