https://help.tallysolutions.com/docs/te9rel64/Tax_India/VAT/journal_vouchers/BR_Reduce_Liability.htm

Reducing Tax Liability (VAT)

You can record a journal voucher to capture the reduction of tax liability due to prior payments.

To create journal voucher to reduce tax liability

1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal .

Note: You can create a journal voucher from Gateway of Tally > Display > Statutory Reports > VAT > select the VAT or CST form.

2. Click J : Stat Adjustment .  In the Stat Adjustment Details screen,

o Select the option VAT in the Type of duty/tax field.

o Select the option Reducing Tax Liability in the Nature of adjustment field.

o Select the option Entry Tax in Additional Details field.

Note: The options for Additional Details are provided as per state specific requirements of VAT/CST forms and annexures. In this example, Bihar is selected as the State .

o Press Enter to save and return to voucher screen.

3. Debit the VAT ledger, and enter the relevant details in the VAT Details screen.

4. Enter the amount in the Debit column.

5. Credit the ledger grouped under Current Assets .

6. Set the option Provide VAT Details? to Yes , and enter the relevant details.

Note: The option Provide VAT Details? is provided as per state specific requirements of VAT/CST forms and annexures. In this example, Bihar is selected as the State .

7. Enter Narration , if required. The journal voucher appears as shown below:

8. Press Enter to save.

T he states with Input Tax Credit Admitted On Capital Goods available as the Nature of Adjustment are given below:

State Name

Nature of Adjustment

Additional Details

Voucher Entry

Bihar

Reducing Tax Liability

Advance Tax Paid

Debit: VAT ledger or ledger grouped under Current Liabilities .

Credit: Ledger grouped under Current Assets .

Entry Tax

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets .

Chhattisgarh

Reducing Tax Liability

Adjusting with ITC

Debit: VAT ledger.

Credit: VAT ledger.

Adjusting with ITC of Capital Goods

Debit: VAT ledger.

Credit: VAT ledger.

Gujarat

Reducing Tax Liability

Entry Tax

Debit: VAT ledger.

Debit: Additional tax ledger.

Credit: Ledger grouped under Current Assets .

Jharkhand

Reducing Tax Liability

Entry Tax

Debit: VAT ledger.

Credit: Ledger grouped under Current Liabilities .

Kerala

Reducing Tax Liability

Entry Tax

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets .

Madhya Pradesh

Reducing Tax Liability

Adjusting with ITC

Debit: VAT ledger.

Credit: Ledger grouped under Current Liabilities .

Maharashtra

Reducing Tax Liability

Adjustment of Tax As Per Form 234

Debit: CST ledger.

Credit: Expense ledger.

Entry Tax

Debit: VAT ledger.

Credit: Expense ledger.

Entry Tax on Motor Vehicle

Debit: VAT ledger.

Credit: Expense ledger.

TCS Adjustment

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets .

Puducherry

Reducing Tax Liability

Advance Tax

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets .

Refund

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets .

Punjab

Reducing Tax Liability

Advance Tax Deducted

Debit: VAT ledger.

Debit: Surcharge ledger.

Credit: Ledger grouped under Current Assets .

Advance Tax Paid

Debit: VAT ledger.

Debit: Surcharge ledger.

Credit: Ledger grouped under Current Assets .

Entry Tax

Debit: VAT ledger.

Credit: Ledger grouped under Current Assets .

Uttar Pradesh

Reducing Tax Liability

Adjusting with ITC

Debit: VAT ledger.

Credit: Ledger grouped under Current Liabilities .