https://help.tallysolutions.com/docs/te9rel64/Tax_International/GCC_VAT/accounting_for_tax_liability_under_gcc_vat.htm

Accounting for Tax Liability Under GCC VAT

Related topics

Input Tax Credit

Opening Balance

Your tax liability increases when you need to pay tax to the authority. In certain situations, you need to reverse or decrease the tax liability. For example, you might have to return the advance received from a customer after recording the tax liability. You can use separate journal vouchers to record such tax adjustments.

You can also create a single journal voucher for increasing the tax liability and input tax credit against transactions of imports, purchases from designated zones, or intra-GCC purchases.

Increase tax liability

Decrease tax liability

Increase of tax liability and input tax credit

Increase tax liability

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

2. Click J : Stat Adjustment .

o Select Increase of Tax Liability as the Nature of adjustment .

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

o Press Enter to return to the journal voucher.

3. Debit the expense ledger.

4. Credit the VAT ledger.

5. Press Ctrl+A to accept the voucher.

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

Nature of Adjustment

Additional Details

Ledgers to be used

Increase of Tax Liability

Capital Goods

Debit - Expense ledger.

Credit - VAT ledger.

Corrections/Amendments

Debit - Expense ledger.

Credit - VAT ledger.

Exempt and Other Than Business Purposes

Select the Emirate

Debit - Expense ledger.

Credit - VAT ledger.

Imported for Subsequent GCC Transfers

Debit - Expense ledger.

Credit - VAT ledger.

Imports

Debit - Expense ledger.

Credit - VAT ledger.

Intra GCC Purchase

Debit - Expense ledger.

Credit - VAT ledger.

Decrease tax liability

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

2. Click J : Stat Adjustment .

o Select Decrease of Tax Liability as the Nature of adjustment .

o In the Additional Details field, select the option Cancellation of Tax Liability for Advance Receipts .

o Select the location of the party, with reference to whom the tax liability is being cancelled, in the Emirate field.

o Press Enter to return to the journal voucher.

3. Debit the VAT ledger for decreasing the tax liability. Enter the VAT Rate and Taxable Value in the VAT Details screen.

4. Enter the amount under 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 decrease of tax liability with the following details:

Nature of Adjustment

Additional Details

Ledgers to be used

Decrease of Tax Liability

Cancellation of Tax Liability for Advance Receipts

Select the Emirate

Debit - VAT ledger.

Credit - Ledger grouped under Current Assets .

Capital Goods

Debit - VAT ledger.

Credit - Ledger grouped under Current Assets .

Corrections/Amendments

Debit - VAT ledger.

Credit - Ledger grouped under Current Assets .

Others

Debit - VAT ledger.

Credit - Ledger grouped under Current Assets .

Increase tax liability and input tax credit

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

2. Click J : Stat Adjustment .

o Select Increase of Tax Liability & Input Tax Credit as the Nature of adjustment .

o In the Additional Details field, select the option Intra GCC Purchase .

o Press Enter to return to the journal voucher.

3. Debit the VAT ledger. Enter the Rate and Taxable Value .

4. Credit the VAT ledger. Enter the Rate and Taxable Value .

5. Press Ctrl+A to accept the voucher.

You can record journal vouchers for increase of tax liability and input tax credit on imports and purchases from designated zones with the following details:

Nature of Adjustment

Additional Details

Ledgers to be used

Increase of Tax Liability & Input Tax Credit

Imports

Debit - VAT ledger.

Credit - VAT ledger.

Purchase from Designated Zone

Debit - VAT ledger.

Credit - VAT ledger.