At the end of every tax period it is advisable to set off the output tax with Input tax. The excess of output tax has to be paid to the Department. For any tax period if input tax is in excess of output tax, the input tax needs to be adjusted only to the extent of output tax liability and balance of tax credit can remain in the respective ledgers.
The Input Tax can be adjusted towards output tax using:
Journal voucher for recording adjustment entry and then a payment entry for paying VAT dues
OR
Record payment voucher using Stat Payment button with Auto-fill option to adjust input against output VAT and make the payment.
Go to Gateway of Tally > Accounting Vouchers > F7: Journal > Select Not Applicable from the Voucher Class List
To display the Dr and Cr instead of By and To in Journal voucher, press F12: Configure and set Use Cr/Dr instead of To/By during entry to Yes.
Debit Output VAT ledgers and enter the corresponding ledger balances to nullify the liability
Credit the Input VAT ledgers and enter the amount of credit available for adjusting against output VAT
Credit the VAT Payable ledger grouped under Current Liabilities. The balance amount will be displayed automatically in credit field
Press Y or Enter to accept and save.
Go to Gateway of Tally > Accounting Vouchers > F5: Payment
Press F12: Configure and set Use Single Entry mode for Pymt/Rcpt/Contra to Yes
In the Payment voucher screen,
Click the Stat Payment button or press Alt + S to display the Statutory Payment sub-screen.
In Statutory Payment sub-screen, provide the details given below:
Type of Duty/Tax: Select VAT as the payment is being made towards VAT dues.
Auto Fill Statutory Payment: Set it to No as the input tax is already adjusted towards output tax and the balance amount is transferred to VAT Payable ledger.
In the Payment Voucher, select the Bank ledger in Account field. (use Crtl+A key combination and create a bank ledger grouped under Bank Accounts. Enter the opening balance if any).
Under Particulars, select the VAT Payable ledger and enter the corresponding ledger balance.
Select Training Levy Payable ledger. Select the Payment Type as Training Levy and enter the ledger balance amount.
Set Provide Details to Yes to display the VAT Payment Details screen.
In the VAT Payment Details screen enter the details pertaining to period of return, date on which amount is deposited, name of the bank and the cheque number.
Press Enter to accept the VAT Payment Details screen.
In the Bank Allocations screen, enter the Favouring Name of the person or organisations in whose favour the cheque is being issued, select the transaction type as per requirement (for e.g., Cheque), enter the instrument number with date and Cross Instrument Using details
Accept the payment voucher.
Note: For illustrating this scenario, mark the journal and payment entry shown in scenario 1 as optional. To mark these entries as optional follow the steps given below:
1. Go to F11: Features > F1: Accounting Features and set the option - Use Reversing Journals and Optional Vouchers to Yes and accept the Accounting Features screen.
2. Go to Gateway of Tally > Display > Day Book and select the journal entry and click on Optional button (Ctrl+L). The text Optional gets displayed in the journal entry. Press Accept button (Ctlr+A) to accept the entry. Select the Payment entry and press Ctrl+L to mark the entry as optional and accept the voucher.
Go to Gateway of Tally > Accounting Vouchers > F5: Payment
Press F12: Configure button and ensure that Use Single Entry mode for Pymt/Rcpt/Contra is set to Yes
In the Payment voucher screen,
Click the Stat Payment button or press Alt + S to display the Statutory Payment sub-screen.
In Statutory Payment sub-screen, provide the details given below:
Type of Duty/Tax: Select VAT as the payment is being made towards VAT dues.
Auto Fill Statutory Payment: Set it to Yes to automate display of tax payable amount.
Adjust Input VAT for Payment: This field gets displayed only when - Auto Fill Statutory Payment is enabled. On setting this field to Yes, the tax payable amount gets calculated by offsetting output tax against the available tax credit.
Period From: Enter the return period in From and To fields.
Note: The tax payable is auto-calculated and displayed in payment voucher on:
(i) Paying only the output VAT amount using Statutory Payment button by setting Auto Fill Statutory Payment to Yes and Adjust Input VAT for Payment to No
(ii) Setting options - Auto Fill Statutory Payment and Adjust Input VAT for Payment to Yes when there is balance amount remaining after offsetting tax credit.
In the Payment Voucher, select the Bank ledger in Account field (use Crtl+A key combination and create a bank ledger grouped under Bank Accounts).
In the Payment Voucher, the output and Input tax amount will be automatically set-off and the tax payable amount gets calculated and displayed. The input VAT amount will be displayed with negative sign to set-off against output VAT.
Select Training Levy Payable ledger. Select the Payment Type as Training Levy and enter the ledger balance amount.
Set Provide Details to Yes to display the VAT Payment Details screen.
In the VAT Payment Details screen, enter the payment details.
Press Enter to accept the VAT Payment Details screen.
In the Bank Allocations screen, enter the name in whose favour the cheque is being issued under Favouring Name. Enter the Cheque number and Cross Instrument Using details
Accept the payment voucher.
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