Tax calculation on Freight charges in Sage X3

By | November 29, 2019

Freight charges refers to the Freight rate or the Price that is charged by a carrier for delivering goods from Source location to Destination location.

You may come across a situation where you would like to add elements like discounts, freight charges etc on the sales order . Sage X3 has a feature to add different invoicing elements like Discount%, Discount $, Freight etc in the sales invoicing element screen. Also the entry of the position number is important as it will determine the position of the elements in respective screens. Refer below screen shots:

Navigate to : Setup → Sales → Invoicing Elements → Freight Charges → Element position

Fig1: Sales invoicing element screen
Fig2: Freight Charges Element position on sales order

Now, check freight charge is added on the invoicing tab → invoicing element grid.

Navigate to: Sales → Orders → orders → Invoicing tab.

Fig3: Invoicing Element (Freight Charge) on sales order screen

Refer above screen shot, as we have defined value for Freight = ‘4.05’ amount .

Now, check tax calculation on freight, how taxes are applied on Freight.
Refer below screen shot:

Fig4: Taxes applied on sales order line level

As we can see that, in the above screen shot the taxes which are applied on the sales order lines are (GST,EXO).

Now, as we can see in the above screen shot that what freight charge and discounts values are applied on the lines. See the below calculation for Lines excluding tax, Excluding tax, and including tax fields.

  • Lines excluding tax = 32 , because the total gross price which are applied on the line level is ’32’ and ‘0’
Fig5: Gross Price defined on line level in SO screen
  • Excluding tax= 36.05 (32+4.05)

where 32 are the lines total price and 4.05 is freight charges which is defined in the invoicing tab.

  • Including tax= 38.06 (33.60+4.46)

here, 33.06 is the total tax amount which are applied on the line level I.e 5% discount is applied on the line1 = 32+ (5%)= 32 + 1.6 = 33.60

4.46 is the tax applied on the freight charge= 4.05 + (10%)= 4.05 + 0.405= (4.05+ 0.41) = 4.46.

Refer below screen shot for more clarity:

Fig6: Tax Valuation screen from Sales order

Now , check form where Tax (T10) is applied on the freight Charges.

Follow below steps to replicate it:

  1. Check Tax which is applied on the Freight charges. (Navigate to: setup → sales → invoicing element, Freight charges → Taxes) which is (NOR)
  2. Check BP tax rule in the ‘Management tab’ on sales order screen which is ‘SPIC’ .
  3. Now check the tax rate which is applied on both the taxes in the tax determination screen. Refer below screen shot:
Fig7: Tax determination screen

The Tax rate which is applied on the ‘SPIC’ and ‘NOR’ is T10 and on this 10% rate is defined. So that is why 10% rate is applied on the freight charges.

This explains the calculation of tax which is applied on the freight charges.

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