@lubos if a simple option to let user input rate or amount of tax withold by customer is implemented. it will help many countries in their works. as there are some rules by which customer withhold some portion of tax to pay to authority.
there is already an option in Manager to enter Withholding tax both as a rate and as specific amount.
please read the guide Account for withholding tax on sales invoices | Manager
yes there is. but it is for withhold tax on whole invoice amount. i am saying withhold some portion of just tax or in my case GST amount.
you cannot reduce your tax liability without the customer actually paying the tax on your behalf. therefore you will have to receive the proof from the customer and enter the same in Manager as explained in the guide.
please read the portion in the guide where it explains making a journal entry. in your case you will have to select the Withholding tax account and the Tax Payable account.
yes i know for this purpose we can we can use two account like GST-WHT receivables and tax paid account same like manager uses with withholding thing
how is your suggestion different from what you already have in Manager?
Manager already has separate accounts for both WHT and Tax payable.
even with your suggestion you still have to make journal entries.
no sir, with due respect please iam explain this in this post.
lets say you invoice your customer for 10000$
and add gst ok 17% which will be 1700$
now if we use my suggestion lets say customer will withhold 20% of gst so withhold amount will be 340$ which will be automatically GST-WHT account until when we will add payment proof it can be go into gst paid
the problem is that withholding tax field is already being used by in withholding other type of federal tax. you can say that there are two types of taxes which are being withhold by customers when paying us.
i had explained earlier the straightforward method.
if you want to keep the taxes separate then you can create a separate asset account and enter the WHT amount as a negative value line item instead of selecting the default 
option.
then make a journal entry between the new account and Tax Payable after you receive proof of payment from your customer.
but it is not fool proof system as we have to give invoice to the customer that would be not good
then use the default Withholding tax option for invoices and use separate account for your federal taxes.
default option is already being used by federal Income tax you are not understanding the whole situation @lubos need your suggestion it is the simple option but the usefulness of this feature is way too much for at least Pakistani users of Manager
Dear Uzair,
From your call and your issue discussed here. I came to know that your case is not that much complicated. According to accounting and Manager way of creating the sales invoice, you have to include your GST 17% and WHT as usual. Now when it comes to receive money from customer they are keeping WHT money and retaining 20% of GST 17% amount as required by government offices when government office is your customer.
Only solution according to accounting is to pass a journal voucher mentioning the GST 17% account and customer account. This way you will update the ledger of customer and you will get the money due from the customer shown in their ledger as balance.
Hope this will solve your issue.
@uzair94, when you want the customer to withhold amounts destined for different taxes, you must either:
- Calculate a composite withholding percentage or
- Calculate a fixed amount representing the result of such a composite percentage
You have not provided complete information about your situation, only said that withholding tax was already being used for “withholding other type of federal tax.” So it is not possible to give an example matching your situation. You will need to determine the composite figure on your own. Complete explanations of the methodology should be included in notes on your sales invoices for your customers’ benefit and use.
When amounts in the Withholding tax account are applied to your various tax bills or filings, your journal entries can debit different expense or equity accounts according to which tax is being paid and the structure of your chart of accounts.
It will be important to remember than tax codes are applied at the line-item level, while withholding tax is applied at the invoice total level. That is necessary to keep Tax payable and Accounts receivable all in proper balance through such events as exchanges and returns of goods, receipt of customer payments, and so forth.
sir let me tell you the whole process of payment
lets say we sale a product of 10000$ to the customer
and total after GST of 17% will be 11700$
after that they will make a cheque for us by doing this calculation
4.5% of 11700$=526.5% which is withholding income tax
1/5th of GST which is 1700/5=340$ which is second withhtolding amount.
cheque that they will make for us will 11700-526.5-340=10833.5$
that is all working now in this working the customer withheld two types of amount one 4.5% and other 1/5th or 20% of GST amount that they will pay to authority on our reference and give us certificate. 4.5% portion is happily completed from withholding tax option but for other we have to use workaround methods but if manager can provide this funtion then it will be more beneficial for Pakistani users.
Using your more complete example, @uzair94, all you need to do is withhold 7.4059829%. (Adjust the number of decimal places according to how accurate you need to be.) The withholding percentage, W, is calculated from the tax-inclusive total of the invoice and the amount to be received from your customer:
W = [1 - (10833.5 / 11700)] x 100 = [1 - 0.9259401] x 100 = 7.4059829 %
Understand that this percentage only works on invoices where all line items are taxed at the same 17% rate. It would be different if additional tax codes were used. But the calculation approach would be the same.
Also understand that adding a second-tier of withholding tied to tax codes applied at the line item level is not at all straightforward. The existing withholding scheme involves two additional automatic accounts being added to your chart of accounts. Two-tier withholding could mean two more automatic accounts for every different tax code any user might employ. Provisions for generating all these would have to be hard-coded into the program; the number implemented would depend on exact localizations imported. Some countries have a lot of tax codes. Netherlands, for example, has 14 non-zero tax codes, so up to 28 additional accounts. And of course, a feature cannot be added to the program that does not accommodate all potential users.
sir we have already tried this oercentage method but please note. withholding tax and other 1/5th belongs to two different authorites so at the year end it will be difficult for us to segregate
Manager can have option in customize or in setting to enable this option or not so user who needs it can enable it.
Add custom fields to indicate tax authority. Then generate Sales Invoice Totals by Custom Field reports.
it cannot be possible sir.