If tax is levied in your country, you can display down payments with gross amounts (with tax) or net amounts in the customer or vendor account and special G/L account. This depends on the system configuration for this company code.

Entering the tax for down payments differs from other procedures: You enter the down payment amount net (without tax) or gross, depending on the special G/L account.

With net display, you post the down payment amount to the customer or vendor account and to the special G/L account. You must enter the tax in a separate line item. The system posts the output tax (customers) or input tax (vendors) to the input or output tax account.

With gross display, you post the down payment with tax included to the customer or vendor account. The system posts the down payment to the special G/L account and posts the tax to the output or input tax account. To clear the tax, the system also posts the tax amount to a clearing account for output of input tax (see the figure below which displays these transactions for Accounts Payable).

The special G/L account for customer or vendor down payments determines whether the display is net or gross. In these accounts, enter the corresponding code in the field Tax category.

In the document, you display the down payment by the individual line items. For down payments with gross display, the system generates additional line items to clear the tax.