Setting Tax inclusive and Exclusive
Intro on Tax inclusive and Exclusive
It's easy to determine the difference between inclusive tax and exclusive tax. It all depends on whether the tax is added on top of the total retail price, or not.
Inclusive tax - The taxes are already a part of the product's retail price, so no more taxes are added to the subtotal of the sales transaction. For example: if the price of good is Rs 200 inclusive and GST rate is 5%, then the customer needs to pay Rs 200 as the price is inclusive of taxes.
Exclusive tax - The taxes are not yet a part of the retail price, so the tax amount is added to the subtotal of the sales transaction, before the checkout is finalized. For example: If the price of good is Rs 200 exclusive and GST rate is 5%, then customer needs to pay Rs 210 as the price is exclusive of taxes.
Yes - indicates the Prices are Inclusive of Tax.
Tax Amount = ( Cost Price or Selling Price ) - (( Cost Price or Selling Price * 100 ) / (Value entered as Tax + 100)) |
No - indicates that the Prices are Exclusive of Tax.
Tax Amount = (( Cost Price or Selling Price ) * Value entered as Tax ) /100 |
For example:
Consider the Cost Price = 210.00, Sell Price = 236.25, Tax =5%
Price | Inclusive of Tax | Exclusive of Tax |
Cost Price for 5 Units | 5 * 210.00 * = 1050.00 | 5 * 210.00 * 5% = 1102.5 |
Sell Price for 5 Units | 5 * 236.25 = 1181.25 | 5 * 236.25 * 5% = 1240.31 |
Setting Tax inclusive and Exclusive
As per GST norms, an item will be either tax inclusive or exclusive. This criteria will be differing on item basis and bill basis.
Item based setting
1.Go To Master -> Item -> Item
2.Click on the edit icon against the item
3.Under the Tax, You will find the field called "Tax inclusive" and you can mark it as YES or NO based on how you want the tax to be calculated for the item. After that, click on Update button to save the changes done.
Bill Based Setting
When you want the whole transaction( either sales or purchase) to be inclusive/ exclusive of GST, then it can be done by setting the sales and purchase formula for the customer (In case of sales transactions) and for the Supplier (In case of purchase transactions).
Note - In transactions, the first priority will be considered for formula mapped against the customer and supplier. If the sales and purchase formula is not mapped, it will take from what is mapped for the item in Item master.
Steps for mapping Sales formula to customers
1.Go to Master -> Customer -> Customer and Click on the edit icon against the customer for which you need to update the sales formula.
2.There will be a field called "Sales Formula". You can map it as either "Gst_sales_incl_yes" or "Gst_sales_incl_no". After that, click on Update button.
Steps for mapping Purchase formula to suppliers
1.Go to Master -> Supplier -> Supplier and Click on the edit icon against the supplier for which you need to update the purchase formula.
2.There will be a field called "Purchase Formula". You can map it as either "Gst_purchase_incl_yes" or "Gst_purchase_incl_no". After that, click on Update
FAQ:
How to map tax inclusive /exclusive for huge number of items ?
To update the Tax Inclusive/Exclusive setting for a many items, you can use the Item Update Migration.In the migration sheet, enable only the Item Code and Tax Inclusive columns, update the necessary values, and upload the file., For detailed steps, Kindly refer the link Item update migration
How to map purchase formula for huge number of Suppliers?
To map the Purchase Formula in bulk for multiple suppliers, use the Supplier Update Migration.In the migration sheet, enable only the Supplier Code and Purchase Formula columns, fill in the required values, and upload the file.For detailed steps, Kindly refer to the link Supplier update migration.
How to map sales formula for huge number of customers?
To map the Sales Formula in bulk for multiple customers, use the Customer Update Migration.In the migration sheet, enable only the Customer Code and Sales Formula columns, enter the necessary values, and upload the file.For detailed steps, Kindly refer the link Customer update migration.
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