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

Notional Input Tax Credit (VAT)

You can record notional tax credits on capital goods and non-capital goods, in a journal voucher for Chandigarh VAT.

To record the notional tax credit on capital goods in journal voucher

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 Type of duty/tax as VAT .

o Select Notional Input Tax credit as the Nature of Adjustment .

o Select on Capital Goods in Additional Details section.

Note: Based on the selection made for Nature of Adjustments , the Additional Details option either appears or disappears.

o Press Ctrl+A to return to the voucher.

3. Debit the notional input tax ledger.

Note: To identify a ledger for notional tax, in the ledger grouped under Duties & Taxes with Type of duty/tax set to VAT , set the option Use for Notional ITC to Yes .

4. Select the purchase reference and enter the purchase details in Credit Settlement Details screen.

5. Enter the tax amount.

6. Credit the ledger grouped under Current Assets .

7. Press Ctrl+A to save.

While recording the journal voucher for Notional Input Tax Credit with Additional Details set as on Non Capital Goods , debit the notional tax ledger and credit the expense ledger.