Now you are close enough to my point, but our international audience is not aware of this, so i have to bring this in another way.
boxygen wrote:@xehroz, I didn't went through your documents before my first post. Now I have read in detail. The case you are referring here is mostly FMCG products distribution setup. Unfortunately I didn't come across such situation because majority of my clients are service based.
It is complicated but I'll come with another simple to understand example.
Let's assume one product called "Super Candy" is sold to consumers at PKR 119
Breaking of this is (100 as MRP + 17 ST + 2 ET)
First situation
The Manufacturer sell this to it's registered customer (In this step to a Retailer) at following rate
90+17+2=109
90 Goes into COGS account for that product
17 goes to Sales Tax Account for that product (this can be passed on / Claimable)
2 goes to "Extra Tax" account for that product (this can also be passed on further to next customer / Claimable)
Second situation
The Manufacturer sell this to it's Un-registered customer (In this step to a Retailer) at following rate
90+17+3+2=112
90 Goes into COGS account for that product
17 goes to Sales Tax Account for that product (this can be passed on / Claimable)
3 goes to "Additional Sales Tax" for that product (THIS CAN-NOT BE PASSED ON FURTHER / non-claimable)
2 goes to "Extra Tax" account for that product (this can also be passed on further to next customer / Claimable)
FYI Passed on or claimable means that this amount of tax can be claimed while filing monthly sales tax returns and the customer may get a rebate / refund / adjustments subject to other things, it is can be adjusted in your tax return. Pass-on means the same in terms of "SALES" i.e. you can ask your customer "By law govt. has collected tax on this from me through my supplier and i am passing on this load to you as per law". Additional tax cannot be passed-on if some registered retailer is charged with this, this would be his EXPENSE he would have to bear this.
THIS was all from "Sales" point of view.
From procurement side it is the same as sales, you log the difference in cost and sale price into profit and difference of ST, ET is also logged and difference is paid accordingly to govt. only additional tax is recorded as expense.
boxygen wrote:But this is quite interesting and I would like to understand it first. Based on your two documents can you please state some examples with Basic values for each type of Item category and tax category. I want to see the complex formulae that are being applied in any single case.
for e.g. Item A Cost = 90, MRP is 100, Tax is 17%, Additional is 3%, Extra is 2% then What GL Transactions shall be recorded when this Item is sold and What OutPut Tax accounts are Credited.
The only impact in this case would be upon "Un-Registered" retailer or distributor, i.e. when he makes a purchase he would be charged additional 3% tax, but he CANNOT pass-on this to his customer, for example the consumer will pay only 17% of MRP + 2% Extra Tax. This thing was introduced to encourage registration (in other words documentation and traceability) and discourage un-regulated trade.
boxygen wrote:Also the impact of Item A for each type of Registered, Unregistered and End Consumer.
Yes according to law toffees etc. are always charged a tax called "Extra Tax" which is @2%
boxygen wrote:If Item A is defined to be confectionary item then it will always be added 2%?
We have to log all these separately and would have to display/produce this record separately.
I hope this will develop common understanding. and i wish nothing is left.
Shehroz
