FAQ on Service Tax

Yes, tax liability details can be viewed in the same format as ST3 report and use to verify the details in Form ST3.

To view category-wise and transaction wise breakup of service tax liability

1.     Go to Gateway of Tally > Display > Statutory Reports > Service Tax Reports > Form ST3.

2.     Select the row Service Tax Liability and press Enter to display category-wise description of taxable services.

3.     Select a category and press Enter to display transaction-wise description of taxable services in that category.

4.     Click F7: Quarter Wise to view providers liability for the category in ST3 template format.

The report appears as shown below:

No, Tally.ERP 9 allows export of Form ST3 in xml format for uploading. However, for validation, the form can be printed as a word file in the format prescribed by the department.

To print Form ST3 as a word file

1.     Go to Gateway of Tally > Display > Statutory Reports > Service Tax Reports > Form ST3.

2.     Press Ctrl+P to print the form.

3.     Enter the Name and Place in Print Report screen

4.     Press Enter to print.

In case the sales value is altered in an inclusive of tax transaction after selecting the tax ledgers, the tax value is not updated sometimes. It is advised to remove the ledgers and re-select them, after altering the sales amount.

To update service tax amount in inclusive of tax transaction

1.     Place the cursor on service tax ledger in the voucher and select End of List from the List of Ledger Accounts.

2.     Alter the inclusive of tax sales value.

3.     Select the service tax ledger. The tax amount is updated as per the new assessable value.

4.     Press Ctrl+A to save.

Online payment of service tax is made mandatory. Hence, GAR-7 challan used for making service tax payment to banks is not made available in Tally.ERP 9.

Service tax is levied only when the service is rendered within the country. It is not calculated on export and import of service. However, if service is rendered locally and bill is sent to a person outside country, service tax levied, the amount is recorded manually in other than base currency. Tally.ERP 9 will calculated the value in base currency based on the conversion factor. This is because all service tax returns accept only base currency.

To record a service transaction in other than base currency

1.     Go to Gateway of Tally > Accounting Vouchers > F8: Sales > I: Acct Invoice.

2.     Select the party in the field Party's A/c Name.

3.     Select the sales ledger under Particulars.

4.     Enter the foreign currency symbol and value in the field Amount.

5.     Press Enter to display Forex Rate of Exchange screen.

6.     Enter the Rate of Exchange.

The Forex Rate of Exchange screen appears as shown below:

7.     Press Enter to return to voucher screen.

8.     Select the tax ledgers.

9.     Press Enter.

10.  Enter Narration, if required.

The transaction with foreign currency appears as shown below:

11.  Press Enter to save.

Set the option Allow Service Tax for Non-Revenue Accounts? to Yes in F12: Configure of Ledger Creation screen.

By default, Is Service Tax applicable? is available only for revenue account.

To modify the Swachh Bharat Cess ledger in 4.9x

●      Select the Type of Duty/Tax as Others.

●      Set the option Use for Swachh Bharat Cess to Yes.

Credit on Swachh Bharat Cess cannot be availed. Hence, it does not appear as service tax credit availed in Form ST-3.

Reverse charge liability for Swacch Bharat Cess and Krishi Kalyan Cess cannot be created by using journal voucher adjustment flags. Hence, the liability value for Swacch Bharat Cess and Krishi Kalyan Cess has to be recorded manually in journal voucher.

While creating liability for Tax on Reverse Charge, you can either avail the credit or treat it as expense.

To create tax liability for reverse charge service received and avail credit

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

2.     Debit Service Tax ledger and enter the amount in Debit column.

3.     Debit Krishi Kalyan Cess ledger and enter the amount in Debit column.

4.     Debit Swachh Bharat Cess ledger created under expenses and enter the amount in Debit column.

5.     Credit Service Tax payable ledger and enter the amount in Credit column.

6.     Credit Swacch Bharat Cess payable ledger and enter the amount in Credit column.

7.     Credit Krishi Kalyan Cess payable ledger and enter the amount in Credit column.

8.     Enter Narration, if any.

9.     Press Enter to save.

Note: Swacch Bharat Cess cannot be availed on tax paid on reverse charge, hence debited the Swachh Bharat Cess (expense) ledger.

To create liability on services received under reverse charge and not availing credit

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

2.     Debit expense ledger and enter the amount in Debit column.

3.     Credit Service Tax payable ledger and enter the amount in Credit column.

4.     Credit Swacch Bharat Cess payable ledger and enter the amount in Credit column.

5.     Credit Krishi Kalyan Cess payable ledger and enter the amount in Credit column.

6.     Enter Narration, if any.

7.     Press Enter to save.

Note: Reverse charge liability is treated as expense on paying the tax to the department.

Similarly, liability can be created for Tax on Import of Service and Tax on Service Received.

Input credit for Swacch Bharat Cess paid is allowed only in case of following and not for all tax liability:

●      Advance Tax Paid Rule 6(1A) Adjustment

●      Excess Service Tax Paid Earlier Rule 6(4A) Adjustment

●      Tax Paid But Service Not Rendered Rule 6(3) Adjustment

A voucher class has to be created for enabling service tax adjustment flags in order to record any service tax related adjustment transactions, including Swacch Bharat Cess and Krishi Kalyan Cess. Service tax adjustment transactions can be recorded by using the voucher class and selecting the required adjustment flag.

To create voucher class in journal voucher type

1.     Go to Accounts Info. > Voucher Types > Alter > Journal.

2.     Enter class name in the field Name of Class.

3.     Press Enter to display the Voucher Type Class screen.

o      Set the option Use Class for Service Tax Adjustments? to Yes.

o      Press Enter to accept and return to Voucher Type Alteration screen.

4.     Press Ctrl+A to accept.

To record adjustment for journal voucher

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

2.     Select the adjustment voucher class in the Change Voucher Type screen.

3.     Select the option Advance Tax Paid Rule 6(1A) Adjustment in the field Used for.

4.     Debit Service Tax ledger and enter the amount in Debit column.

o      Select Agst Ref in the field Type of Ref. and select the bill against which the advance tax paid is to be adjusted.

o      Press Enter to return to voucher screen.

5.     Debit Swacch Bharat Cess ledger and enter the amount in Debit column.

6.     Debit Krishi Kalyan Cess and enter the amount in Debit column.

7.     Credit Service Tax ledger and enter the amount in Credit column.

o      Select Agst Ref in the field Type of Ref. and select the bill in which advance tax is paid.

o      Press Enter to return to voucher screen.

8.     Credit Swacch Bharat payable ledger and enter the amount in Credit column.

9.     Credit Krishi Kalyan payable ledger and enter the amount in Credit column.

10.  Enter Narration, if any.

11.  Press Enter to save.

Note: Unlike Swachh Bharat Cess, Krishi Kalyan Cess can be adjusted against Krishi Kalyan Cess tax liability.

To record payment voucher for service tax remittance, including Swacch Bharat Cess and Krishi Kalyan Cess.

1.     Go to Gateway of Tally > Accounting Vouchers > F5: Payment.

2.     Select cash or bank ledger in the field Account.

3.     Select Service Tax ledger under Particulars.

o      Select Agst Ref in the field Type of Ref. and select the bill for which the tax is paid.

o      Press Enter to return to voucher screen.

4.     Select Swacch Bharat Cess ledger and enter the amount.

5.     Select Krishi Kalyan Cess and enter the amount.

6.     Enable the option Provide Details.

o      Enter the period and challan details of tax payment in Payment Details screen.

o      Press Enter to return to voucher screen.

7.     Enter Narration, if any.

8.     Press Enter to save.

Note: Swachh Bharat Cess and Krishi Kalyan Cess cannot be recorded using Auto fill statutory payment in creation mode.

No. Swacch Bharat Cess and Krishi Kalyan Cess details are not captured in service tax reports in Tally.ERP 9 version 4.93 Stat 260.

No. Swacch Bharat Cess and Krishi Kalyan Cess details are not captured in Form ST3 in Tally.ERP 9 version 4.93 Stat 260.

Known Gaps

In release 5.3.8, the following features are not supported for Krishi Kalyan cess:

●      Auto payment of Krishi Kalyan cess

●      Auto adjustment of Krishi Kalyan cess in journal vouchers

●      Reflection of cess amount in Form ST3 computation report.

Workaround

●      Amount of Krishi Kalyan cess to be paid has to be entered manually when the Payment Type is selected as Regular or Recipient Liability in payment voucher.

●      The Krishi Kalyan cess credit has to be calculated manually and adjusted against Krishi Kalyan cess liability in the journal adjustment entries.

Krishi Kalyan cess is the new cess of 0.5% introduced with effect from 1st June 2016.

Krishi kalyan cess is calculated on the assessable value of taxable services.

Yes. Input tax credit of krishi kalyan cess will be available to adjust against krishi kalyan cess payable.

Krishi Kalyan cess cannot be adjusted against excise liability.

Krishi Kalyan cess credit can be adjusted against the krishi kalyan cess payable using the following VAT adjustments in journal voucher:

●     Advance Tax Paid Rule 6(1A) Adjustment

●     Tax Paid but service not rendered Rule 6(3) Adjustment

●     Excess Service Tax Paid earlier Rule 6(4A) Adjustment

Also, krishi kalyan cess can be availed as tax credit using the VAT Adjustment Availing Input Credit.

Krishi Kalyan cess credit has to be manually adjusted against krishi kalyan cess liability.

Krishi kalyan cess value has to be manually entered in payment voucher.

Krishi kalyan cess values will not reflect in Form ST3 computation report.