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Once you activate GCC VAT for your company in Tally.ERP 9, you can record the purchase of goods and services (inward supply) that attract VAT using a purchase voucher.
● Purchase from an unregistered dealer
● Purchases within GCC countries
● Purchase from designated zone
The purchase of goods or services from a supplier in the same country will attract VAT rates as applicable for the goods or services. For example, a business located in Abu Dhabi can purchase goods or services from a supplier in Dubai, or any other emirates of UAE, such purchases from suppliers located in UAE is considered domestic purchase.
Record purchases from a domestic supplier
1. Go to Gateway of Tally > Accounting Vouchers > F9: Purchase .
2. Specify the sales invoice no. and date received from the supplying party in the Supplier invoice no. and Date fields respectively.
3. In Party A/c name , select the supplier's ledger.
4. Select the purchase ledger applicable for local taxable purchases.
5. Select the required items, and specify the quantities and rates.
6. Select the VAT ledger.
You can view the tax details by clicking A : Tax Analysis . Click F1 : Detailed to view the tax break-up.
7. Press Ctrl+A to accept.
Purchases from unregistered dealers are exempt. You need to identify the party as an unregistered dealer.
Update the party ledger to identify unregistered dealers
1. Go to Gateway of Tally > Accounts Info. > Ledgers > Alter > select the ledger.
2. Set the Registration type as Unregistered .
3. Press Ctrl+A to save.
Record purchases from an unregistered dealer
1. Go to Gateway of Tally > Accounting Vouchers > F9: Purchase .
2. In Party's A/c Name , select the ledger of the unregistered dealer.
3. Select the purchase ledger created with Domestic Purchases - Unregistered as the Nature of transaction .
If you are using a common purchase ledger, then based on the party ledger, the nature of transaction is inferred as Domestic Purchases - Unregistered .
4. Select the stock item, and enter the quantity and rate.
5. Press Ctrl+A to accept.
If you are a registered dealer located in UAE and purchase goods or services from a registered or unregistered dealer in Saudi Arabia, then you have to pay tax on the purchases, based on reverse charge. You have to record a journal voucher to book tax liability and claim input tax credit for the liability booked and the tax paid.
Record purchases within GCC countries
1. Go to Gateway of Tally > Accounting Vouchers > F9: Purchase .
2. In Party's A/c Name , select the supplier belonging to a GCC country.
3. Select the purchase ledger created with Intra GCC Taxable Purchases as the Nature of transaction .
4. Select the stock item, and enter the quantity and rate.
5. Press Ctrl+A to accept.
You can view the details of tax liability to be recorded for intra GCC purchases under reverse charge in the Reverse Charge Summary .
Record journal vouchers for reverse charge liability
1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal .
2. Click J : Stat Adjustment .
o Select Increase of Tax Liability as the Nature of adjustment .
o In the Additional Details field, select the option Intra GCC Purchase .
o Press Enter to return to journal voucher.
3. Debit the expense ledger, or the ledger grouped under Current Assets .
4. Credit the VAT ledger for the tax on intra GCC purchase under reverse charge. Enter the tax Rate and Taxable Value in the VAT Details screen displayed.
5. Press Ctrl+A to accept the voucher.
When capital goods are purchased, the input tax is adjusted based on the actual use of the goods during the specified period. You can record the input credit claim using a journal voucher.
Record purchases of capital goods
1. Go to Gateway of Tally > Accounting Vouchers > F9: Purchases .
2. Press Ctrl+V to switch to voucher mode.
3. Press F12: Configure twice, set the option Allow expenses/fixed assets in purchase vouchers? to Yes .
4. Press Ctrl+A to return to voucher screen.
5. Enter Supplier Invoice No. and Date .
6. Credit the party ledger and enter the amount.
7. Debit the fixed assets ledger (grouped under Fixed Assets and with Domestic Taxable Purchase - Capital Goods selected as the Nature of transaction ) and enter the taxable value.
8. Enter the VAT Rate and Taxable Value in the VAT Details screen displayed.
9. Press Crtl+A to return to the voucher.
10. Debit current assets ledger created under Current Assets.
11. Press Ctrl+A to accept the voucher.
Claim input credit on capital goods purchase to the extent allowed for the period
1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal .
2. Click J : Stat Adjustment .
o Select Increasing Input Tax as the Nature of adjustment .
o In the Additional Details field, select the option Capital Goods .
o Press Enter to return to journal voucher.
3. Debit the VAT ledger for the tax on capital goods purchase. Enter the VAT Rate and Taxable Value in the VAT Details screen displayed.
4. Credit the current assets ledger grouped under Current Assets that was used during capital goods purchase to account for tax expenses.
5. Press Ctrl+A to accept the voucher.
When a company purchases goods or services from a registered party located in a designated zone, such purchases are taxable under reverse charge. The purchasing company will record the tax liability in their books and pay tax to the extent of the liability.
To help record transactions with party located in a designated zone, the following features are being provided in Tally.ERP 9.
● Select the type of party as Designated Zone in the party ledger master.
● Select the nature of transaction as Domestic Purchases – Designate Zone for taxable purchases made from the party in the designated zone.
Since reverse charge is applicable on purchases made from a registered party located in the designated zone, the purchase transactions will be listed in the Reverse Charge Report to help record tax liability for the taxable purchases.
Create a ledger for a supplier from a designated zone
1. In the Ledger Creation screen, click F12: Configure .
● In the Master Configuration screen, enable the option Allow selection of type of party and press Ctrl+A to accept.
2. Enter the supplier name, select the group and provide other required details in the Ledger Creation screen.
3. Select the Registration type as Regular , and enter the Date of VAT registration and TRN under VAT Registration Details .
4. In the Type of party field, select the option Designate Zone .
5. Press Ctrl+A to accept.
Record purchase of goods from a designated zone
1. Go to Gateway of Tally > Accounting Vouchers > F9: Purchase .
2. In Party A/c Name , select the ledger created for a supplier from a designated zone.
3. Select the purchase ledger created with Domestic Purchases – Designated Zone as Nature of transaction .
Note: When a common purchase ledger without any specific nature of transaction is selected in the invoice, Tally.ERP 9 will identify the transaction to be a purchase made from a designated zone, if the party ledger is created by selecting Regular as the Registration type and Designated Zone as the Type of party .
4. Select the purchased stock item, enter the quantity and rate.
o Click A : Tax Analysis > F1 : Detailed to view the detailed Tax Analysis report that displays the reverse charge amount.
o Press Esc to go back to the purchase voucher.
5. Press Ctrl+A to accept.
Record a journal voucher for tax liability
1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal .
2. Click J : Stat Adjustment .
o Select Increase of Tax Liability as Nature of adjustment .
o In the Additional Details field, select the option Purchase from Designated Zone .
o Press Enter to return to the journal voucher.
3. Debit the ledger grouped under Current Assets .
4. Credit the VAT ledger for tax on purchase from the designated zone under reverse charge. Enter VAT Rate and Taxable Value in the VAT Details screen.
5. Press Ctrl+A to accept the voucher.
Record a journal voucher to claim input credit
1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal .
2. Click J : Stat Adjustment .
o Select Increasing Input Tax as Nature of adjustment .
o In the Additional Details field, select the option Purchase from Designated Zone .
o Press Enter to return to the journal voucher.
3. Debit the VAT ledger for tax on purchase from the designated zone under reverse charge. Enter VAT Rate and Taxable Value in the VAT Details screen.
4. Credit the ledger created under Current Assets .
5. Press Ctrl+A to accept the voucher.
Record a journal voucher for tax liability and input credit in the same voucher
1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal .
2. Click J : Stat Adjustment .
o Select Increase of Tax Liability and Input Tax Credit as Nature of adjustment .
o In the Additional Details field, select the option Purchase from Designated Zone .
o Press Enter to return to the journal voucher.
3. Debit the VAT ledger for tax on purchase from the designated zone under reverse charge. Enter VAT Rate and Taxable Value in the VAT Details screen.
4. Credit the VAT ledger for tax on purchase from the designated zone under reverse charge. Enter VAT Rate and Taxable Value in the VAT Details screen.
5. Press Ctrl+A to accept the voucher.
