[Singapore] GST Rounding Issues

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Benjamin George

• July 08, 2019 01:45

Recently, we had an interesting conversation regarding the GST rounding method used in Financio.

 

Financio's GST Calculation:

In Financio, GST is calculated by line and is rounded-off by line before being added to the following line. As seen in the example below, this gives rise to a potential 1 cent difference if compared to applying a 7% tax on the subtotal:

Line 1: 2512.50 x 7% = 175.88 (Rounded)
Line 2: 656.25 x 7% = 45.94 (Rounded)
Total Taxable Amount = 221.82

This method is accepted by IRAS and is a method most commonly adopted by POS vendors.

 

Alternative Calculation

While the previous method is a more accurate method of GST calculation, the most common practice of GST calculation by users remain applying a 7% taxable amount to the sub-total amount. In this example, the formula will will reflect the following:

(2,512.50+656.25) x 7% = 221.8125 (~221.81)

Users tend to view the taxable amount as an overall based on the issued invoice rather than on a line-by-line basis. 

 

Correction:

In the event where there's a need to adjust for this differences, the current way to do so would be to create a GST rounding account and apply as per seen below. Unfortunately, such adjustment will affect the presentation of the invoice but it is the only available solution at this moment.

 

With that said, we'd love to hear your feedback, opinions and stories of how your business currently manage this aspect of GST filing.

 

Regards,

Travis Tai - Community Manager

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  caseyltl29

  • March 18, 2020 05:31
  • Edited

  To simply the matter, probably the tax computed should appear as a line item itself so that users can manually override the GST amount to tie to the documents.

  Currently, we can only see the tax appearing at the footer only and there's no way we can change it other than passing dummy entries to tie back the cents issue.

  As far as GST is concern, there will always be such rounding off problem. Therefore, the fastest way is to enable users to manually override the GST amount before saving the entry.

  Thank you!

   

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