DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Withholding Tax Rounding Issue


#1

When creating a Sales Invoice, I put the value of service and then provide 10% as Withholding Tax. It works beautifully except when the numbers do not round well.

For example, My amount for billing is Rs. 83,333. When the customer deducts 10%, it should result into Rs. 8333.3/- deducted and It should show 74999.70 as balance. This is a correct calculation and Manager shows exactly that.

However, when the customer pays in real, they would actually pay Rs. 75,000 and balance of 8333 will be shown as Tax Receivable. This is a minor rounding adjustment but results into incorrect balance due. To make this work correctly, I need to use 9.99964% as Withholding rate to round it off correctly.

I don’t really see an easy way to solve it except that there can be an option to provide value apart from % only. Is that possible?


#2

In the latest version (15.7.27) it’s now possible to set withholding tax field as fixed amount rather than percentage.


#3

Sweet!!! Sir, please now that we have solved this big issue, can you extend withholding Tax function to purchase invoices? this is to enable us account properly for the withholding taxes we withhold and must remit to the tax authorities, get withholding tax certificates and release them to our suppliers.

Thanks


#4

@Abeiku, let’s wait a month or so. If the feedback I receive is that withholding tax implementation in Manager is a good direction, I will continue working on it.


#5

Works perfect for me.


#6

Agree on Abeiku’s suggestion. The only catch is that we will need to keep a track of both ends of taxes - Receivable & Payable. Most of the times, it must be allowed to cancel each other and only settle the balance but some times, it might be required to settle these separately. Hence both of these options should be allowed.

In India, it would mostly be settled (adjusted against each other).


#7

@shekharsom Very true the withholding tax on sales is a withholding tax on purchase to another entity so it a must to have. In my country withholding taxes on purchases are remitted to the tax authority by the entity withholding it (liability) . And the entity suffering it will recognise it as an asset exactly like the way mananger accounts for it.


#8

Okay Sir, in about a little over a month i will follow up on it. I will however suggest that in the future when you have the opportunity, enable withholding tax to be added line by line (some items may be exempted from withholding tax, the invoice must indicate) using percentages on an invoice exactly like how sales tax is, and also, give the user the option of selecting whether it should compute the Withholding tax on sales tax inclusive amounts or sales tax exclusive amounts in settings or a check box on the invoice making page.

I would like to add that the current withholding tax workflow is great but what am suggesting will make it better i believe