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Dynamics 365 Community / Forums / Microsoft Dynamics GP (Archived) / Tax Deduction in Advan...
Microsoft Dynamics GP (Archived)

Tax Deduction in Advance Payment to Vendor

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Posted on by Community Member
Hi All, I am working in MSGP 10.0. Please guide me in context of following scenario: "How can we deduct/write-off tax while entering Advance Payment to Vendor/Supplier without applying the payment with any invoice by using 'Manual Payment Entry'in Payables Management Module"? Internationally this procedure is not in practice. But here in Pakistan, we do this alot. Looking for some work arounds from you guys... Atta-Ur-Rahman

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  • Community Member Profile Picture
    Community Member on at
    Re: Tax Deduction in Advance Payment to Vendor

    Hi, can you confirm that the following is what you want to do?

    You want to pay a vendor, and be ale to calculate how much sales tax is included in the payment, even though you don't have an invoice to apply it against.

    What would you base the tax calculation on?...the vendors tax schedule ID?

    You could run a smartlist of unapplied payments in the period, along with the vndors tax schedule ID and its tax perentae. Export toXL and manually adjust your tax return. You would need to reverse this the following month and rerun the smatlist (as some of last onths payments will now have invoices applied).

    Without investing in a development, this could be a good workaround.

    We did a development about 3 years ago for a similar requirement for a european company who was operating a 'cash' basis sales tax system...ie they paid the sales tax on cash deposits from customers before they issued invoices. Unfortunately there is no way in standard GP to accommodate this.

     

  • Community Member Profile Picture
    Community Member on at
    Re: Re:Withholding Tax Deduction in Advance Payment to Vendor
    Sir, I am talking about a vendor who is 'subject to withholding' with some certain percentage in GP like 3.5%. Moreover, we are paying that vendor in advance and ,by law, we deduct withholding tax (Income Tax Deduction Deduction at Source). Now keeping in context the above lines, I am looking for work around as standard GP does not allow the deduct WH Tax directly (without applying any invoice). Hope I've cleared my point of view.
  • Irfan Rasheed Profile Picture
    Irfan Rasheed 550 on at
    Re: Re: Re:Withholding Tax Deduction in Advance Payment to Vendor

    Yes, you are right that there is no Modular Entry available in GP, for deduction of WHT from Advance Payments. It has a work around that you do it in two steps;

    01. Make Manual Payment for net amount of cheque.

    02. Make a Payable Transaction Entry in Purchasing Module, for that amount which is withheld from payment, by selecting Document Type as Credit Memo. In distribution the Payable impact could charge to WHT GL Code.

    I hope it could resolve your issue.

    Regards.

    /Irfan.

  • Community Member Profile Picture
    Community Member on at
    Re: Re: Re: Re:Withholding Tax Deduction in Advance Payment to Vendor
    Dear Irfan, Thank you for this insight, I did it as you suggested. Is it possible to generate this impact with distribution type of WH? So that, Withholding Batch can be auto-generated after applying the payment and credit memo to actual invoice after some time. (containing its respective impact on FBR). Please give your insight. Looking for your reply. Regards, Atta-Ur-Rahman 0344-5494136

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