Fourth type of tax/charge

ERPNext Accounting
1

Hi @rmehta

I think it would be good to add a fourth type of tax/charge to the taxes and charges table.

Total is always payable to the supplier.
Valuation affects the value of the items purchased.
Total and Valuation is payable to the supplier and affects the value of the items purchased.

What about taxes/charges that are related to the transaction but are not payable to the supplier and do not affect the valuation of the items?

For example, when we import items, we pay VAT directly to the government, not to the supplier. If there were a fourth tax/charge type for this, it would simplify the process and keep all of the transactions tied via the same Purchase Invoice.

What do you think?

thanks,
Sofia

2 Likes
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@sofia Why VAT should not go into item valuation?

3

@nabinhait, because all of the VAT we pay for purchases we make is discounted from the VAT we pay to the government on sales.

Adding VAT to the valuation of our items makes our items more expensive. Since the VAT we pay on purchases serves as a tax credit then there’s no need to charge our customers for it.

4

As it is not affecting item valuation or payable amount of supplier, there is no need to add those charges/taxes inside Purchase Invoice. Instead, you should create a fresh Purchase Invoice, to book those values.

@rmehta Can you please give input on this issue?

5

Hi Sofia,
I really cannot follow your reasoning. I calculate VAT every three month from the credits and debits frpm my VAT account in erpnext and report to the government. Balancing out VAt on sales and VAT on purchases is i believe worldwide applicable

1 Like
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@becht_robert, do you add the VAT that you pay upon purchasing items to the valuation of those items?

@nabinhait, thanks, I will either do that or add a line to the purchases’ journal entry.

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Hi @sofia , I must have misunderstood you when I reply on this message from you. I am struggling with the same problem. I have been going to this list looking at tax and vat. Many entries all on the same thing, purchasing item tax free from supplier, with the obligation to pay this tax to the government. @nabinhait @rushabh_mehta

8

I am facing a similar issue, in the Indian scenario we have reverse charges such as Service Tax, and SB cess which are levied on the buyer. Also in MP and also in other Indian states there is “Entry Tax” which is paid on purchases made outside the local municipal body.

While Service Tax there is set-off available, but it does not form a part of total, but still is a liability. Similarly for Entry Tax does not show on Invoice but needs to be paid to the state government.

It would be a good idea to have a fourth option “Reverse/other taxes” for handling such cases.