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https://help.tallysolutions.com/docs/te9rel66/Tax_International/GCC_VAT/accounting_for_input_tax_credit_under_gcc_vat.htm

Accounting for Input Tax Credit Under GCC VAT

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Tax Liability

Opening Balance

Increase of tax liability and input tax credit

You are eligible to get input credit for the tax you have paid on your inward supplies (purchases). In case your inward supplies are reverse-chargeable, you are liable to pay tax, but you can claim input credit. When the inward supplies are not used for generating taxable sales, input credit reversals are applicable. If your input credit is more than your tax liability, you can opt for refund or carry the credit forward to the next period. For all these adjustments, use journal vouchers.

Depending on the type of business transaction for which input credit is being adjusted various adjustment options have been provided in journal voucher. For example: In case of increasing input tax credit, you can use the adjustment options such as Capital Goods , Intra GCC Purchase , and so on depending on the transaction for which adjustment is required.

Increase input tax credit

Reversal of input tax

Refund of input tax credit

Increase input tax credit on imports

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

2. Click J : Stat Adjustment .

o Select Increasing Input Tax as the Nature of adjustment .

o In the Additional Details field, select the option Imports .

o Press Enter to return to the journal voucher.

3. Debit the VAT ledger for the tax on intra GCC purchase under reverse charge. Enter the VAT Rate and Taxable Value in the VAT Details screen displayed.

4. Enter the amount in the Debit column.

5. Credit the current assets ledger grouped under Current Assets .

6. Press Ctrl+A to accept the voucher.

You can record journal vouchers related to increase of input tax with the following details:

Nature of Adjustment

Additional Details

Ledgers to be used

Increasing Input Tax

Capital Goods

Debit - VAT ledger.

Credit - Ledger grouped under Current Assets .

Corrections/Amendments

Debit - VAT ledger.

Credit - Ledger grouped under Current Assets .

Intra GCC Purchase

Debit - VAT ledger.

Credit - Ledger grouped under Current Assets .

Others

Debit - VAT ledger.

Credit - Ledger grouped under Current Assets .

Purchase from Designated Zone

Debit - VAT ledger.

Credit - Ledger grouped under Current Assets .

Purchase from Unregistered dealer

Debit - VAT ledger.

Credit - Ledger grouped under Current Assets .

Recoverable VAT from Other GCC Countries

Select the Country

Note: This option is used to claim input credit in case of intra GCC subsequent sales.

Debit - VAT ledger.

Credit - Ledger grouped under Current Assets .

Reversal of input tax

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

2. Click J : Stat Adjustment .

o Select Reversal of Input Tax as the Nature of adjustment .

o In the Additional Details field, select the option Capital Goods .

o Press Enter to return to the journal voucher.

3. Debit the purchase expenses ledger.

4. Enter the value in the Debit column.

5. Credit the VAT ledger. Enter the VAT Rate and Taxable Value in the VAT Details screen displayed.

6. Press Ctrl+A to accept the voucher.

You can record journal vouchers related to reversal of input tax with the following details:

Nature of Adjustment

Additional Details

Ledgers to be used

Reversal of Input Tax

Corrections/Amendments

Debit - Debit purchase or expense ledger.

Credit - VAT ledger.

Others

Debit - Debit purchase or expense ledger.

Credit - VAT ledger.

Record Refund of Input Tax under GCC VAT

To enable cash or bank accounts to directly debit the bank account with the VAT refund received from the authorities, go to the journal voucher and enable the option Allow cash accounts in journal vouchers? in F12: Configure .

Refund of input credit

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

2. Click J : Stat Adjustment .

o Select Refund of Input Tax as the Nature of adjustment .

o Press Enter to return to journal voucher.

3. Debit the bank account ledger.

4. Enter the value in the Debit column. Specify the cheque, or the transfer details in Bank Allocations screen.

5. Credit the VAT ledger.

6. Press Ctrl+A to accept the voucher.