Supply on Profit Margin Under GCC VAT

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Input Tax Credit

The profit margin scheme of tax applies to second-hand goods, antiques, and collector's items, where tax is applied on the profit margin achieved on the supply rather than the full value. Therefore, the tax liability is applicable only on the profit margin. In Tally.ERP 9, since tax is not charged on the entire amount, the tax liability for the profit margin is recorded using an adjustment journal voucher.

Purchase of used goods for sale on profit margin should also be recorded by selecting Domestic Purchase - Profit Margin as the Nature of transaction. This will ensure that there is no tax applicability on the purchase or the sale of the same stock item, but only on the profit margin on sale.

Record sales of used goods for profit margin

1.    Go to Gateway of Tally > Accounting Vouchers > F8: Sales.

2.    In Party A/c name, select the ledger of the customer belonging to a GCC country.

3.    In the Sales ledger field, select the ledger created with Domestic Supplies - Profit Margin as the Nature of transaction.

4.    Select the used stock items purchased for sale on profit margin. Enter the quantity and rate. Press Enter in the Amount field to display Profit Margin Details screen.

5.    Enter the details with respect to the vendor from whom the goods were purchased, as shown below:

Other details: Here you can provide a brief description of the goods.

Marginal value: This is the sales value including the tax liability, but excluding the purchase amount.

Consideration: This value refers to the profit or revenue generated in this sales transaction.

VAT liability: This value refers to the tax amount calculated on the Consideration.

6.    Press Enter to return to voucher.

7.    Press Ctrl+A to accept.