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Tax query???

former_member219158
Participant
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94

Hi experts..

I have one query regarding tax.

When we purchase any material at that time we pay output tax. ..which comes from configuration done on Tax on Sales and Purchases....Does W/Tax also calculated for the same as we are dealing with vendor and W/Tax is applicable to vendor when we pay any amount.

Exp...if we pay purchase material.

Entry....Invoice.

Purchase / Expense account ......DR

Output Tax....................................DR

To...Vendor accout ......................CR

In above case will WTAX comes in credit side of the entry.

Please reply

Accepted Solutions (0)

Answers (5)

Answers (5)

srinivasa_maruvada
Active Contributor
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First of all correct that output tax si on sales and input tax on purchases

While doing Invoice

Good Receipt

Dr Raw Material A/c 100

Cr GRIR A/c 100

Invoice Receipt

Dr GRIR A/c 100

Dr Input Tax A/c 16

Cr Vendor A/c 110

Cr WHT A/c 6

When Payment made to Vendor

Dr Vendor A/c 110

Cr Bank A/c 110

When Payment made to Tax Authorities

Dr WHT A/c 6

Cr Bank A/c 6

There is no 2nd tax involved. Here we have only one tax ie 16

Secondly WHT 6 is not a tax, it is tax deduction at source TDS from vendor.

Srinivas

former_member219158
Participant
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Thanks for ur answers ...

As per my knowledge W/TAX is only used for service....then why we deduct W/Tax when we buy goods ..i mean on purchases W/Tax should not be calculated.....please reply

srinivasa_maruvada
Active Contributor
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Your knowledge is wrong .

Withholding tax is not a tax

It is a part of your input tax which will be deducted now and pay to authorities immediately.

Remaining part of input tax will be paid by Vendor after assessment. :):)

Srinivas

former_member219158
Participant
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Thanks

former_member765905
Contributor
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Hi Expert,

If the vendor contains Taxes on Sales and Purchase and Withholding Tax, then you should provide the withholding Tax Code and Withholding Tax Type and select liable check box in the Vendor Master(XK02).

While posting we need to select the Tax Code, then the accounting entry as follows:

  • Withholding Tax will be deducted at the time of Payment to Vendor.*

  • Sometimes we pay advance to Vendor, then we will also deduct withholding tax, this again adjusted at the time of Invoice, the balance will be paid to vendor with deducting withholding tax*

Advance payment to Vendor

Advance to Vendor - Dr - 1,00,000/-

Withholding Tax - Cr - 5,000/-

Vendor - Cr - 95,000/-

If Invoice is for RS: 1,00,000/- (If the withholding tax amount is already deducted at the time of Advance, then it is adjusted)

Purchases A/c - Dr - 85,000/-

Input Tax A/c - Dr - 10,000/-

Withholding Tax A/c - Dr - 5,000/-

Vendor A/c - Cr - 1,00,000/-

Regards,

GK

SAP

Former Member
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Hi,

You can do both Tax, like Input tax on Purchase and WHT tax deduction on invoice posting.

Dr Expense Acc

Dr Input tax

Cr Vendor

Dr WHT tax on invoice posting

When you do MIRO you select the Calculate Tax for Tax on Sales and Purchase and from WHT tax tab we select TDS deduction on invoice posting.

Regards

Arun

Former Member
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Hi Vijay,

For purchasing material only output tax will apply. With Holding tax will apply for only service rendered vendors.

Regards,

Rambo

Muralinag14
Active Contributor
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At the time of purchase

Dr Purchase

Dr Input tax

Dr WHT

Cr Vendor

Rgds

Murali. N

former_member219158
Participant
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Murali thanks for reply.

so in purchase entry both taxes comes...Input tax and W/Tax.

and W/tax comes in credit side or debit side.

Muralinag14
Active Contributor
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check my entry

Former Member
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Hi Vijay,

Correction in my post : for purchasing material only input tax will apply. With Holding tax will apply only for service rendering vendors.

@ Murali,

Please confirm, as per my knowledge there is no possiblity of 2 types of taxes at a time I mean input tax and WH Tax.

In this case entry will be :

Purchase a/c Dr

Input Tax a/c Dr

Vendor a/c CR

Regards,

Rambo

former_member219158
Participant
0 Kudos

Thanks Rambo...This is what my question is..How can there be a double tax on one invoice or payment.

and as per my knowledge W/TAX is for services......I wanted to clarify this

Murali...please reply.

Former Member
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Hi Vijay,

When you set withholding tax as "withholding tax for invoice posting" in your W/H configuration. Yes it is possible as Murali said.

You just need to put W/H base amount or W/H amount in Withholding tax tab when you are doing MIRO.