Recording material in and material out transactions is required for companies with more than one excise unit that may need to transfer raw materials or finished goods from one unit to another. A manufacturing unit has to be registered as a Large Tax Payer Unit (LTU) to allow inter unit transfer of goods without duty liability.
If a company is not registered as an LTU, then excise duty is applicable on inter unit transfers. This transfer of goods affects only the inventory books, and not the financial reports of the company. The manufacturer should still be able to book the duty liability as applicable.
For example, ABC Company is not a registered as an LTU. ABC Company transfers 100 nos. of Oval Eyeglasses - T1234 to their inventory unit ABC Company II. The transfer of goods from ABC Company will be considered a regular clearance of stock with 12.5% of excise duty applicable on the stock transfer.
To enable material in and out transactions
1. Go to Gateway of Tally > F11: Features > F2: Inventory Features.
2. Enable the option Use material in and out vouchers?.
3. Press Ctrl+A to accept.
To record material out transaction
1. Go to Gateway of Tally > Inventory Vouchers> Ctrl+J (Material Out).
2. Click F12: Configure.
o Set the option Allow modification of Nature of Removal? to Yes.
o Press Ctrl+A.
3. Select ABC Company as the Tax Unit.
4. Select Excise Book Name from the List of Excise Books.
5. Select the branch ledger as the Party's A/c Name.
6. Select Inter Unit Transfer as the Nature of Removal.
Note: To enable the option Inter Unit Transfer as the Nature of Removal:
Go to F11: Statutory Features and enable the option Set/alter excise details?
♦ Click F12: Configure.
♦ Set the option Enable Large Tax Payer Unit (LTU)? to Yes.
♦ Press Ctrl+A to save.
Set the option Is company a Large Tax payer Unit (LTU)? to Yes in the Excise Registration Details screen.
7. Select the required Destination Godown.
8. Select the Stock Item to be transferred.
9. Enter the Godown, Quantity and Rate in the Stock Item Allocations screen.
10. Select the Excise Duty ledger.
The completed Material Out voucher is as shown below:
11. Press Enter to save.
12. Select Yes for the message prompt Create Liability Voucher?.
A journal voucher with the flag Excise Duty on Movement of Stocks is automatically created to raise the tax liability as shown below:
ABC company received 500 set of light filtering lens from their branch unit. Basic excise duty of 12.5% is applicable on the stock transfer of goods.
To record a material in transaction
1. Go to Gateway of Tally > Inventory Vouchers > Ctrl+W (Material In).
2. Select ABC Company as the Tax Unit.
3. Select Excise Book Name from the List of Excise Books.
4. Select the branch ledger as the Party's A/c Name.
5. Select the required Destination Godown.
6. Select the Stock Item to be transferred.
7. Enter the Godown, Quantity and Rate in the Stock Item Allocations screen.
8. Select the Excise Duty ledger.
The completed Material In voucher transaction appears as shown below:
9. Press Enter to save.
10. Select Yes for the message prompt Avail Cenvat Credit?.
A journal voucher with the flag Excise Duty on Movement of Stocks is automatically created to avail CENVAT credit as shown below:
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