VAT recording

SUGGESTED

Dear Team,

We have noticed a strange issue in treatment of VAT. The VAT is calculated in AP correctly and reflected in VAT report as well. However, while posting in GL it has been split into two base accounts named 1601 and 1690. Below is an example demonstrated for your consideration.

 

In screen shot we have an invoice for BD 9229.14 and then there are two deductions for retention and advance payment for BD 922.91 and 461.46 respectively. The VAT amounting BD 392.24 is 5% of net amount that is BD 7884.77 (9229.14-922.91-461.46).

In GL the VAT deducted should be posted to 1601 and 5% of retention amount should be posted in 1690. However, the system has split BD 392.24 VAT deducted on net amount to BD 354.62 and BD 37.62, which is clear from the GLs attached with email.

Can you please explain the logic behind this allocation.

Further the amount of VAT in base account 1690 should be BD 45.15 (5% of BD 922.91 retention).

The full amount of VAT on net amount of invoice should be posted to 1601, which is not the case.

Attached account (1690 and 1691 )details for your reference.

 

We shall appreciate your early response in this matter.

Best regards.

Salim

Tamcon

  • 0
    SUGGESTED

    Hi Tamcon,

    Take a look at the Tax Group setup (AP Setup > Taxes > Tax Groups) for VSRB and make note of the Tax Rates that are assigned. Then look at the Tax Rate setup (AP Setup > Taxes > Tax Rates) to see the GL accounts that are assigned to the rate and if "Tracking tax retainage in AP" is marked. Based on the information you provided, I suspect that the VSRB tax group has a tax rate assigned where "Tracking tax retainage in AP" is marked and the Retainage Debit account is assigned to 1690.

    April

  • 0 in reply to April Dahl

    Hello April,

    Since we have defined a retainage debit account , when i try to uncheck this option gives following error

    As explained earlier , the values calculated in AP is correct and when posted to GL the distribution to 2 different accounts is as shown before giving the problem . We need to know the ratio/rate at which the distribution is carried out?