[GNC] Recording Tax Correctly

Omer Hayat omer.hayat at outlook.com
Sun Aug 16 03:54:05 EDT 2020


Hi.
We have a 5% VAT charged on all bills and invoices. To the government, we pay the difference.
I have setup an 'Input VAT(paid to Vendor)' and 'Output VAT(received from Customers)' accounts under Liabilities, and set them up. These are recording the VAT paid & received from Bills/Invoices correctly. The Input VAT account has negative values, and output VAT has positive values. We are supposed to pay the difference of these.
For example:

VAT paid to Vendor
(50.00)
VAT received from Customer      75.00
FINAL VAT PAYABLE TO GOVT       25.00

Keeping the above example, I would like to pass one entry, and pay off the difference amount.
Example:
DR Final Payable to Govt
CR Bank
But, how can I pass the Debit entry? Should I create a 'Tax' placeholder account and pass it to that? But then the individual Input & Output VAT accounts might have a balance.

Please advise.


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