Reduction in tax liability due to prior payments can be adjusted by creating a journal.
To create journal voucher to reduce tax liability
1. Go to Gateway of Tally > Accounting Vouchers > F7: Journal.
2. Click J: Stat Adjustment to enable required options in Stat Adjustment Details screen.
● In the Stat Adjustment Details screen,
o Select the option VAT in the Type of duty/tax field.
o Select the option Reducing Tax Liability in the Nature of adjustment field.
o Select the option Entry Tax in Additional Details field.
Note: The options for Additional Details are provided as per state specific requirements of VAT/CST forms and annexures. In this example, the State is selected as Bihar.
o Press Enter to save and return to voucher screen.
3. Debit the VAT ledger, and enter the relevant details in the VAT Details screen.
4. Enter the amount in the Debit column.
5. Credit the ledger grouped under Current Assets.
6. Set the option Provide VAT Details to Yes, and enter the relevant details.
Note: The option Provide VAT Details is provided as per state specific requirements of VAT/CST forms and annexures. In this example, the State is selected as Bihar.
7. Enter Narration, if required. The journal voucher appears as shown below:
8. Press Enter to save.