Invoice with Retainage - Tax wrongly calculated on net invoice amount rather than gross amount
Dear All,
We are using complex PO with retention. When we create invoices matched with complex PO, the tax is calculated on the net amount (net of retention amount) rather than gross invoice amount. Below is simple example
PO Amount = 100,000/-
Retention = 15%
Tax Rate = 4% (e-business Tax)
Invoice fully matched to the PO.
System create invoice as below (Distribution)
Item -- 100,000/
Tax (VAT) on item -- 4000
Retention -- (15000)
Tax (VAT) on retention -- (600)
Net Invoice Amount = 88400
This is wrong calculation as per the tax laws. Tax should be calculated on the gross invoice amount only and reversal of 600/- on retention should not take place. Is there a way that we can control this behavior and get the correct tax value on such transactions i.e. VAT = 4000 on this transaction.