A pure agent is a service provider who is a liaison between another service provider and a client. An expense incurred by the pure agent is exempt from service tax.
Tally.ERP 9 provides the facility to exclude the costs and expenses incurred by a service provider acting as a pure agent from total service charges to get taxable amount.
On 16-11-2015, D-Day Events acted as a pure agent in getting event management services to Expecto Magic. The service cost amounted to ₹ 1,50,000, including the pure agent expenses of ₹ 25,000. The service tax is charged at @ 14.0% and Swachh Bharat Cess (SBC) is charged @ 0.50%.
To record the transaction
1. Go to Gateway of Tally > Accounting Vouchers > F8: Sales > Accounting Invoice.
2. Select Expecto Magic in the field Party's A/c Name.
Ensure that the Type of service for this party is Pure Agent.
To enable Type of service as Pure Agent
1. Enable Set/alter service tax details?, in the party creation screen.
2. Select Pure Agent as the Type of service.
3. Press Ctrl + A to accept.
3. Select the sales ledger under Particulars.
4. Enter the pure agent expenses 25000, in the field Allowable Expenses.
The Service Tax Details screen appears as shown below:
5. Enter 150000 in the field Amount.
6. Select duties and taxes ledger. The service tax and SBC rate will be calculated automatically on the difference amount.
7. Press Enter to save.
8. Click A: Tax Analysis. Click F1: Detailed to view the tax breakup of the two service category.
9. Enter Narration, if required.
The sales invoice appears as shown below:
10. Press Enter to accept.
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