The reverse charge purchases and sales involving Pure Agent services can be recorded in Purchase and Sales vouchers with or without inventory in Accounting Invoice, Inventory Invoice and Voucher modes.
On 9-7-2013 ABC Company rendered cab services worth
1,00,000
to MagicWorks Inc. The Taxable Percentage of the service is 60% and tax
liability of the service provider is 90%. The allowable expense is 5,000.
To record the above transaction,
Create the Service Receiver Ledger - MagicWorks Inc.
Create the Service Ledger - Cab Services with the Default Service Category set to Rent-A-Cab Service
Create the service tax ledgers
Record the transaction in Sales Invoice
Record the Payment Voucher (to account for payment to the Department)
To record the sale of service,
Go to Gateway of Tally > Accounting Vouchers > F8: Sales
In Party A/c Name field select MagicWorks Inc.
Under Particulars, select Service Ledger - Cab Services and press Enter to view Service Tax Details screen.
In Service Tax Details screen,
Click F12: Configure and set the option - Allow Pure Agent for Reverse Charge to Yes.
In Type of Ref field select New Ref from the Method of Adjustment.
In Name field accept the default reference Number displayed which can be changed by the user.
In Type of Service field select the service type - Reverse Charge.
In Category/Service field the service category predefined in the Service Ledger will be defaulted. Press Enter to view the Taxable Percentage screen.
In Taxable Percentage screen, set the option - Is Pure Agent to Yes.
Enter the Allowable Expenses as 5,000
Enter the Taxable Percentage as 60% and Reverse Charge % (Service Provider) as 90%.
Service Amount: In this field enter the Service Amount of 1,00,000
Amount (Incl. of Tax): The amount specified in the Service Amount field plus Service Tax payable on the amount, will be displayed in this field.
Accept Service Tax Details screen.
In the Voucher Creation screen,
In Amount field Service Amount of 1,00,000 will be displayed.
On selecting Service Tax, Education Cess and Secondary and Higher Education Cess Ledgers the Tax amount will be displayed automatically
In Bill-wise Details screen, select the Type of Ref as New Ref. In Name field enter the bill number. The Amount will be defaulted automatically.
Accept the Bill-wise Details screen.
Press Y or Enter to accept the Voucher Creation screen.
Press Page Up key and click Alt+P: Print to print the Sales Invoice. The Allowable Expenses will be displayed as shown:
Go to Gateway of Tally > Accounting Vouchers > F5: Payment
Select the bank ledger in the Account field.
Under Particulars, select Service Tax ledger. In Service Tax Details screen, select the Type of Ref field select Agst Ref and choose the relevant Pending Tax Bill.
Based on the tax bill selected Type of Ref, Category, Amount (Incl. of Tax) and Service Amount will be defaulted.
Similarly, select the ledgers - Education Cess and Secondary Education Cess and choose the Pending Tax Bills.
Set the field - Provide Details to Yes and enter the Service Tax Payment Details.
Accept the Payment Voucher.
Note: This transaction can also be recorded using Stat Payment button.
On 16-9-2013 ABC Company received works contract services
worth
1,50,000 from EMS Services. The Taxable Percentage of the service is 40%
and tax liability of the service provider is 60%. The allowable expense
is 10,000.
To record the above transaction,
Create the Service Provider Ledger - EMS Service.
Create the Service Ledger - Works Contract with the Default Service Category set to Works Contract Services.
Create a service tax ledgers.
Record the transaction in Purchase Voucher.
Record the Payment Voucher (to account for party payment).
Record a Journal Voucher (to create Service Tax liability).
Record the Payment Voucher (to account for payment to the Department)
To record the purchase of services,
Go to Gateway of Tally > Accounting Vouchers > F9: Purchase
In Party A/c Name field select EMS Services
Under Particulars, select Service Ledger - Works Contract and press Enter to view Service Tax Details screen.
In Service Tax Details screen.
Click F12: Configure and ensure the option - Allow Pure Agent for Reverse Charge is set to Yes.
In Type of Ref field select New Ref from the Method of Adjustment.
In Name field accept the default reference Number displayed which can be changed by the user.
In Type of Service field select Reverse Charge.
In Category/Service field the service category predefined in the Service Ledger will be defaulted. Press Enter to view the Taxable Percentage screen.
In Taxable Percentage screen, set the option - Is Pure Agent to Yes.
Enter the Allowable Expenses as 10,000.
Enter the Taxable Percentage as 40% and Reverse Charge % (Service Provider) as 60%.
Service Amount: In this field enter the Service Amount of 1,50,000.
The Tax values will be computed accordingly (i.e, Service Tax @ 12%, Education Cess @ 2% and Secondary and Higher Education Cess @ 1%) and Amount (Incl. of Tax) will capture the total of Service amount and Tax amount.
Accept Service Tax Details screen.
In the Voucher Creation screen,
In Amount field Service Amount of 1,50,000 will be displayed.
On selecting Service Tax, Education Cess and Secondary and Higher Education Cess Ledgers the Tax amount will be displayed automatically.
Note: The tax gets picked-up from Service Tax details screen as the values will not be calculated in the voucher on selecting the Tax ledgers.
In Bill-wise Details screen, select the Type of Ref as New Ref. In Name field enter the bill number. The Amount will be defaulted automatically.
Accept the Bill-wise Details screen.
Press Y or Enter to accept the Voucher Creation screen.
In reverse charge transactions, Service Tax liability on the service receiver arises only on making the payment to the service provider.
Go to Gateway of Tally > Accounting Vouchers > F5: Payment
Select the bank ledger in the Account field.
Under Particulars, select the party ledger. In Service Tax Details screen, select the Type of Ref field select Agst Ref and choose the relevant Pending Tax Bill.
Based on the tax bill selected Type of Ref, Category, Amount (Incl. of Tax) and Service Amount will be defaulted.
Press Enter to save and accept.
Go to Gateway of Tally > Accounting Vouchers > F7: Journal > Select the voucher class created to account for Service Tax Adjustments
Click F2: Date button and change the voucher date to 20-9-2013.
In Used for field select Tax on Reverse Charge from the list of Service Tax Adjustments
In Service Tax Liability screen,
In Till Date select the Voucher date to account all services purchased till the date of accounting the Service Tax liability. By default Voucher Date 20-9-2013 will be displayed.
In Service Category field, select Works Contract Services from the List of Service Categories.
Avail Input Credit: Set this option to Yes to avail the Service Tax amount paid towards the cab services as Credit which can be offset against further Tax Payable.
In Party Ledger field select the party from whom services are received - EMS Services from the List of Ledger Accounts
In Output Ledgers section select the Service Tax, Education Cess and Secondary and Higher Education Cess ledgers.
In Input /Expense Ledgers section select the Service Tax, Education Cess and Secondary and Higher Education Cess ledgers.
On accepting the Service Tax Liability screen, Tally.ERP 9 auto-fills the details in Journal Voucher
Press Y or Enter to accept and save.
To make payment to the Department, record a payment voucher using the Stat Payment button.
The above transaction will be displayed in Service Tax Computation report, Bill Date-wise report, Tax on Service Received report and Input Credit Summary. In F12: Configuration of Service Tax Computation and Tax On Service Received reports, a new option Show Allowable Expenses is provided. On setting this option to Yes, the Allowable Expense value will be displayed in a separate column.
In the Tax on Service Received report, click F12: Configure and set the option - Show Allowable Expenses to Yes. The report displays as shown:
