Edit

Design details: Non-deductible GST

  • Article

Non-deductible goods and services tax (GST) is the GST that's payable by a purchaser, but that isn't deductible from the purchaser's own GST liability. Because it can be difficult to know where and how an item is used, you must contact the local tax authorities in your country or region to determine whether a specified percentage of the GST is deductible. Even when you know that a specific percentage of the GST isn't deductible, there are different models for handling non-deductible amounts as they are related to items and fixed assets.

Prerequisites for using non-deductible GST

To use and post non-deductible GST, follow these steps.

  1. On the GST Setup page, select Enable Non-Deductible GST to enable the feature.
  2. On the GST Posting Setup page, select which GST posting groups can use non-deductible GST.

Examples

For the following examples, non-deductible GST is enabled, and the following setup is completed:

  • The GST Product Posting Group field is set to NDGST.

  • On the GST Posting Setup page:

    • NDGST is set as the GST product posting group, and DOMESTIC is set as the GST business posting group.
    • The GST Identifier value must be unique.
    • The GST % field is set to 25.
    • The Allow Non-deductible GST field is set to Allow.
    • The Non-deductible GST % field is set to 100.
    • The GST Calculation Type field is set to Normal GST.
    • Only the GST account and input tax credit account are configured.

All the examples use items and fixed assets where the GST product posting group is NDGST.

Items

A new item has NDGST set as the GST product posting group. In the purchase document, Quantity = 1 and Direct Unit Cost Excl. GST = 1,000.00.

Regardless of the option that's used, the results in the GST entry are the same.

Document Type Type Base Amount Non-Deductible GST Base Non-deductible GST Amount
Invoice Purchase 0.00 0.00 1,000.00 250.00

The details are shown in the Value Entries.

Note

You can enable the Use for Item Cost field on the GST Setup page.

Use for Item Cost isn't enabled

Item Ledger Entry Type Entry Type Cost Amount (Actual) Item Ledger Entry Quantity
Purchase Direct Cost 1,000.00 1

Use for Item Cost is enabled

Item Ledger Entry Type Entry Type Cost Amount (Actual) Item Ledger Entry Quantity
Purchase Direct Cost 1,250.00 1

Fixed assets

A new fixed asset has the acquisition cost account set to use NDGST as the GST product posting group. In the purchase document, Quantity = 1 and Direct Unit Cost Excl. GST = 1,000.00.

Regardless of the option that's used, the results in the GST entry are the same.

Document Type Type Base Amount Non-Deductible GST Base Non-deductible GST Amount
Invoice Purchase 0.00 0.00 1,000.00 250.00

The details are shown in the Fixed Asset Ledger Entries.

Note

You can enable the Use for Fixed Asset Cost field on the GST Setup page.

Use for Fixed Asset Cost isn't enabled

Document Type FA Posting Type Amount GST Amount
Invoice Acquisition Cost 1,000.00 250.00

Use for Fixed Asset Cost is enabled

Document Type FA Posting Type Amount GST Amount
Invoice Acquisition Cost 1,000.00 250.00
Invoice Acquisition Cost 250.00 0.00

See also

Set up non-deductible GST
Finance
Work with Business Central

Find free e-learning modules for Business Central here