To manage your Input Tax allocable to Exempt Sales (Schedule 5), you should first create a transaction in which the tax type is set to Tax Exempt Sales. You can do this for both Goods and Services type of transactions.

Entering the transaction will enable Schedule 5 in the Summary of your VAT Report. Click the Edit Schedule 5 button to continue.

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 Amount of Input Tax not directly attributable, 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.

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