VAT - FAQ

The tax rate and VAT details is captured in the following order:

●      Ledger

●      Account Group

●      Stock Item

●      Stock Group

●      Company

The VAT rate already defined at the company level, stock group level, ledger level and  stock item level can be changed or altered in the respective level.

To change the VAT rate at the company level

1.     Go to Gateway of Tally > F11: Features > Statutory & Taxation.

2.     Set the option Enable Value Added Tax (VAT) to Yes.

3.     Enable the option Set/Alter VAT Details.

4.      Enable Set/alter VAT rate/inventory details.

o      Click L:Details, and enter the required VAT rate with the required applicable period

o      Press Enter to save

To change the VAT rate at the stock group level

1.     Go to Gateway of Tally > Inventory Info. > Stock Groups > Alter

2.     Select the required group.

3.     Enable the option Set/alter VAT details.

o      Click L:Details, and enter the required VAT rate with the required applicable period

o      Press Enter to save.

4.     Press Enter to save the Stock Group Alteration screen.

To change the VAT rate at the stock item  level

1.     Go to Gateway of Tally >  Inventory Info.> Stock Item > Alter

2.     Select the required stock item

3.     Enable the option Set/alter VAT details.

o      Click L:Details, and enter the required VAT rate with the required applicable period

o      Press Enter to save.

4.     Press Enter to save the Stock Item Alteration screen.

To change the VAT rate at the ledger  level

1.     Go to Gateway of Tally > Accounts Info. > Ledger > Alter

2.     Select the required ledger purchase, sales or duty tax ledger.

3.     Enable the option Set/alter VAT details.

o      Click L:Details, and enter the required VAT rate with the required applicable period

o      Press Enter to save.

4.     Press Enter to save the Ledger Alteration screen.

As per the hierarchy of picking VAT details for reports, ledger is considered first followed by account group and then the stock item. Hence, if the commodity code is defined in the sales or purchase ledger, it gets considered for all transactions and appears in annexures.

To consider the commodity code defined in each stock items

●      Enter the relevant commodity details in each stock item.

●      Delete the commodity details entered in purchase and sales ledgers.

●      View the annexures.

The commodity details defined in the stock item are displayed in annexures.

It is not necessary to record the adjustment entry to adjust output VAT with input VAT amount whenever there is VAT payable, since the auto adjustment of the VAT amount is handled from release 5.0 onwards.

Reason

When commodity name & code are configured in sales or purchase ledger master, the information in annexures is captured from sales or purchase ledger, and not from item master configuration.

Solution

Remove the commodity details recorded in VAT Details screen of sales/purchase ledger. Further, disable the option Provide commodity details? in Configuration (F12: Configure) screen.

To ensure that the PAN gets printed in the invoice ensure that the Ledger Name and the Mailing Name under Ledger master are the same.

To view the declaration receivable and payable forms

●      Go to Gateway of Tally > Display > Statutory Reports > VAT > Declaration Forms > Forms Receivable/Forms Issuable.

The value of VAT payable and VAT ledger balance should match for the system to automatically pick VAT payable amount in stat payment transaction. If the payment transaction is recorded from Gateway of Tally > Accounting Vouchers > F5: Payment, the return has to be saved for the system to pre-fill the VAT payable amount in the transaction.

This is the expected behavior to disallow overriding form selection at transaction level. Enabling the user to override the selection will lead to conflict resulting in transactions being excluded from annexures and returns. When the option Sales/purchases against Form C? is enabled in VAT Details screen of party ledger master, the field Is against C Form? is checked by default, and any alteration is disallowed, hence the field is skipped while recording the transaction.

The Statistics of Vouchers section in VAT returns forms is divided into:

Total Number of Transactions: The count of all transactions entered in the company for the selected period is displayed here. This is the sum of Included, Excluded, and Uncertain Transactions.

Included Transactions: Displays all vouchers that have all requisite information in the corresponding masters and transactions to comply with the requirements for filing returns. These vouchers will be a part of VAT and CST forms as applicable.

Excluded Transactions: Displays the count of all vouchers which are not a part of the returns. As VAT and CST details are not provided in these transactions, there will be no implications on forms and annexures.

Uncertain Transactions: Displays the count of all vouchers with insufficient or incorrect information. These vouchers contain VAT or CST related information and are not included in the count of Included Transactions and Excluded Transactions.

For example,

●      Country, state and dealer type are not defined for party ledger.

●      Tax details are not defined for stock item.

●      Duty type is not defined for VAT ledger.

●      Mismatch in country or state selected in party master and transactions.

●      Mismatch in tax amount.  

Tax payment transactions are not included in the list of Total Number of Transactions.

Tax payment transactions are classified under the head Tax payment (included), which appears as shown below:

In a VAT return form, the exception Unable to determine party's dealer type displays the transactions for which dealer type is not selected in the party master.

This exception can be resolved by one of the following ways:

Updating Dealer Type

To set location for the party ledger

1.     Select the exception Unable to determine country/state.  

2.     Press Enter.

3.     Click S: Set Location to view the Update Dealer Type screen.

4.     Select the Type of Dealer as shown below:

5.     Press Ctrl+A to accept.

Multi-ledger alteration

To alter multiple ledgers

1.     Select the exception Unable to determine country/state.  

2.     Press Enter.

3.     Press Ctrl+E to display the Multi Ledger Alteration screen.

4.     Select the Country and State.

5.     Select the Dealer Type as shown below:

6.     Press Ctrl+A to accept.

Set as common party

To set a ledger as common party

1.     Select the exception Unable to determine country/state.  

2.     Press Enter.

3.     Press Spacebar.

4.     Click C: Common Party to view the List of  Ledgers with Exception screen.

5.     Press Enter to accept the message Do you want to set as 'Common Party'?

The exceptions will  be resolved and the transactions moved to the Included Transactions if there are no further exceptions.

In a VAT return form, the exception Unable to determine Duty Type of Ledger displays the transactions for which the duty type is not selected in the tax ledger grouped under Duties & Taxes. This exception will  be resolved by selecting the duty type of the ledger.  

To set duty type

1.     Select the exception Unable to determine duty type of ledger.

2.     Press Enter to view the List of Ledgers with Exception screen.

Note: All the ledgers (grouped under Duties & Taxes) in which the Type of Duty/Tax is set to Others are displayed with corresponding count of transactions in which they are used. These ledgers appear when tax amount is manually entered in the transaction.

3.     Click S: Set Duty Type to view the Update Duty Type screen.

4.     Select the Type of Duty/Tax as shown below:

5.     Press Ctrl+A to accept.

The exception is now resolved and the transactions move to the Included Transactions if there are no further exceptions.

In a VAT return form, the exception Unable to determine the Tax details of Group/Ledger(s) displays  the stock groups (if linked to stock items), and stock items grouped under it, for which the VAT rate is not defined either in master or at the company level.

To solve this exception

1.     Select the exception Unable to determine the tax details of the Stock Group/Stock Item(s).

2.     Press Enter.

Note: Stock group-wise details can be changed to item-wise listing by clicking F5: Item-wise (Grouped) toggle button.

3.     Click S: Set Rate.

4.     Enter the date from which the rate is applicable from.

5.     Select the Tax Type.

6.     Enter the Tax Rate. The Update VAT Rate screen appears as shown below:

7.     Press Ctrl+A to accept.   

The exception is now resolved and the transactions move to the Included Transactions if there are no further exceptions.

In a VAT return form, the exception Conflict in party’s country/state in master and transaction displays  the transactions in which the state selected is different in transaction and party ledger.

To solve this exception

1.     Select the exception Conflict in party's country/state in master and transaction.

2.     Press Enter.

Note: Under each transaction, the following two rows are displayed:

State in Voucher with the name of the state selected in the Party Details screen of the invoice.

State in Ledger Master with name of the state selected in the party ledger.

You can use the information to understand the conflict and resolve it from the List of Vouchers with Party State Conflict Exception screen without drilling down to the transaction or ledger level.

3.     Click S: Resolve Conflict to view the Resolve Conflict screen.

4.     Select Ledger in the Consider Party Location from field if the state name specified in the party ledger master has to be  considered, else select Voucher as shown below:

5.      Press Ctrl+A to accept.

The exception is now resolved and the transactions move to the Included Transactions if there are no further exceptions.

In a VAT return form, the exception Unable to determine the country/state of the party displays  the transactions in which the state selected is different in transaction and party ledger.

To set location for the party ledger

1.     Select the exception Unable to determine country/state.  

2.     Press Enter.

3.     Click S: Set Location to view the Update Location screen.

4.     Select the Country and the State, as shown below:

5.     Press Enter to save.

The exception is now resolved and the transactions move to the Included Transactions if there are no further exceptions.

In a VAT return form, the exception Unable to determine the Tax details of stock group/stock item(s) displays  the stock groups (if linked to stock items), and stock items grouped under it, for which the VAT rate is not defined either in master or at the company level.

To solve this exception

1.     Select the exception Unable to determine the tax details of the stock group/stock item(s).

2.     Press Enter.

Note: Stock group-wise details can be changed to item-wise listing by clicking F5: Item-wise (Grouped) toggle button.

3.     Click S: Set Rate.

4.     Enter the date from which the rate is applicable from.

5.     Select the Tax Type.

6.     Enter the Tax Rate. The Update VAT Rate screen appears as shown below:

7.     Press Ctrl+A to accept.   

The exception is now resolved and the transactions move to the Included Transactions if there are no further exceptions.

In a VAT return form, the exception Unable to determine nature of adjustment displays the journal vouchers recorded with tax ledger (grouped under Duties & Taxes), without selecting Nature of Adjustment.

To resolve this exception

1.     Select the exception Unable to determine nature of adjustment.

2.     Press Enter.

3.     Click S: Set Details.

4.     Select the Type of Duty/Tax from the list.

5.     Select the Nature of Adjustment and the applicable Additional Details as shown below:

6.     Press Ctrl+A to accept.