Reverse charge liability for Swachh Bharat Cess and Krishi Kalyan Cess cannot be created by using journal voucher adjustment flags. Hence, the liability value for Swachh Bharat Cess and Krishi Kalyan Cess has to be recorded manually in journal voucher.
While creating liability for Tax on Reverse Charge, you can either avail the credit or treat it as expense.
To create tax liability for reverse charge service received and avail credit
1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal.
2. Debit Service Tax ledger and enter the amount in Debit column.
3. Debit Krishi Kalyan Cess ledger and enter the amount in Debit column.
4. Debit Swachh Bharat Cess ledger created under expenses and enter the amount in Debit column.
5. Credit Service Tax payable ledger and enter the amount in Credit column.
6. Credit Swachh Bharat Cess payable ledger and enter the amount in Credit column.
7. Credit Krishi Kalyan Cess payable ledger and enter the amount in Credit column.
8. Enter Narration, if any.
9. Press Enter to save.
Note: Swacch Bharat Cess cannot be availed on tax paid on reverse charge, hence debited the Swachh Bharat Cess (expense) ledger.
To create liability on services received under reverse charge and not availing credit
1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal.
2. Debit expense ledger and enter the amount in Debit column.
3. Credit Service Tax payable ledger and enter the amount in Credit column.
4. Credit Swachh Bharat Cess payable ledger and enter the amount in Credit column.
5. Credit Krishi Kalyan Cess payable ledger and enter the amount in Credit column.
6. Enter Narration, if any.
7. Press Enter to save.
Note: Reverse charge liability is treated as expense on paying the tax to the department.
Similarly, liability can be created for Tax on Import of Service and Tax on Service Received.