Reverse sales tax on Settlement discount

(0) Share

Report

Posted on by Shabnam Motani

195

Hello Experts,

We have requirement to calculate vendor settlement discount and when discount get calculated, reverse out the sales tax (GST) applicable to that settlement discount.

To achieve that I have created the following set up.

1) On Account Payable parameter

“Calculate settlement for partial payment” and “calculate settlement discount for credit” are selected.

2) Switch on “Reverse Sales Tax (GST)” on Sales Tax (GST) Group

3) Created 20% Settlement Discount Id with “Discount offset accounts” selected to “Accounts on Invoice line” and assign that ID to vendor master.

Now issue is that when I create Vendor payment, system calculates discount correctly using the account used on invoice line however Sales Tax (GST) discount doesn’t get calculated.

Please see below voucher distribution of invoice, amounted 6600 and sales Tax(GST) 10% -600.

Payment voucher for above invoice with 20% Settlement Discount

Can you please advice if I am missing any set up.

Thanks in advance.

Categories:

Financial Management

All responses (9)

Answers (1)

Suggested answer

Shabnam Motani 195 on at

Like (1)

Report

RE: Reverse sales tax on Settlement discount

Thanks for helping me out with this issue Ludwig !

I found the issue, in my case invoice value is inclusive of sales tax, another configuration need to be switched on, on General Ledger Parameter.

Once I changed the parameter, system start calculating sales tax reversal on settlement discount.

Once again I appreciate all your help.

Shabnam
Verified answer

Ludwig Reinhard Microsoft Employee on at

Like (1)

Report

RE: Reverse sales tax on Settlement discount

Hello Shabnam,

I replicated a vendor invoice in a contoso company.

Other than you, I used the DEMF company and posted an invoice with sales tax first.

Please try doing the same

1. Record a new vendor invoice for vendor DE-001.

2. When posting this invoice make sure that you use the sales tax group 'AP-DOM' and the item sales tax group 'FULL'.

3. Ensure that a cash discount code is selected

4. Post the invoice

5. Create a payment journal

6. Select the vendor manually

7. Select the open invoice in the settlement form and ensure that a cash discount is shown for deduction

8. Post the payment journal and check the voucher and the all related vouchers

In my case 0.95 VAT are corrected.

I believe that the original invoice was possibly not posted correctly with sales tax and therefore no correction was generated.

Please double check this by replicating the steps and comparing the setup in DEMF with yours.

Best regards,

Ludwig
Shabnam Motani 195 on at

Like (0)

Report

RE: Reverse sales tax on Settlement discount

Hi Ludwig,

I have tested on (8.1), however same result.

Please see below screenshots.

Payment with 20% cash discount. As you can see no Sales tax has been reversed.

Do you think I am missing and config here.

Thanks!!
Suggested answer

Shabnam Motani 195 on at

Like (0)

Report

RE: Reverse sales tax on Settlement discount

I really appreciate all your help Ludwig.

I will definitely have a look and let you know how I go.

Many thanks for all your time and efforts.
Suggested answer

Ludwig Reinhard Microsoft Employee on at

Like (0)

Report

RE: Reverse sales tax on Settlement discount

Hi,

Can you upgrade to a more recent version?

I found a couple of hotfixes on LCS that deal with this issue, such as the following one: KB 4469805No reverse of sales tax on cash discount using reverse charge tax code

Please have a look at LCS to find either the hotfix or simply upgrade to the latest version.

Best regards,

Ludwig
Shabnam Motani 195 on at

Like (0)

Report

RE: Reverse sales tax on Settlement discount

Thanks Ludwig,

I am in Australia and below is the system version.

Installed product version : Microsoft Dynamics 365 for Finance and Operations (7.3)

Installed platform version : Update15 (7.0.4841.35259)

Thanks for all your help.
Ludwig Reinhard Microsoft Employee on at

Like (0)

Report

RE: Reverse sales tax on Settlement discount

Hi Shabnam,

What system version do you operate exactly?

Can you also let us know for which country you setup the tax?

Would like to replicate this on my machine.

Many thanks,

Ludwig
Shabnam Motani 195 on at

Like (0)

Report

RE: Reverse sales tax on Settlement discount

Thanks for your reply Ludwing!

As suggested, I have tried using 'use main account for vendor discounts' option

1) set up change on settlement id

2) Invoice voucher entries

3) Payment voucher entry

As you can see sales tax reversal has not been calculated.

Thanks for you help so far!
Suggested answer

Ludwig Reinhard Microsoft Employee on at

Like (0)

Report

RE: Reverse sales tax on Settlement discount

Hi,

Can you select 'use main account for vendor discounts' instead of 'account on the invoice lines' and try posting again?

Many thanks,

Ludwig