Service Tax Deduction on Sales

PeterINA

for every sales, we can add sales tax which add the amount need to be payed. But for every service, we need to deduct the amount because of service tax. So for example : I sold product $1000, and service $100. They all have sales tax 10%, so $1100 plus 10% of those = $1210, but for service, the amount needs to be deducted because of service tax 2%. So $100 + sales tax $10 - service tax $2 .
How to do this on invoice?

NancyC

Hey @PeterINA, can you please verify if both of your product and services are taxed at 10%, but there's an additional 2% tax for services? If so, when creating the invoice and after adding each line item, you'll have the option to apply multiple taxes to each line item separately. This means you can apply both 10% and the 2% tax for your service line item (while keeping only the 10% tax for your products line items).

Or if your service tax is only taxed at 8%, you can apply that specific sales tax to the service line items only.

If I'm off base here, please reply with a screenshot of an example of invoice with a detailed breakdown of what you'd like to achieve. Thanks!

PeterINA

Hi,
an example will be like this.
The price of the goods sold is 1000.000, the sales tax is 10% so Total will be 1.100.000, but the service tax is 2% from the price of the goods sold, so the service tax is 20.000, this buyer will deduct his payment to us with this service tax. So the payment that we receive from the buyer is 1.000.000 + sales tax (100.000) - service tax (20.000).

AlexL

Hey @PeterINA , at the moment there's no way to handle this directly through the sales tax. As a workaround, you can add a line item into your invoice in a negative amount. For example, if you need to add a service tax of 2% which subtracts from the amount, you can add an amount of $-20 in a new line item labeled 'service tax' which will reduce the total.

a1pilot

Ok AlexL, thank you.

So if we add a negative line item in an invoice for taxes deducted how can we generate a report for the totals of these line items please?

PeterINA

Hi @AlexL thank you for your answer, @a1pilot is right...we also need to have report on these tax deduction.

I think it will be good if we can create multiple taxes, so for our example, we create Tax A which consists of VAT 10% + Service Tax -2%, so we apply this to our line items in the invoices, the VAT will automatically be placed as Sales Tax (on invoice) and Tax Recoverable (on Bills/Expenses), while the Service Tax -2% will be placed also on Assets/Liabilities. I hope Wave can incorporate this feature in the future

Thanks