Tax template: VAT Exempt (Schedule 1)
Template with a 0% VAT row for exempt supplies, so they still appear in the VAT return; related input VAT is not recoverable.
In detail
The exempt template also carries a 0% row to 2261 - VAT Payable - YFF, but it means something different from the export template: the supply is outside VAT altogether under Schedule 1, and the input VAT on purchases used for it cannot be recovered. BRAccount keeps the two templates separate so the VAT return can list exempt sales and zero rated exports on their own lines. The Nepal VAT Exempt Tax Rules load it for parties flagged exempt, and you can pick it by hand on an invoice for exempt items such as training to a school. If your business has both exempt and taxable sales, the input VAT credit must be apportioned before filing.
Formula
VAT = Rs 0; blocked input VAT = total input VAT x exempt sales / total sales
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Debtors - YFF (School) | Rs 20,000 | |
| Rendering of Services - YFF | Rs 20,000 | |
| 2261 - VAT Payable - YFF | Rs 0 |
How to record it in BRAccount
- 01Go to Taxes > Sales Taxes and Charges Template and open VAT Exempt (Schedule 1) - YFF.
- 02Confirm the single row at rate 0.
- 03Go to Invoicing > Sales Invoice > New and pick the template if the Tax Rule did not load it.
- 04Enter the exempt service, for example Rs 20,000 of training.
- 05Submit. The invoice posts with a zero VAT row and is listed under exempt supplies in the return.
When to use it
Use for Schedule 1 items; keep it separate from zero rated exports.
Example from the demo books
Rs 20,000 of exempt training services with a VAT row of Rs 0.