VAT on Sales to Government
In order to access Input Tax on Sale to Govt. closed to expense (Schedule 4), you should first go to Summary, then click the Edit Schedule 4 button.
Here are some of the formulas needed for you to complete the Schedule 4 of your 2550M form:
Standard Input Tax to sale to government
This kind of VAT on Sales is the result of taxable sales transactions to government with 12% VAT multiplied with taxes withheld from sales coming from products/services sold by supplier to the government (7%).
Formula: [Taxable Sales to Government X Amount of Input Tax not Directly Attributable]
If you have 1,400,000 of total sales, and 200,000 of it it were sales to government, then:
200,000 x 0.07 = 14,000
Total Input Tax attributable to sale to government
To calculate your total input tax attributable, you should get the sum of both your Input Tax Directly Attributable to Sale to Government with the Amount of Input Tax Not Directly Attributable. See formula below:
[Input Tax directly attributable to sale to government + Amount of Input Tax not directly attributable]
Input Tax on Sale to Govt. closed to expense (To Item 20B)
To get this amount, subtract your Total Input Tax attributable to sale to government with your Standard Input Tax to sale to government.
Formula: [Total Input Tax attributable to sale to government - Standard Input Tax to sale to government]
Enter your numbers in the appropriate textboxes then hit Calculate to get the amounts. Click Save button to save your changes.
Managing Input Tax allocable to Exempt Sales
To manage your Input Tax allocable to Exempt Sales (Schedule 5), you should first create a transaction in which the tax rate is set to Tax Exempt Sales.
Entering the transaction will enable Schedule 5 in the Summary of your VAT Report.
In order to get your Total Input Tax attributable to exempt sale (To Item 20C), you need to subtract your Input Tax directly attributable to exempt sale with your Ratable portion of Input Tax not directly attributable to any activity, which can be achieved by using this formula:
[Tax Exempt Sale / Total Sales X Amount of Input Tax not Directly Attributable]
After you have entered your details, you can simply click the Save button to update the Schedule 5 of your 2550M form.