VAT computation if Check the Is this Tax included in Basic Rate in erpnext v13.26

Hi all,

Anyone here encountered this issue?
VAT computation discrepancies like for example 12% of 1000 = 120 but if you check the option “Is there any additional computation?” in “Purchase Taxes and Charges” or screenshot below the value change to 107.14

Check - Is there any additional computation


Uncheck - Is there any additional computation

Thanks

Hello any erpnext documentation how tax works if you check

“Is there any additional computation?"

What is “Check - Is there any additional computation” ? I’m not sure what this is

But from what I’m seeing, first screenshot is saying VAT is already included in the P1000 amount (so working backwards, the line item is P892.86 + P107.14 VAT total is P1000)

Second scenario P1000 amount excluds VAT so becomes P1000 + P120 VAT total is P1120.

This is achieved using this checkbox:

If you check that option “Tax include in Basic Rate”, so posed 1000 amount in backwards becomes 880 and Vat 120, but is not

Maybe I’m don’t understand what you are saying.

Tax include in Basic Rate (and rate of 12%) becomes:

P892.86 + P107.14 (12%) = P1000 NOT P880 & P120. It’s 12% of P892 not 12% of P1000

This is in the first screenshot you posted

the value of 12% of 1000 = 107.14, but if you check the

Tax include in Basic Rate

option, the value is not correct instead of 120, that’s what I’m saying

which this is the correct 12% of 1000 =120

Thanks

Explain to me why you say this is correct:

12% of 1000 =120

1000x.12 =120

Not like that. The way it would appear in an invoice:

Basic rate amount
VAT (12% of that rate)
Total (add the two)

Use a complete example.

Yes I agree, 1000 + 120 = 1120, but try Tax included in Basic rate
https://discuss.erpnext.com/uploads/default/original/3X/0/7/0727e525750471797a1a533074aa5cb49099104c.png
the calculation is different

I don’t think you understand what that checkbox means and is trying to achieve.

You have convinced yourself that there is a bug here when there isn’t one.

Please read my first reply. I tried to explain the difference between the two. Once you have gone through that then let me know what your issue is.

My apologies to make this complicated, can you point me to the right direction?
what we are trying to accomplish is:

  1. In Purchase Invoice - need the net total 12% TAX inclusive. and 12% tax will book to the account for government filing.
  2. Need to include in Print

Okay,

So if you need the net total VAT inclusive to be P1000, you tick that checkbox.

Then system will calculate VAT working backwards

The gross amount becomes P892.86

VAT Becomes P107.14

Total (VAT inclusive) =P1000 as you want.

The problem you think the 12% is calculated on the P1000, and it’s not. VAT is calculated on gross amount. P1000 ALREADY includes VAT (otherwise you are referring to VAT exclusive scenario and it will be added making total P1120)

Hope it makes sense.

Thank you so much for clarification, Now I understand