I am creating a purchase invoice and providing the desired details in required field. i.e. The unit price, and the Tax Scheme. After Creating the purchase invoice, all the calculations are perfect. While i am paying the suppliers by specnd money button, the purchase invoice gets paid in full.
After All that, when I am looking on summary page it shows the Tax Amount under Other Liabilities and sub Category of Tax Payable.
If I have already paid the tax to supplier then why i am having the liability to pay the tax again?
Please help me, whether i am doing something wrong ?
Purchase Invoice tax we call it Input Tax; Sales Invoice tax we call it Output Tax. (We also call VAT or GST)
Normally output tax is greater then input tax are going to pay it for government . If input tax greater then output tax you should claim it for. So In our accounting record is should be shown that :-
Purchase from supplier $100.00 + VAT/GST 6%
Dr. Purchase 100.00
Dr. VAT/GST Liability 6.00
Cr. Suppliers 106.00
Sales to customer $130.00 + VAT/GST 6%
Dr. Customer 137.80
Cr. Sales 130.00
Cr. VAT/GST Liability 7.80
At accounting under Balance Sheet-Current Liabilities-VAT/GST Liability showing total is $1.80 is going to pay out