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.
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 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.
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