Hi All,
Appreciate your inputs on the following tax scenario. We need to book out tax for things we give for free to our employees.
Example: We are buying laptop bags from a vendor to give for free to our employees. We pay for example 10% VAT
This will be direct FI invoice where the tax incurred will be absorbed in as expense as we cannot claim input tax credit for this.
This means the input tax code will be zero rated.
The requirement here says, as per the legislation we need to account for output tax under deemed supplies for these free items.
As we are giving these items for free to the employees whom we cannot bill.
In this scenario how do we account the output VAT. Can this be automatically posted in SAP or will this be an manual journal entry.
In any case what will be the accounting entry for this.
cheers
Viru