Tax posting for freight charges (Tax on Freight)

Question

Hi All,
   I am posting freight charges in A/R Invoice. The freight charges are levied to service tax ( Serv Tax 125, Cess 1% and H edu cess 2%). Now the problem is when I am attaching the tax code to the frieght amout and adding the invoice then the tax amount is being posted to the Rounding expense A/c defined in the Gl Accnt Determination, general Tab. This is being posted as a seperate line item along with the rounding amount in the Journal.
I have defined seperate gl accounts for the tax postings in the tax code definition but these accounts are not being effected.
Desirable and expected is that the freight charges should fall in the freight expense a/c(which is being done), the tax amount should effect the tax gl accounts as defined in tax codes.
how come the tax amount is being posted in the rounding expense?
Please suggest how to correct this. 
Raj.
Edited by: debraj bhattacharyya on Dec 9, 2008 10:55 AM

Answer 1

Hi,
While preparing the A/R Invoice and entering the Freight Amount you will select relevant Tax code. In that tax code you should link the GL account in which the tax amount to be stored.
From AR Invoice, you will click the link button near freight. Now new window opens for freight charges. You will enter the frieght amount and link the appropriate tax code in the "Tax Code" field. If you click the Link arrow neat Tax Code it takes you to the Tax Codes - Setup window. In this window you can view the settings you have done for the Tax code. In this windoe you have fields A/R Tax Account and A/P Tax Account.
Please check whether you have linked the Correct Account code in A/R Tax Account field.
Raja.S