VAT Carry Forward
VAT carry forward lets you claim excess input VAT (what you’ve paid) to reduce future output VAT (what you’ve collected from customers). If your input VAT is higher than your output VAT, you can carry forward the claimable VAT amount for future periods. This helps you manage cash flow and makes it easier to reclaim taxes.
In Zoho Books, you can carry forward the claimable VAT amount to the next tax period. When you generate the VAT3 returns in Zoho Books, Box 16 will display the amount you can claim from the KRA. When you file the VAT return, the amount displayed will be carried forward to the next tax period.
Scenario: Sarah runs a bakery. In January, she paid KES 200 in VAT on supplies and collected KES 300 in VAT from sales. She paid KES 100 to the tax authority. In February, she paid KES 240 in VAT on new supplies and collected KES 200 in VAT from sales. Sarah can carry forward the claimable VAT amount (KES 40) from February for future tax payments.
Record VAT Carry Forward in Zoho Books
To record a VAT carry forward:
- Go to Reports on the left sidebar.
- Select VAT3 Returns under VAT.
- Under the Net VAT Due section, check if Box 16 displays any negative amount. If present, it will be carried forward to the next tax period.
- Click Mark as Filed in the top right corner of the page.
- In the File VAT Return pop-up:
- Select the required Date of Filing.
- Check the option Carry Forward Reclaimable Amount to apply the claimable VAT amount to the next tax period.
- Click Save.
The claimable VAT amount will be carried forward to the next tax period, and the VAT3 return will be marked as Filed. When you generate VAT3 return for the next tax period, the claimable amount will be displayed in Box 17, which is deducted from the total amount due for that period.
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