For reversal of claimed or availed input tax credit, you can record a journal entry using Reversal of Input Tax as Nature of Adjustment.
To record journal entry to account for reversal of input tax
1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal.
Note: You can create a journal voucher from Gateway of Tally > Display > Statutory Reports > VAT > select the VAT or CST form.
2. Click J: Stat Adjustment. In the Stat Adjustment Details screen,
o Select the option VAT in the Type of Duty/Tax field.
o Select the option Reversal of Input Tax in the Nature of Adjustment field.
o Select Reversal on Common Inputs in Additional Details.
o Press Enter to save.
3. Debit an expense ledger created under the group Indirect Expenses.
4. Enter the required details in ITC claimable details screen.
In the ITC claimable details screen,
o Enter the VAT paid on specific inputs (x), VAT paid on common inputs (z), ITC eligible on common inputs (y) for the required purchase transaction at specified rate.
The Total ITC claimed (x+y) will be calculated automatically. The ITC claimable details screen appears as shown below:
o Press Ctrl+A to save the screen.
5. Credit the VAT ledger created under the group Duties & Taxes with Type of duty/tax selected as VAT.
6. Enter the Rate and Assessable Value in VAT Details screen.
The completed screen appears as shown below:
7. Press Enter to save.
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