(IND) Post service tax in purchase transactions by using the Invoice register form [AX 2012]

Updated: November 27, 2013

Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012

Use the Invoice register form to post service tax in purchase transactions. You can specify the service code and service category for each journal line before you post the journal.

  1. Click Accounts payable > Journals > Invoices > Invoice register.

  2. Click New to create a journal, enter the journal details, and then click Lines. For more information, see Create and validate journals and journal lines.

  3. In the Journal voucher form, on the Overview tab, enter the invoice details.

  4. In the Sales tax group field, select the sales tax group for the vendor.

  5. In the Item sales tax group field, select the item tax group that you have created for the vendor. The sales tax group and the item sales tax group for a journal line must contain tax codes that have a tax type of Service tax.

  6. On the Tax information tab, in the Company information field group, you can modify the name and current address of the legal entity.

  7. In the Service code field, select a service code that is attached to goods of the type Service.

    NoteNote

    In AX 2012 R3 and cumulative update 6 or later for AX 2012 R2: The accounting code for the service is updated in the Accounting code field based on the service code that you select. For more information, see (IND) Set up service codes for service goods.

  8. In AX 2012 R3 and cumulative update 6 or later for AX 2012 R2: In the Service category field, select one of the following options to indicate the service category for the journal line:

    • Inward – Select this option when you purchase goods from a vendor.

    • Inter unit or input – Select this option either when you transfer goods between two units within your legal entity, or when you transfer goods from the legal entity to a subcontractor for additional processing. For example, you can select this option when the goods are manufactured in one unit and then transferred to the packing unit of your legal entity.

    • Others – Select this option for other service categories. The input tax amount for this category is posted to the expense account instead of to the recoverable account or the interim recoverable account.

  9. On the Overview tab, in the Consignment note number field, enter the consignment note number for the vendor.

  10. Click Sales tax to view the calculated service tax in the Sales tax transactions form.

  11. Close the Sales tax transactions form.

  12. Validate and post the journal voucher for the invoice register. The service tax amounts are credited to the tax payable accounts.

An invoice journal line is created for a purchase transaction with the account combination of Ledger (debit)-Vendor (credit) in the Invoice register form. The journal line amount is 1,000, which is the credit amount. The rate of service tax is 12 percent, the rate of primary education cess (PE Cess) is 2 percent, and the rate of secondary and higher education cess (SHE Cess) is 1 percent. The Point of taxation basis option is selected in the Accounting basis field. The reverse charge percentage is 0 percent. The Load on inventory % check box is selected, and the percentage is defined as 100 percent for all three service tax components in the Item sales tax groups form.

The formula for the calculation of service tax is defined in the Formula designer form, as illustrated in the following table.

Tax code/component

Tax based on

Calculation expression

Service tax

Line amount

PE Cess

Line amount is excluded

+[Service tax]

SHE Cess

Line amount is excluded

+[Service tax]

The Price incl. tax check box is selected for all of the three service tax components.

According to this example, service tax is calculated in the invoice register journal as shown in the following table.

Tax

Formula

Value

Service tax

[1,000 - (1,000*12.36/112.36)]

INR 890

(890.00 * 12%)

INR 106.38

PE Cess

(106.38 * 2%)

INR 2.13

SHE Cess

(106.38 * 1%)

INR 1.07

The original amount and the tax amounts that are calculated are displayed in the Sales tax transactions form.

When you validate and post the journal, the total tax amount is credited to the inventory account, and the service tax and the cess are added to the cost of the goods.

If the Load on inventory % check box is cleared, the tax amounts are debited to the interim tax recoverable accounts.

The following table displays the journal entries.

Account

Debit

Credit

Ledger account

INR 890.00

Service tax recoverable account

INR 106.80

PE Cess recoverable account

INR 2.13

SHE Cess recoverable account

INR 1.07

Vendor account

INR 1000.00


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