For reversal of claimed or availed input tax credit, a journal entry using Reversal of Input Tax as Nature of Adjustment can be recorded.
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 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 Press Enter to save.
3. Debit an expense ledger created under the group Indirect Expenses .
4. Credit the VAT ledger created under the group Duties & Taxes with Type of duty/tax selected as VAT.
o Enter the Rate and Assessable Value in the VAT Details screen.
o Press Ctrl+A to accept the VAT Details screen.
The completed screen appears as shown below:
5. Press Enter to save.
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