Reversal of input tax can be recorded by creating a journal voucher. Use Reversal of Input Tax as the Nature of Adjustment. and debit the expense under the group Indirect Expenses.
To create journal voucher to reverse the input tax
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 Reversal of Input Tax in the Nature of adjustment field.
o Select the option Inter State Stock Transfer 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 expense ledger.
4. Enter the amount in the Debit column.
5. Credit the VAT ledger, and enter the relevant details in the VAT Details screen.
6. Set the option Provide VAT Details to Yes and enter the From and To dates, else retain it as No.
7. Enter Narration, if required.
The journal voucher appears as shown below:
8. Press Enter to save.