Lesson 9 of 9 · 3 min

When a customer withholds tax

A company or government customer may pay you less and pay the rest to the tax office for you. Record both, and the invoice is settled in full.

  1. City Cash & Carry owes Rs 177,000.00 on NT-0051: Rs 150,000.00 of goods and Rs 27,000.00 of sales tax. As a withholding agent it keeps back 4.5% income tax (Rs 6,750.00) and a fifth of the sales tax (Rs 5,400.00), and pays you Rs 164,850.00.
  2. In Record a payment, switch on They kept back tax and fill in each with its certificate number. What came in and what was withheld settle NT-0051 in full. The withheld part is tax already paid for you: it's yours to claim, so it waits on its own account until you do.
  3. Reports → Tax withheld by customers lists each one with its certificate, by customer, and what's still to claim. One without a certificate yet is marked: ask the customer for it, since your return can't claim it without.
  4. Put a customer's usual rates on their details, under Tax they withhold, and the payment form fills them in. Rates change, so check each against the certificate. In the UK it's CIS that a contractor deducts; sales tax isn't withheld there.

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1. A customer pays Rs 164,850.00 on a Rs 177,000.00 invoice and sends certificates for the rest. What do you record?

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