Purchase Taxes and Charges Template

The purchase side mirror of the sales template, copied into Purchase Invoices and Purchase Orders. Its VAT row is set to be deducted from the supplier bill and debited to 1241 - VAT Receivable - YFF, the input VAT you recover against output VAT in the monthly return. The same template can hold charges like freight or insurance with the type Valuation and Total, which adds them to item cost rather than to a separate expense. The demo bills from Market mind investment group carry no VAT, so for them the template is left blank. Claiming input VAT on an exempt supplier's bill is credit you are not entitled to, which an IRD audit reverses with penalties.

Input VAT = Net purchase x 13 / 100; amount payable to supplier = Net purchase + Input VAT

1. 01Go to Taxes > Purchase Taxes and Charges Template > New.
2. 02Name it, pick the company and tick Is Default if most bills carry VAT.
3. 03Add a row: type On Net Total, account 1241 - VAT Receivable - YFF, rate 13.
4. 04For freight to be added to item cost, add a row with type Valuation and Total.
5. 05Save, then open Buying > Purchase Invoice > New and pick the template under Taxes.
6. 06Submit. Input VAT debits VAT Receivable and the full amount credits Creditors.

Create under Accounts > Purchase Taxes and Charges Template and mark a default for Purchase Invoices.

VAT 13% on a Rs 1,00,000 laptop bill adds Rs 13,000 input VAT to recover.