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 .
N ote: 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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