This document describes the change in Tax computation method in RMS and will go live on 13-April-2023
Summary:
- Previously, we used to compute tax on per unit values. And then multiply by quantity to get total values.
- From now on, we will be computing tax on total values, and divide by quantity to get the unit values.
- This is because in invoices and while sending data to Cleartax, all operations are on total values and not on per unit values. So, we should have more precision in the total values and not the per unit values.
Terminology
Name | Description |
---|---|
From GSTIN | The Seller GSTIN |
To GSTIN | The Buyer GSTIN (required in case of B2B Transactions) |
From Zip | The Seller Address Zip |
To Zip | The Buyer Address Zip |
Actual Selling Price Per Unit | The Per Unit price at which the item is sold(tax amount is included) |
Actual Selling Price Total | The total selling price (after multiplying with quantity) |
Base Selling Price Per Unit | The Per Unit Base price of the item (excluding tax amount) |
Base Selling Price Total | The total base price (excluding tax amount) |
Tax Amount Per Unit | The tax amount applicable on the item (per unit) |
Tax Amount Total | The total tax amount |
Tax Rate | The rate that is applicable for tax calculation |
Input
The following fields are provided to RMS for tax computation
From GSTIN and To GSTIN
From Zip and To Zip
Line Item Details
Actual Selling Price Per Unit
Tax Rule (refer tax rule documentation)
Quantity
Old Tax Computation Algorithm
The From GSTIN and To GSTIN are compared. If they are same, then 0% tax rate is applied.
Tax Rate is determined from Tax Rule.
The From and To Zip values are used to determine the category of sub tax values.
If Intra State → SGST and CGST tax is applicable
If Inter State → IGST tax is applicable
From actual selling price per unit, tax per unit is calculated
(actual selling price unit - (actual selling price unit/(1+(rate/100)))
The tax amount per unit is rounded off to 2 decimal places.
If it is an Interstate transaction, then IGST tax amount per unit will be the same as tax amount per unit.
If it is an Intra state transaction, then the tax amount per unit is divided by 2 to get the SGST and CGST tax amount per unit values. And then the tax amount per unit is re-calculated by summing up the SGST and CGST tax amounts.
Then base selling price per unit is calculated (actual selling price per unit - tax amount per unit).
And then the total values are calculated by multiplying the per unit values with quantity.
actual selling price total = actual selling price per unit * quantity
base selling price total = base selling price per unit * quantity
tax amount total = tax amount per unit * quantity
IGST total = IGST amount per unit * quantity
CGST total = CGST amount per unit * quantity
SGST total = SGST amount per unit * quantity
New Tax Computation Algorithm
The From GSTIN and To GSTIN are compared. If they are same, then 0% tax rate is applied.
Tax Rate is determined from Tax Rule.
The From and To Zip values are used to determine the category of sub tax values.
If Intra State → SGST and CGST tax is applicable
If Inter State → IGST tax is applicable
First actual selling price total is calculated (actual selling price per unit*quantity).
Then the total tax amount is calculated
(actual selling price total - (actual selling price total/(1+(rate/100)))
The total tax amount is then rounded off to 2 decimal places.
If it is an Interstate transaction, then total IGST tax amount will be the same as total tax amount.
If it is an Intra state transaction, then the total tax amount is divided by 2 to get the SGST and CGST tax amount values. And then the total tax amount is re-calculated by summing up the SGST and CGST tax amounts.
Then base selling price total is calculated (actual selling price total - tax amount total)
Tax Amount per unit is calculated by dividing the total tax amount by quantity and rounding it off to 2 decimal places.
Base Selling Price per unit is calculated by dividing the total base selling price by quantity and rounding it off to 2 decimal places.
Examples
Example 1
actualSellingPricePerUnit = 1050.01
Rate = 12
quantity = 50
Old Calculation Method
intermediate tax per unit = 112.5
cgst and sgst amounts per unit = 56.25
final tax amount per unit = 56.25 + 56.25 = 112.5
base amount per unit = 937.51
final tax amount total = 5625.00
base selling price total = 46875.5
actual selling price total = 52500.5
New Calculation Method
actualSellingPriceTotal = 52500.5
intermediate tax total = 5625.053571 = 5625.05(rounded off)
cgst and sgst values (per unit) = 2812.525 = 2812.52(rounded off)
final tax total = 2812.52 + 2812.52 = 5625.06
base selling price total = 52500.5 - 5625.06 = 46875.44
Tax per unit = 112.5012 = 112.50 (rounded off)
Base selling price per unit = 937.5088 = 937.51(rounded off)
Example 2
actualSellingPricePerUnit = 488.95
Rate = 5
quantity = 380
Old Calculation Method
intermediate tax per unit = 23.28
cgst and sgst tax (per unit) = 11.64
final tax amount per unit = 23.28
base amount per unit = 465.67
tax amount total = 8846.4
base amount total = 176954.60
actual selling price total = 185801
New Calculation Method
actualSellingPriceTotal = 185801
intermediate tax total = 8847.66667 = 8847.67(rounded off)
cgst and sgst values = 4423.835 = 4423.84(rounded off)
final tax total = 4423.84 + 4423.84 = 8847.68
base selling price total = 185801 - 8847.67 = 176953.32
Tax per unit = 23.28336842 = 23.28 (rounded off)
Base selling price per unit = 465.6666316 = 465.67(rounded off)
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