FB60 Posting for Tax Calculation issue

[former_member560223]

Hello Guys,

I have an issue with understanding of the Tax calculation on a Vendor Invoice posting, would highly appreciate any help here. Below are the two scenarios:

Scenario 1: When the Vendor Invoice is $1,000 and posting an invoice in FB60

This is pretty straight forward and after filling all the required fields the final posting is

CR - Vendor Account for $1,000

DR - Purchase Account for $1,100

CR - Tax G/L Account for $100 (Ex: 10%)

So, far so clear.

Scenario 2: When the Vendor invoice is $1,050 ($1,000 for goods and $50 for tax) and posting in FB60

In the header:

Invoice amount is $1,050

Tax amount is $50 (partially Taxed along with Invoice)

Line Item:

Purchase account G/L is $1,000

The Final posting looks as below:

CR - Vendor Account for $1,050

DR - Purchase Account for $1,150

CR - Tax G/L Account for $100 (Calculating Tax for Base amount $1,050 - $50 = $1,000)

1. Here the base amount for tax calculation is calculated right which is $1,000 ($1,050 - $50)

2. Using the Tax code the tax is calculated $100 (10% of $1,000)

But since the invoice already had Tax amount ($50) I was expecting this to be considered and have a Tax G/L line/s to have amount of a net amount of $50 instead of $100. This causes the purchase account to be debited for $1,150 instead of $1,100.

Wanted to see if anyone can help me achieve the above? Any help would be great.

Thanks and have a great one!

Vinay.

[sanilbhandari]

Hello vinay.kamineni

I am a bit lost with the accounting entries that you have listed if you are talking of indirect tax and the supplier is registered with VAT/GST already. In such a case, the accounting entries should be:

Scenario 1 (Tax rate @ 10%)

If the tax is deductible (You can tax a tax credit)

Purchase A/c Dr $1000

Input Tax Credit A/c $100

To Vendor A/c $1100

If the tax is non deductible (you cannot claim a credit for the VAT paid)

Purchase A/c Dr $ 1100

To Vendor A/c $ 1100

In the case of non deductible tax, you will have a tax code created with accounting key assigned in tax procedure as Non Deductible. This accounting key is configured in OBCN

Scenario 2 (Tax Rate @10% with Tax Amount as 50)

If the vendor has charged a wrong tax amount than the applicable tax rate, i would assume you would reject the invoice and not book it in SAP. You will ask the vendor the reason for charging lower tax and if this is by mistake than you should ask for a newer invoice.

If the country regulations allow you to book tax as per invoice received and than booking the remaining amount as a new debit note from vendor than you will have the below entries

Purchase Account $1000

Input Tax Credit $ 50

To Vendor A/c $ 1050

In FB60, there are two ways to book this entry. For the purchase amount create two seperate line items of $500 each. In such a case, for the first line, book a tax code with a tax rate of 0% and in the second line book $500 with tax code with rate of 10%. You would than get accounting entry as below:

Purchase Account $ 500

Purchase Account $500

Input Tax Credit $ 50

To Vendor A/c $1050

You can also specify tax amount calculated on line item manually as well in FB60 under the tax tab on header. You should not select "Calculate Tax Amount" checkbox as well and in the tax code set up the check box for "Check ID" should not be selected.

Hope this helps

Thanks & Regards

Sanil Bhandari

[former_member560223]

Thanks for your response Sanil. Here is my question again (Scenario 2):

If I have an invoice amount (Header) of $1050 and Tax amount $50 entered.

Shouldn't SAP know that $50 entered in the Tax amount field is part of the invoice amount? Seems like it does that is the reason why it calculates $1000 ($1050 - $50) as base amount for Tax calculation (U1 - 10%).

Now my Line item entry is $1000 and when posting the document SAP is calculating the Tax for $1000 @ 10% and it comes out to $100. But it is not offsetting the already entered Tax amount $50 from the new calculation. Is this right?

Thank you!.

[former_member560223]

Also, I would like to add that your solution of having two line items, one with I0 and U1 of $500 each works but I don't want any manual effort for the calculation part. Wanted to see how I can have the system do that calculation form the given a invoice amount, tax amount and tax code.

[sanilbhandari]

I would think that the calculation of $50 as tax amount when the tax code is set up as 10% is wrong. You should just reject the invoice and ask the supplier to send a correct invoice, since the input tax credit available to you less and ultimately you have to pay more tax liability. You would always want to have more tax credit available to offset against the tax liability.

However, that said, you should not click on the calculate tax automatically checkbox next to the place you enter tax code and than tax amount should be updated as $50 in place of $100 as you would expect.

Thanks & Regards

Sanil Bhandari