Recording Pure Agent Services (Service Tax)

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.

For example, on 01-06-2016, 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) and Krishi Kalyan cess are charged at 0.50% each.

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.

3.     Select the sales ledger under Particulars.

4.     Enter the pure agent expenses 25,000, in the field Allowable Expenses.

The Service Tax Details screen appears as shown below:

5.     Enter 1,50,000 in the field Amount.

6.     Select service tax, SBC and Krishi Kalyan cess ledgers. The values are calculated automatically on the difference amount.

o      Click A: Tax Analysis.

o      Click F1: Detailed to view the breakup of service tax details.

o      Press Esc to return to sales invoice.

The sales invoice appears as shown below:

7.     Enter the Narration, if required.

8.     Press O to override the transaction details and save.