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FrontAccounting forum → Banking and General Ledger → CST In India - How to setup
I make an interstate purchase and pay a tax of 2%, which is input tax. When I sell this item, I apply VAT, say at 5% being the output tax. By law I am required to pay the entire output tax to the authorities, and the input tax is neither refundable nor adjustable. But FA automatically adjusts CST paid against VAT colletcted in Tax inquiry. For accounting purpose, the CST paid should be posted in Cost of Goods sold. How to set these things?
If you are not getting the input tax refunded, then you should set supplier as tax exempt (a gorup with no taxes). And when entering the supplier item lines you should distribute the tax to be included on every line. You could also consult a local accountant for detailed information.
/Joe
OK. Thanks for the input. I could set it up for purchasing part. But now I am having this scenario.
I am manufacturing an Item -A which is having a cost of Rs.100 before tax. When I sell this item I am required to collect taxes as follows.
a> Excise duty of 10% on cost [10% of Rs.100] = Rs.10.0
b> Cess-1 which is 2% of Excise duty payable [2% of [10% of Rs.100]] = Rs.0.20
c> Cess-2 which is 1% of Excise duty payable [1% of [10% of Rs.100]] = Rs 0.10
So far so good. This can be setup as 10%+0.2%+0.1%. Now is the problem.
Now I am supposed to lavy a VAT of 2% on cost+a+b+c. [That is 2% of Rs.100+10+0.2+0.1 = Rs 2.206], Right now I have setup this by rather a rude method, by fixing vat rate as 2.206% which does'nt seem good. Is there a possibility of introducing something called "surcharge" which calculates additional tax on base tax?
No, the only way of doing this is just how you did it. There is no way of tax on tax on tax. You will have to do it as you did.
/Joe
Thanks for your reply. Accountancy is ok with this arrangement but books look rather irregular!. Is there a way to hide the tax rate being printed on invoice? I can set up the description of tax as per my need.Only if the rate of tax is hidden from the invoice. Let the tax rate be anything, like 2.206 or whatever, if it could be hidden from the invoice, our worries are over!
Yes, there is a global variable in config.php file, $suppress_tax_rates, which is default set to 0. If set to 1, the tax rate will not be printed, and you hould include it in the tax type text.
/Joe
That should solve all my problems. Thank you very much. Moreover, I would like to congratulate you on a very wonderful software, I could configure it to such a fineness, as if the software was built for our company's need! Bravo!
Thank you. We have an Indian user/developer, Chaitanya, on board. We or you can always address him for local questions.
/Joe
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