Where a registered person supplies both taxable and exempt supplies, he can deduct only the input tax attributable to the taxable supplies.
To record reversal of tax for non-deductible input
1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal.
2. Click J: Stat Adjustment, to view the Stat Adjustment Details screen.
o Select Reversal of Input Tax as Nature of adjustments.
o Select the option Exempted Goods in the Additional Details field.
o Press Enter to return to voucher screen.
3. Debit expense ledger created for non-deductible tax expense and enter the amount in Debit colulmn.
4. Credit the VAT ledger (created under Duties & Taxes with the Type of duty/tax as VAT).
The journal voucher appears as shown below:
5. Press Enter to accept and save.