Input Tax in Vendor Line Items
Tax in a vendor invoice. The deductible portion of the input tax can be reclaimed from the tax authorities.
Tax on sales/purchases is deducted from amounts in G/L account items and not from amounts in vendor items. For vendors, tax on sales/purchases is input tax and is posted to a tax receivable account. In systems delivered to countries which have no tax on sales/purchases, the Tax code field is suppressed. You can enter tax on sales/purchases for the invoice in the following ways: You can
The system posts one item for every tax code.
The following scenarios are possible when entering taxes:
The following figure shows the options available for entering a tax code in each vendor line item.
It illustrates how input tax and a vendor invoice are posted. The system posts the input tax to the tax receivable account automatically.
Most countries have more than one tax on sales/purchases rate. The tax return must include a separate line for each rate. You must therefore enter a different tax code for each tax rate.
For more information about preparing the tax returns for submission to the authorities, see FI Closing and Reporting.