When I make payment for VAT, instead of the Tax payable balance to disappear, it doubles. For instance, my Tax payable shows -100. After payment of 100, the Tax payable balance shows -200. I’ve tried to resolve it to no avail.
Please help.
Tax payable is a liability account. When you owe money to the tax authorities, it shows as a positive number on the Summary page. Paying a tax bill moves the balance in the negative direction. So, if you owed 100, it would be displayed as positive 100. Paying 100 would lower the balance to zero.
Since your balance was -100, that means the tax authority owed you money. Paying them more means they now owe you still more. Once again, the balance moved in the negative direction, as it should.
The question is why your balance was negative. There could have been two main reasons:
- You paid more input VAT to suppliers than you collected as output VAT from customers. This is common if you have unusually large purchases during the period. Manager offsets these two amounts in the same Tax payable account. Whether your tax authority will refund the money to you or simply carry it in your account depends on local law.
- You have mistakenly entered receipts or sales invoices as payments or purchase invoices. This would cause the tax amounts to be reversed. But this should be easy to discover, as it would also distort your bank or cash account balances and your income and expense accounts.
You can explore the cause by drilling down on the Tax payable balance on the Summary page. Or, you can look at the Tax Transactions report in the Reports tab.
@ Tut:
Thanks a million, for your prompt, yet very helpful response.
I have taken a look at my transactions. Really, I recorded more purchases than sales. I’m very grateful. Thanks once again.