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How to exclude VAT/GST on Discounts on Sales Orders?

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Posted on by Mufazzil Memon

Hi all,

I am facing an issue where I am specifically applying discounts on Line Level and my prices are inclusive of tax. The rest of the accounting entries are fine but VAT is also being deducted from Discounts.

For Example:

Item Price = 100

Discount = 10

Price Inclusive of Tax = 90.

Vat Charge = 5 %

Price Exclusive of Tax = (90/1.05) => 85.714

Ideally, the VAT should be calculated on 90 alone. Whereas the system is calculating discount on 90 and 10 (Discount Amount) both.

I would really appreciate if someone can guide me with any workaround.

Thanks,

Mufazzil A Memon.

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OsmanIstanbul 2,818 on at

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Hi,

On the tax code setups form, you can change the below parameter.

Best

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Mufazzil Memon 35 on at

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Dear Osman,

Even configuring it to "Percentage of gross amount" didn't solve my issue. I am attaching screenshot for your reference.

Item price = 100

Discount = 20 (As you can see in the image discount is showing as 19.048, which is wrong, it should come as 20).

Net Amount = 80

VAT = 3.810

Rest of the calculations are okay.

Please advise.

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saurabh bharti 15,039 Moderator on at

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Check on sales tax code, calculation parameters .

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Mufazzil Memon 35 on at

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[quote user="saurabh bharti"]
Check on sales tax code, calculation parameters .
[/quote]
Hi Saurabh,

I have attached screenshot of calculation parameters in above replies. Can you tell specifically like what combination of configurations will help.

Thanks,

Mufazzil.

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