ERPNext.com Frappe Cloud Support Partners Foundation

Tax amount is being registered twice

Hi all,

I’m a complete novice to to ERPNext (and accounting in general) and I’m getting really confused when creating my sales invoice and payment entry. I’m pretty sure I need to have the tax defined on both documents, but that produces 2x the liability.

Here’s how my Chart of Accounts looks before I do anything:

I then create a sales invoice with a cost of 320 SEK and 25% tax for a total of 400 SEK:

Now the Chart of Accounts again:

Everything’s fine up to this point from what I can tell. Let me now create the Payment Entry:

Sidenote: Here’s the one and only row I have under Advance Taxes and Charges:

Let’s now look at the Chart of Accounts and the General Ledger:

In the screenshot above we see; 80 SEK have been added to the Debtors account under Accounts Receivable and 80 SEK have been added to the VAT account under Duties and Taxes. Why is this happening? Should I not specify the tax on the Payment Entry? Am I wrong in thinking of the Payment Entry as a receipt I can send to the customer?

When I create a Payment Entry without the tax, then the Chart of Accounts and General Ledger look fine, but I’m not sure if it’s the way it is supposed to be:

All attempt to help to try to clarify this is greatly appreciated! :upside_down_face:

ERPNEXT_VERSION=v13.6.0

Kind regards,
Emil

Looks fine to me. 80 is output of 400/1.25 (25% tax included in Price). 400 customer owes the company so Debtors DR 400, Sales is 320 CR and Tax is 80.

Customer paid 400 so system Debited Cash (mode of Payment) and credited Debtor. What you have done is I presume somehow added 80 Tax manually on Payment Entry. You should just pass 400 as cash received. System would clear the outstanding with that. Check the GL of VAT inside which you will find the voucher type and voucher number that has added additional 80 to it. Read this to understand how to pass a payment entry.

https://docs.erpnext.com/docs/v13/user/manual/en/accounts/payment-entry

Hey Muzammil and thank you for your answer.

What you have done is I presume somehow added 80 Tax manually on Payment Entry.

That’s correct. I was thinking that I could use the Payment Entry as a receipt and that the VAT should be included on the receipt, as I was confused when seeing 0 SEK VAT - but I might be mistaken.

I just looked at an invoice and receipt from a service company I use. Here’s how it looks:

The two essentially look the same, with the difference that the receipt has a remark that it’s paid. How can I send payment receipts to my customers with ERPNext?

Either download as PDF or if you have email connected to ERPNext then use the Email button on top right inside Menu button. ERPNext will convert the receipt into a PDF file and attach it to the email.

Is the payment entry to be considered as a receipt?